China got hit with COVID-19 first and endured a long, painful lockdown as they worked to understand the virus and get it under control. Today, they have greatly contained it, all but stopped community spread and are on their way to returning to a normal life. At least for the moment, as this is a very tricky virus to manage.
As a result of where China is now versus where they were even a few months ago, they have lessons for other countries on what the world after COVID may look like. New research tested the public’s opinion on spending and the economy and it looks like, Chinese consumers are back. They may not be heading abroad for the time being, but they are starting to spend again.
Here are the highlights.
- Luxury purchases will continue to increase locally in Mainland China as Chinese customers do not intend to travel abroad in the coming months, even if travel bans are lifted.
- Even though online purchases will strengthen post-COVID-19, Chinese customers still consider visiting the physical store to purchase luxury goods. One of the key reasons is the human interaction with Sales Advisors which is missing when shopping online.
- More than ever, Sales Advisors have a key role to connect the brand with customers however, their role may change. They will not only connect with customers in the store but also interact with them across various digital platforms.
It’s obvious that the Chinese are interested in traveling again, but it will take time and will start domestically at first. Only 16% of respondents said they would increase their travel spending over the next six months.
How has brands’ communication been perceived during the outbreak?
The Customer Experience Group and its agencies strongly believe that the most successful brands are those who manage to create a memorable and emotional connection with customers. The Chinese customers surveyed validate this point as 73% said they expected brands to keep in touch during the crisis. However, there is a gap between what was expected by customers and the reality as only 51% remember having been in touch with brands during this period. Customers shared mostly positive feedback about the messages sent by brands (‘caring’, ‘appropriate’) but half of them regret that some messages were more sales-centric than customer-centric (‘message of support’).
What are Chinese customers’ intentions towards traveling now?
Chinese travelers played a huge part in driving the luxury industry’s revenue in previous years. With the COVID-19 outbreak, what are the travel intentions of Chinese customers and which country do they intend to visit?
The majority of Chinese customers feel safer in their country than anywhere else: 83% of respondents stated that they felt the worst of the pandemic was over in China, and 94% believe that living in China is safer from the virus than the rest of the world.
Consequently, Chinese customers prefer to travel domestically (within Mainland China) even when travel bans are lifted. Due to this, luxury purchases will continue to increase locally as domestic traveling is favored among Chinese customers.
Chinese customers (93%) are fully confident in China’s economic recovery. However, when it comes to their personal financial situation, roughly one-third of them raised concerns about their financial situation in the near future. Customers stated they will decrease their spending across most categories. There are two categories however that are less impacted with consumers expecting to spend the same than before on luxury beauty and high-end technology.
During the COVID-19 period, many customers purchased luxury goods online, mostly from luxury beauty brands (78%) and they will consider purchasing online more regularly post COVID-19. Some of these notable online platforms used included the brand’s own website; Tmall.com; JD.com; and WeChat Mini Programs. Accordingly, brands need to further enhance their digital reach across these key shopping platforms.
Although online purchases will increase post-COVID-19, it does not mean that Chinese customers will give up on visiting stores for luxury purchases. Customers still report a much higher sense of luxury when purchasing in-store versus online.
Feeling safe is a prerequisite for customers visiting a store. Safety measures highlighted as the most important by respondents are masks worn by both staff and customers, as well as continuous sanitizing of the store after each visitor.
These safety measures should not be taken lightly by brands. Our report found that customers would immediately leave the store (98%), assess their loyalty to the brand (86%) and spread poor word of mouth among peers and on social media if brands did not meet health and safety expectations.
Furthermore, customers are highly interested in hybrid services where brands link their online and offline experiences. These hybrid services combine the benefits of both platforms: convenience, human interaction, less time spent in-store and safe environment with less crowded spaces. Initiatives such as in-store reservations and one-on-one shopping appointments can further enhance the customer experience.