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Retailers need to be creative to attract jaded shoppers to spend
By Wang Yanlin |
September 28, 2012, Friday
|
Print Edition
Print Edition
Retailers expecting the ongoing Shanghai Shopping Festival to help boost sluggish consumer spending may be in for some disappointment.
Despite the usual gimmickry of lower prices and longer opening hours, people seem to be demanding better quality products and more personal service. Cheap goods selling at cheap prices just aren't as compelling nowadays.
Li Guoding, general manager of Shanghai Friendship Group Co, which operates more than 1,000 stores in the city, said he still hopes the "endless" promotions offered during the festival will drive up sales.
The festival surrounds the annual holiday week marking the October 1 anniversary of the founding of the People's Republic of China. This year the holiday includes the Mid-Autumn Festival.
"The eight-day holiday is of great value to us for bolstering our performance," Li said. "Nearly all of our stores have geared up to better serve clients."
The three-week Shanghai Shopping Festival ends on October 7. The public is being bombarded with promotions.
For example, weekend opening hours were extended into the early morning at the Shanghai No. 1 Department Store, Orient Shopping Center and Yong'an Department Store. Lucky draws with iPhone 5s offered as prizes were also offered to entice people to shop.
During the first few days of October there will be discount coupons, "buy one, get one free" offers and surprise sales.
Retailers under the Friendship Group said consumers can save up to 55 percent if they take advantage of all the promotions on offer.
But will they?
Shopping festival officials are upbeat. They said sales at 150 large city retailers in the week ended on September 23 surged 17 percent from a year earlier to 2.25 billion yuan (US$357 million). That compares with average sales growth of 9.4 percent in the first half.
However, consumer sentiment doesn't seem quite so upbeat. While die-hard shopaholics may be out there taking advantage of all the promotions, other consumers present a more diffident image.
"I window-shopped in several stores last weekend but found few products attractive," said 32-year-old Sunny Sun, who admits she used to splash out a lot of money on clothes and shoes.
She said she's a bit bored by all the same promotions she's been seeing for years. Wang Weijun, 45, said he accompanied his wife and daughter to one department store last week, but the family didn't spend much because the place was so crowded and the merchandise looked like a rerun of last year's sales.
Shen Meixia, 57, said she intended to take advantage of bargains during the festival but found the blitz of promotions too complicated to calculate actual savings.
Compared with three years ago, when an overnight festival promotion nearly caused a dangerous stampede, calm seems to reign this year. Perhaps too much calm for retailers.
Qi Xiaozhai, a professor and former director of the Shanghai Municipal Commerce Development Research Center, said retailers need to think of something new to reignite consumer passion.
"The economic downturn and the public's growing concerns about product quality have combined with a lack of retail imagination to produce more sluggish sales," Qi said. "People are fed up with standard promotions that seem to run year round."
Qi also cautioned that any retail boom now may well be followed by a sales slump in the months ahead, which doesn't bode well for annual data.
As China's "commercial capital," Shanghai has experienced an invasion of new department stores, hypermarkets, supermarkets, convenience stores, chain stores, specialty shops and discount stores in the past two decades. That retail explosion has had an enormous impact on consumer behavior.
In the early 1990s, Nanjing Road East was the premier area for shopping, and the Shanghai No. 1 Department Store was the undisputed landmark for consumers to buy everything from gadgets to clothes.
Now, local residents can easily find products they want in nearby stores because almost every district in the city has a developed commercial area. Shopping hubs like Xujiahui in the Xuhui District, Wujiaochang in the Yangpu District and Daning in the Zhabei District have successfully shaken the dominance of Nanjing Road East or Central Huaihai Road.
Zhu Hua, the current director at the research center, said many consumers are now choosing to shop closer to home.
"It means less travel time, more convenience and a better shopping experience," Zhu said. "At the same time, shopping centers are replacing conventional department stores."
Unlike department stores, the malls provide a wider range of options, including restaurants, cinemas, coffee bars and game arcades.
If shopping centers in Shanghai have one weakness, it's their homogeneity. One looks like the next. So does much of the merchandise on sale.
Zhu said retailers in Shanghai need to do more to differentiate themselves, catering to the demands of local residents and income groups and ages in areas they do business.
The entry of foreign retailers in the marketplace has also had a profound effect, Zhu said, because they are pioneers in marketing innovation. According to a recent survey by the research center, hypermarts like Wal-Mart and Carrefour are popular with consumers, with nearly half of respondents saying they are frequent patrons.
With Shanghai starting a new round of construction in areas like Hongqiao in Changning District, and Houtan and Disneyland in Pudong New Area, Zhu said there are opportunities for Shanghai retailers.
Indeed, even in online shopping which has become popular, going out to the streets to shop remains a pleasant experience and an integral part of daily life. It remains for retailers to capture that experience and turn it to their advantage.
Despite the usual gimmickry of lower prices and longer opening hours, people seem to be demanding better quality products and more personal service. Cheap goods selling at cheap prices just aren't as compelling nowadays.
Li Guoding, general manager of Shanghai Friendship Group Co, which operates more than 1,000 stores in the city, said he still hopes the "endless" promotions offered during the festival will drive up sales.
The festival surrounds the annual holiday week marking the October 1 anniversary of the founding of the People's Republic of China. This year the holiday includes the Mid-Autumn Festival.
"The eight-day holiday is of great value to us for bolstering our performance," Li said. "Nearly all of our stores have geared up to better serve clients."
The three-week Shanghai Shopping Festival ends on October 7. The public is being bombarded with promotions.
For example, weekend opening hours were extended into the early morning at the Shanghai No. 1 Department Store, Orient Shopping Center and Yong'an Department Store. Lucky draws with iPhone 5s offered as prizes were also offered to entice people to shop.
During the first few days of October there will be discount coupons, "buy one, get one free" offers and surprise sales.
Retailers under the Friendship Group said consumers can save up to 55 percent if they take advantage of all the promotions on offer.
But will they?
Shopping festival officials are upbeat. They said sales at 150 large city retailers in the week ended on September 23 surged 17 percent from a year earlier to 2.25 billion yuan (US$357 million). That compares with average sales growth of 9.4 percent in the first half.
However, consumer sentiment doesn't seem quite so upbeat. While die-hard shopaholics may be out there taking advantage of all the promotions, other consumers present a more diffident image.
"I window-shopped in several stores last weekend but found few products attractive," said 32-year-old Sunny Sun, who admits she used to splash out a lot of money on clothes and shoes.
She said she's a bit bored by all the same promotions she's been seeing for years. Wang Weijun, 45, said he accompanied his wife and daughter to one department store last week, but the family didn't spend much because the place was so crowded and the merchandise looked like a rerun of last year's sales.
Shen Meixia, 57, said she intended to take advantage of bargains during the festival but found the blitz of promotions too complicated to calculate actual savings.
Compared with three years ago, when an overnight festival promotion nearly caused a dangerous stampede, calm seems to reign this year. Perhaps too much calm for retailers.
Qi Xiaozhai, a professor and former director of the Shanghai Municipal Commerce Development Research Center, said retailers need to think of something new to reignite consumer passion.
"The economic downturn and the public's growing concerns about product quality have combined with a lack of retail imagination to produce more sluggish sales," Qi said. "People are fed up with standard promotions that seem to run year round."
Qi also cautioned that any retail boom now may well be followed by a sales slump in the months ahead, which doesn't bode well for annual data.
As China's "commercial capital," Shanghai has experienced an invasion of new department stores, hypermarkets, supermarkets, convenience stores, chain stores, specialty shops and discount stores in the past two decades. That retail explosion has had an enormous impact on consumer behavior.
In the early 1990s, Nanjing Road East was the premier area for shopping, and the Shanghai No. 1 Department Store was the undisputed landmark for consumers to buy everything from gadgets to clothes.
Now, local residents can easily find products they want in nearby stores because almost every district in the city has a developed commercial area. Shopping hubs like Xujiahui in the Xuhui District, Wujiaochang in the Yangpu District and Daning in the Zhabei District have successfully shaken the dominance of Nanjing Road East or Central Huaihai Road.
Zhu Hua, the current director at the research center, said many consumers are now choosing to shop closer to home.
"It means less travel time, more convenience and a better shopping experience," Zhu said. "At the same time, shopping centers are replacing conventional department stores."
Unlike department stores, the malls provide a wider range of options, including restaurants, cinemas, coffee bars and game arcades.
If shopping centers in Shanghai have one weakness, it's their homogeneity. One looks like the next. So does much of the merchandise on sale.
Zhu said retailers in Shanghai need to do more to differentiate themselves, catering to the demands of local residents and income groups and ages in areas they do business.
The entry of foreign retailers in the marketplace has also had a profound effect, Zhu said, because they are pioneers in marketing innovation. According to a recent survey by the research center, hypermarts like Wal-Mart and Carrefour are popular with consumers, with nearly half of respondents saying they are frequent patrons.
With Shanghai starting a new round of construction in areas like Hongqiao in Changning District, and Houtan and Disneyland in Pudong New Area, Zhu said there are opportunities for Shanghai retailers.
Indeed, even in online shopping which has become popular, going out to the streets to shop remains a pleasant experience and an integral part of daily life. It remains for retailers to capture that experience and turn it to their advantage.
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