While uncertainty still looms in many places, some markets are beginning to emerge from the global COVID-19 shutdowns, and brands and retailers are looking for signs of life. Reports show that China and areas of Southeast Asia have been notably resilient, buoyed by higher consumer optimism and greater comfort with digital platforms. Tapping into these market trends could hold the key to long-term success for brands that can pivot and accelerate their logistical, digital, and ecommerce strategies.
Changes in China
China, of course, is no stranger to health crises and can offer some valuable lessons. In 2003, China faced the SARS epidemic and experienced a steady recovery, reaching pre-epidemic sales numbers just one month after the outbreak, and stabilization only two months after that. The recovery was even faster for products in the apparel and personal care categories. Perhaps because they had been through such a crisis before, and because they were the first to grapple with the current pandemic, the Chinese market appears to be bouncing back, albeit more slowly than 2003, and is still one to watch. Relative to the rest of the world, Chinese consumers have been considered “cautiously optimistic,” with 50% of Chinese consumers saying they will shop more online after the outbreak, compared to 40% around the world. Generationally speaking, it’s notable that more Gen Z-ers and Millennials in China shopped online during the shutdown than their peers around the globe. But what’s also interesting is that Gen X-ers and Baby Boomers who purchased products online for the first time also outpaced their global cohorts.
According to McKinsey, changes in China’s shopping habits are likely to have a long-term impact on brands. Here are four key strategies to address China’s changing attitudes:
- Safety First – As COVID-19 is likely to have lasting effects on consumer behavior, brands are advised to continue to prioritize protections for consumers as well as employees.
- Triple Digital Transformation – Consumers have all gone online and appear to want to stay there. Brands need to ensure their digital experience meets and exceeds their customers’ expectations.
- Embrace Broader Trends – Data shows that more consumers in China want to embrace a healthier lifestyle in the wake of the pandemic. A trend toward shopping for products that are both local and deliver value is also accelerating.
- Transform the Supply Chain – COVID-19 has shown it’s more important than ever to ensure an agile and resilient supply chain is in place.
One other undeniable trend that is captivating Chinese consumers, and making brands take notice, is the emergence of live streaming to grow sales and build brand affinity. By tapping into a massive digital audience still fearful of heading into a physical store, brands and retailers are teaming up with influencers to showcase merchandise – offering education, entertainment, and often special offers. According to Chinese market intelligence firm iiMedia Research, live streaming ecommerce revenue is likely to double this year to 961 billion yuan (US$135 billion).
Southeast Asia on the Rise
Heading south, we also see some interesting trends throughout Southeast Asia.
Bang for the Baht (and other currencies) – Like China, value is high on the list of consumers throughout the region, with 57% of citing “value” among their top three purchasing considerations. When broken down by country, Thailand and Singapore come out on top, with roughly 70% of each market claiming “value for the money” is a primary purchase driver.
Beyond the Capitals – Capital cities still represent the lion’s share of ecommerce shipments, even though they make up significantly less of a country’s overall population. During the pandemic, however, ecommerce in outlying places has grown 12-15% faster than in the capital cities. Ecommerce businesses would be wise to consider how delivering to more rural areas of these countries could help meet the increasing demand from the region.
App Acceleration – With many consumers stuck indoors, digital devices and apps have taken root. According to a survey from Bain and Facebook, 85% of consumers in Southeast Asia tried a new digital app during Q1 2020. Among first-time and continued usage, many consumers reported using apps to increase online purchases: social media (38%), video streaming (35%), and Instant Messaging (30%).
Want help growing and strengthening your business in China and Southeast Asia? We can help. Contact our Sales Team.