We recently spoke to 100 boutique managers in Southern California about the Chinese traveler opportunity and how brands can capitalize on continuing growth of outbound tourism. Below is a summary of the recent talk by Renee Hartmann of China Luxury Advisors.
When thinking about how to best build a sustainable business with Chinese travelers, we break the process into the three most critical components for any retailer:
It may be obvious, but it's crucial. The first step is enticing Chinese tourists into your retail environment. Here's how:
Brand awareness over-indexes in Chinese consumers' shopping preferences. Likewise, most Chinese consumers seek out the brands that they already know and, more importantly, that their peer group back home respect. It is no accident that the brands catching the heaviest traffic from Chinese outbound travelers – such as Coach, Cartier, Van Cleef and Arpels, Chanel, Hermes, Louis Vuitton and Gucci – are also the brands that have invested millions in Mainland branding activity during the past twenty years.
China's luxury consumer base is drastically younger that of other countries, and is universally fluent in digital and social media. Undertaking location-based digital campaigns is a great way to reach out to Chinese travelers, travel influencers and local 'experts' such as Chinese students studying overseas. Abercombie and Fitch, for example, recently ran a Weibo campaign in China to support the opening of its first Hong Kong store. The winner of the contest received a free trip to Hong Kong for the retail opening and a personal three-day tour of Hong Kong... conducted by Abercrombie and Fitch's (probably scantily-clad) models.
While the number of individual travelers is increasing, a very large percentage of Chinese tourists still engage tour guides to smooth their travel experiences. These groups span from mass-market tours sold at a loss by Mainland operators in hopes of generating commissions from brand sales, to ultra-luxury tours with steep price tags sold by concierge services, banks, clubs and high end tour operators. It is critical to understand which is which, and to develop strategies for reaching out and catering to the different segments.
Once Chinese travelers cross your doorstep, it is not a foregone conclusion that they will purchase at all, much less at a game-changing level. Ideas to improve conversion rates and raise average transaction values include:
Whether your salespeople speak Mandarin or not, there are certain sales strategies and tactics that tend to work better for Chinese customers. It is important for everyone in the organization to understand the nuances involved with this customer group and ensure you are approaching and serving them in ways that both meet their needs and produce your desired results.
Examine your merchandising in consideration of the specific tastes and preferences of Chinese customers. Pay special attention to limited edition and hard-to-find items -- these are more attractive to travelers and also can solve the thorny challenge of pricing parity across countries and regions.
Although they sound tastelessly downmarket to luxury retailers, targeted promotions are music to Chinese customers' ears. Most customers will lead with economics over aesthetics, and will demand a discount. Smart operators will find ways to satisfy this desire through gift-with-purchase or other creative promotions that align with brand principles. Also look to Chinese holidays for opportunities for special promotion programs: look not only at the traditional Chinese holidays, but also unique holidays. China has three Valentine's days alone – and this year "Single's Day" produced the largest single day of online sales in China's history.
Once you have identified a valuable customer, work hard to ensure that you keep them.
Most Chinese customers prefer to remain anonymous, and as a result are not very eager to hand over personal information. If you would like to stay in touch with Chinese customers, provide a compelling opportunity to hand over their information, or consider staying in touch with them via Weibo (China's twitter) which doesn't require them providing any information at all.
Design attractive loyalty programs for your Chinese customers. Make sure you provide the specific value they crave -- which is typically a combination of economic benefits and special treatment. If all else fails, focus on economic value.
Look for ways to bring your brand heritage and values to life via unique experiences for Chinese consumers. If customers feel that the brand is giving back to them, and not just viewing them as walking renminbi, it helps build longer term customer loyalty.