As e-commerce continues to develop fast, so too will the ability of Chinese consumers to bank via mobile platforms. we’re already seeing this happening in multiple ways, from street vendors processing credit cards via their android tablets, to e-commerce companies like Alibaba offering their consumers small savings accounts, to phone-to-phone SMS transfers. Tencent (China’s largest internet portal) has started offering customers a banking platform and with its 400million+ users, it’s destined to have a big impact. In the Year of the Horse we’ll witness consumers being able to use, share and spend money faster and more easily, leading to more transactions in more locations. This is good news for small businesses that have previously been constrained by payment issues, and might well regenerate the steadily shrinking small, informal trader. Just imagine how the ability to transfer a relatively small sum of money with a simple cellphone connection will enable transactions that were simply impossible in smaller rural areas. We expect to see points of purchase springing up virtually anywhere – not just in markets, but even on the most remote street corner. Such is the growing power of digital and peer-to-peer banking.
Relatively low numbers of car owners by population, combined with city congestion, has meant Chinese shoppers have always valued convenience retailing. So far this has not represented a competitive threat for large format retailers but in the Year of the Horse we expect this to change. Convenience retailers’ growing understanding of the power they have to compete as a true retailer – rather than just an ‘impulse location’ – will exert more pressure on ‘traditional’ retail. Their vast distribution network is already in place and as they tweak their product offering to increase the value of basket sizes, we predict strong growth. Around the world, we’ve witnessed this retail approach lead the consumer away from larger formats and we fully anticipate it will now do the same in China. Look out for competitors vying to buy the well-established traditional branded convenience stores as international retailers realise that these small outlets are real strongholds. Winning will come at a price however, as critical mass and distribution affordability will ultimately be the determining factors for business success. These will take time to set up, and whether already entrenched convenience brands will be able to leverage their head start remains to be seen. Regardless of who and how this slice of the retailing pie expands, we’re confident that it will prove to be a very robust format in years to come
As China rebalances there will be significant changes and challenges which bring with them tremendous opportunities. Retail is always fast moving, dynamic and change is a constant. The two together, retail in China, represent a potent recipe for success as long as you can orchestrate it. So, as we are now in a new Chinese year – the Year of the Horse, I have put together, with Mike Smollan, from Smollan the 8 key retail trends you should be watching out for and creating strategies and activities around. Will be posting each one over the next few days…Here is the first one.
The Irresistible Rise Of E-Commerce
e-commerce will continue to engulf many areas of retail worldwide, but it’s in China that we fully expect to see the biggest surge. So much that by the end of the Year of the Horse China will become the biggest e-commerce market in the universe. Rising digital penetration amongst the Chinese and the development of digital banking (see ‘bank in the hand’ below), is set to sharpen both the appetite and ability to purchase anything and everything online. Businesses like Taobao (consumer-to-consumer online retail) and Tmall (b2c online retail) are already leading the charge – and indeed Taobao’s creation of a safe and cheap option for everyone to be buyers and sellers in a digital market place looks set to cement e-commerce in Chinese daily life. It’s inevitable that as other enterprises realise that online can provide a greater return on investment, they will start to put more effort and resources into it. We foresee more and more businesses beginning to use the digital platform to stimulate their flat traditional retail sales, further fueling the digital retail revolution. Undoubtedly a key enabler of this continued growth will be China’s low cost, dynamic supply chain; products can be delivered swiftly with little or no extra cost to consumers and this, coupled with the decreasing amount of time available to visit stores physically, will help make online shopping a nationwide norm.
The BrandZ Top 100 Most Valuable Global Brands 2013 is launched today. Total brand value has increased by 7%. This year was a year of recovery, refinement and relevance and there was a new tone. Total brand value was $2.6 trillion. All but two of the 13 categories improved in value. There is much to comment on which I will do over the next few weeks posts, but for now, as I prepare to host 5 live web seminars today for WPP colleagues, clients and friends, here is a visual story line created by the very talented Sergio.
For those of you not able to get a place on my retail conversation with Bryan Roberts from Kantar Retail a couple of week ago… as promised we have managed to find a way of creating a recording of it. Please excuse the sound at the beginning which is a bit low, it gets better a few moments in. We covered a lot of ground including a deep dive on Tesco’s. Bryan knows his stuff and was a pleasure to do this broadcast with. I hope you find it insightful.
China is hardly out of the headlines these days… so it was no real surprise that todays China- Britain Business Council Conference 2013 at the QEII Conference Centre London was packed.
With the agenda starting with an address by David Cameron, The UK Prime Minister and an opening plenary session that included Ken Clark MP, Government Minister; H.E. Liu Xiaoming, Chinese Ambassador to the UK and Sir David Brewer Chairman, China-Britain Business Council it was clear from the start that this gathering was going to cover some interesting ground.
I was honoured to be speaking as well as being Chairman the section of the conference that addressed The Chinese Consumer. Fellow panelists included Dame Lucy Neville-Rolfe CMG, Former Executive Director, Tesco & CBBC Vice Chairman; Professor Sun Baohong, Professor of Marketing, Associate Dean of Global Programs, CKGSB; Mark Henderson,Director, Walpole, and Chairman of the London Luxury Quarter.
More observations to follow but my main take away point from today is that we are well past the tipping point of interest in China. The many companies that attended have realised that love it or hate it, you can’t ignore the rise in China and the impact is having and will have in the global economy. Threat or opportunity smart companies, represented by those who chose to attend, are creating and executing their China strategies Outbound and Inbound. They know that their business might just well depend on it.