The Yin & Yang of retail during 'golden weeks' in China: WPP report

Chinese consumers, retailers and brand manufacturers are engaged in a yin-yang relationship, and each has a role to play. The role of the brand manufacturer and retailer is to sell products for a profit. The role of the consumer is to buy those products at the best possible prices.

While these positions are adversarial, they also are complementary and form a mutually-beneficial relationship, according to a report that includes ethnographic research from Added Value, holiday shopping quantitative findings from Millward Brown, as well as gathered insights from CNRS-TGI, Hill+Knowlton Strategies, Kantar Worldpanel, Mindshare and OgilvyAction.

Shoppers generally strategise a three-part buying process to seek the best deals, as the inexorable rise of the middle classes in China continues to drive sales of a multitude of consumer goods.

The current National Day 'golden week' underway in China is one of many key sales periods for brand owners and retailers. The Spring Festival, or Chinese New Year, as well as Labour Day in the spring are other gold-mine shopping festivals. High-ticket home electronics, appliances and digital devices are at the top of shopping lists for many Chinese consumers in tier-two and -three cities. 

The report recommends specific best practices required for brands and retailers to get on—and stay on—a shopper’s consideration list. It is imperative to participate, as the report states that the holidays are an important indicator of retailer and brand strength.

Sell where most people live, which on the surface refers to Shanghai and other Chinese metropolises, but the hundreds of lower-tier cities where household income, appreciation for brands and consumer sophistication are increasing rapidly, represent "enormous potential", states the report.

Why? Because many households in tier-two and -three cities are in life stages that require them to buy new homes for the first time, for instance. And in China, "new living space is an empty shell that requires total outfitting, from fixtures to furnishings", the report states. Meanwhile, others who have enjoyed affluence for a few years are now ready to replace or upgrade their home electronics and appliances.

Therefore, brands and retailers need to be perpetually prepared. Although the 'golden weeks' are just a few days on the calendar, they can occupy the minds of consumers for months, the report states.

WPP research has revealed that most consumers go through a three-phase process: Perception (I have to repair, replace or upgrade a product), Preparation (What brands and
retailers do I want to consider?) and Purchasing (Where can I negotiate the best deal?).

The combination of the three-phase process and shopper personalities (convenience shopper,
guanxi shopper and smart shopper) forms a matrix, with "every intersection of the matrix an opportunity for tailored communication", the report states. But the conversation does not begin until shoppers trust that retailers are offering genuine quality merchandise and reliable delivery and installation.

In some categories, such as consumer electronics, manufacturers still exert significant control over pricing. This dynamic is particularly apparent during the 'golden weeks', when stores are overwhelmingly staffed with salespeople employed by brands themselves rather than by retailers.

Given heightened promotional activities during 'golden weeks', differentiation is the greatest challenge facing brands. Often, brands require a communication plan that begins long before the holidays and is subsequently echoed creatively in retail stores, the report states.

Because there is a lot of noise around the 'golden weeks', just being louder than competitors "doesn’t cut it". High visibility is critical during the preparation period when consumers are researching products. "It’s important to be present on consumer forums and microblogs, as well as in traditional media, so that when consumers finally visit a store—physical or virtual—they have encountered the brand message many times", the report elaborates.