Alibaba’s annual mega-sales day, known as Singles Day, is set to be bigger than ever this year as it introduces its “New Retail” strategy, which further connects online and offline shopping.
The event, which takes place on November 11 every year, is celebrating its 10th anniversary in 2018, with the ambition to top last year’s record-breaking $25.3bn revenue in 24-hours. The focus will be on expanding scale and reach, according to the e-commerce giant, which includes moving beyond its home in China.
“Over the last two years, we have pioneered the concept of New Retail to accelerate the digital transformation of the offline,” said Alibaba’s CEO, Daniel Zhang.“We are excited by the impressive results achieved to date and will continue to be the driving force innovating for merchants and customers in the coming decades.”
As for geographical reach, platforms in the Alibaba ecosystem (TMall World, AliExpress and Lazada) are focused on bringing the event to overseas shoppers. Lazara, for example, will host its own festival for customers in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam.
Moreover, Alibaba’s TMall plaform is already offering 500,000 items for pre-order as of October 20, following a see-now-buy-now fashion show on the same day, which enabled the company to respond to any insights on demand.
This year also includes a new focus on independent retailers. The retailer is working with 200,000 mom-and-pop shops which have been upgraded with Alibaba’s technology tools, such as AR-enabled discounts in-store and online promotions.
Other brands including L’Oréal and Starbucks have also announced plans in place. L’Oréal China will launch a series of pop-up stores allowing customers to interact with virtual mirrors using AR and AI as well as vending machines, according to Hagen Wuelferth, the beauty group’s chief digital officer.
The shopping day’s extraordinary growth over the past 10 years aligns with China’s appetite for digitally-enabled experiences, which have not reached the same level in the West.
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Chinese office worker Fan remembers when she carried both high heels and sneakers to work, how much her feet hurt after a long day of work on the heels and how her beloved sneakers saved the day.
Fan works as an HR Consultant in a tech firm in Beijing, she said she now wears sneakers in the office. “I can’t remember when it first started, but (wearing sneakers at work) definitely become more popular in recent years.”
Fan said fashion bloggers influence her choice of fashionable sneakers the most, and she shares the styles on her WeChat account. As she became more comfortable wearing sneakers inside and outside of work, Fan became more willing to spend upwards of $200 on each pair of shoes.
The stylish sneaker trend is starting to have an impact on the sales of footwear from traditional luxury brands. Analysts from investment bank RBC Europe wrote in a recent report that, “The casualization trend is benefiting categories like sneakers and down jackets at the expense of formal wear/formal shoes.” Last year Euromonitor pointed out that the high-end athleisure market is forecast to overtake China’s luxury market by 2020.
On luxury e-commerce platform OFashion, there is very little difference between the price of sneakers by luxury brands, and sneakers by traditional sportswear labels. For example, a pair of Adidas Yeezy Desert Rat 500 is marked at 3149 yuan ($492.8), Gucci’s Ace embroidered sneaker sells for 3880 yuan ($607.28), Air Vapormax Off White is 5090 yuan ($796.66), and Balenciaga’s Speed Signature Mesh Sock Sneaker can be purchased for 4980 yuan ($779.39).
Although this competition may not be good news for luxury brands, the impact it has brought on the sportswear industry is positive, allowing sneakers to be sold at a higher price and with a higher product margin than ever before. According to Erwan Rambourg from HSBC, this is, “the luxurization of sneakers”.
Gildo Zegna, CEO of Italian luxury fashion house Ermenegildo Zegna, attributed the rising price of sportswear sneakers to their rise in emotional value, “If there is one product today that is impulse driven and creates emotions among consumers, it is the sneaker (…) you are talking about people spending $100 to $700 on a single pair.”
Higher pricing has enabled sports brands to share the driving seat with luxury brands. Yet more alarming for luxury brands is a new culture of sneaker exchange – partially driven by emotions and impulse. Young consumers are viewing purchasing of limited edition sneakers in a similar way to that of a Birkin bag – many hold immediate investment value and can be auctioned for much higher prices.
Stock X, a trading platform designed to make sneaker exchange easier, allows buyers to put their sneakers up for auction, and others to buy in real time just like exchanging stocks. Users get their own sneaker portfolio, and track the value of their collection over time, comparing it to others. Two years since the platform was founded, Stock X regularly exceeds as high as $2 million sales a day – approximately 12,000 transactions. On Stock X, the option of shipping to China is now available, and as Fashion Network reported early this year, the company is moving towards further expansion in China.
It’s hard to say how much crossover there is between sneakerheads and luxury buyers, but the healthy growth of both industries are being heavily fueled by young millennials. As the growth of streetwear consumption in China surpasses other fashion industries, the increasing exposure to urban clothing will make consumers open to the option of investing in a pair of higher-priced sneakers.
Meanwhile, the changing structure has led brands to think twice about their production strategies. Paul Andrew, the creative director of Italian brand Salvatore Ferragamo, said in an interview with W magazine: “People wear sneakers so much now that the architecture of the foot has really changed. Italian shoemakers often use casts that are 30 years old, but feet today have become more spread out.” Now he adds a pad made out of memory foam to all of his shoes.
With racing games and a claw machine, it looks more like an arcade than a boutique. But the Coco Game Center housed in trendy Shanghai mall K11 from April 14 to 23 is actually a pop-up shop created by French luxury house Chanel. The racing game, for instance, has a double C logo steering wheel, and the prizes captured by the claw machine are Chanel cosmetics samples.
Chanel’s first game-themed pop-up took place in Tokyo in March this year, and excitement about it spilled over to Chinese fans on social media. When Chanel announced it was bringing the pop-up to China, reservations were booked out a week before it arrived.
The concept of pop-up stores was popularized by Japanese fashion label Comme des Garçons. Its founder, Rei Kawakubo, opened the label’s first pop-up store in Berlin in 2004. Since then, the fashion label has been making its mark around the world through pop-up stores.
The compound annual growth rate of pop-up retailing has been over 100 percent since 2015. By 2020, over 3,000 pop-up stores will have launched in China.
Beyond Traditional Retail
Pop-up stores’ spike in popularity can be attributed in part to the shifting tides of real estate. Traditional retail space is becoming more and more expensive but can feel outdated, making pop-up stores a more exciting alternative.
They allow luxury brands to unleash their creativity, building a branded world that consumers can fully inhabit. Impressive details stimulate fans to record their experiences and post them on social media. Done well, pop-up stores provide authentic social media exposure that money can’t buy.
Last year, Chanel launched its Chanel Café, inviting fans to taste branded dessert and coffee after first trying out some of their products. Around the same time, YSL invited fans to a yacht party, providing them with free makeovers. At both events, brands offered exclusive products for consumers to purchase.
Combining exclusive products and limited durations, pop-up stores are a textbook example of hunger marketing, which is particularly effective in China. Queues often generate excitement, rather than a sense of inconvenience.
Digital Pop-ups Are Now a Thing
Pop-ups are no longer limited to brands entering shopping malls. E-commerce sites are also hosting pop-ups both online and offline.
Luxury E-commerce platform Secooopened a pop-up store with lingerie brand La Perla last year in Beijing’s popular Sanlitun shopping district. Similarly, MyMM, a content-driven e-commerce platform, launched a ‘Trend hunter’ themed pop-up store in Shanghai, allowing visitors to touch the merchandise listed on the site. MyMM said the pop-up store benefits lesser-known brands on the platform, giving them a chance to test consumer response before investing in a physical store.
“About one and a half years ago, more and more e-commerce sites started to think about opening an offline pop-up shop. It has reached a near-explosive state this year,” Vincent Tan, the founder of a pop-up agency POPEX told Chinese media Netease Tech.
He argued that it’s become harder for e-commerce platforms to acquire new users online, and shopping malls have been struggling to attract foot traffic. Pop-ups are seen as a solution to both problems, leading online and offline retailers to increasingly working together.
Another recent development is e-commerce sites hosting virtual pop-ups on their platforms. Luxury brands concerned about cheapening their brand by selling online can experiment with e-commerce platforms by first trying a limited collaboration. On April 10 this year, for instance, luxury watchmaker Audemars Piguet announced its first online pop-up boutique in partnership with JD.com, which marks the 143-year-old Swiss manufacturer’s first foray into e-commerce. That gives them the opportunity to evaluate sales performance and consumer feedback before committing to a deeper, more ongoing relationship.
What’s the Future of Pop-ups?
While pop-up shops can be a useful testing ground for some brands, for others they may already be too cost-prohibitive.
Pop-up stores are meant to make young consumers excited, but as they become more commonplace, it’s getting harder to generate that engagement. Simultaneously, the cost of launching a successful pop-up has gone up as more PR and marketing staff are needed, and hiring a space is becoming more expensive.
For smaller brands, hosting a pop-up doesn’t necessarily help them survive and thrive. Guo Wanyi, a manager of a Chinese brand called Debrand said, “It’s not like a physical store where you can count on sales. Often times the purpose of opening a pop-up is not to generate sales, so you can’t necessarily get back the cost.”
For luxury brands, while pop-ups can help reach younger consumers, hosting too many can eat away at their uniqueness. Like online marketing, not ever retail pop-up retail store can go viral.
Alibaba is trialling a ‘happiness meter’ in its new Futuremart store at its Hangzhou, China HQ, which gives shoppers discounts depending on their mood.
The feature works with the facial recognition payment technology the retail giant has been developing over the past couple of years at participating retailers.
Upon entering the store, customers must check in by both having their faces read, and scanning a QR code with their Alipay, Taobao or Tmall apps, to allow them to shop. Upon leaving, they then have their faces scanned one more time, which in turn will use the “Happy Go” feature to reward discounts for those who are smiling.
Alibaba has been making strides in developing consumer-facing facial recognition technology, famously launching its first smile-to-pay feature at a KFC restaurant in the same Chinese city in 2017.
The strategy also involves major investments in two out of the three facial recognition startups in China, all of which are valued at over $1 billion. This month, it led a $600 million investment round on SenseTime, a Hong Kong-based company whose software is used by businesses, and SNOW, a popular Snapchat-type of app that uses SenseTime to power augmented reality visuals. Its most important client however is the Chinese government, which deploys the technology in public spaces and compares ‘live’ faces against an existing database.
As noted earlier this month, Asia has leapfrogged the West in terms of technologically-enhanced retail experiences, partly due to the Asian consumer’s ease of adoption of technologies, particularly in China. In the US, Amazon Go’s just-walk-out technology was initially met with some skepticism, noted during this year’s Shoptalk by Gianna Puerini, VP of Amazon Go, who said consumers are having to learn the behavior of not having a traditional checkout experience.
As pilot concepts develop both in the East and West, it will be interesting to watch this space to see which will eventually be deployed at mass scale in order to enhance the physical experience.
Digital pioneer Burberry is building on its longstanding partnership with Chinese social messaging platform WeChat with a gifting experience in celebration of the Lunar New Year.
WeChat users are invited to unwrap some of the brand’s iconic products using the app’s native swipe, tap and shake functions. At the end of the experience, they can also create and personalise digital Lunar New Year envelopes to send to friends and family to celebrate the holiday through the platform. WeChat users in China are also given the chance to win limited edition physical Burberry Lunar New Year envelopes. Lunar New Year inspired gifts are available to purchase online and in store.
The Lunar New Year experience is designed to entertain but also drive sales, making it a strong example of why Burberry remains ahead of its competitors in the digital sector. Its digital initiatives concentrate on providing engaging content all the while featuring a subtle underlying commercial aspect.
Crucially, however, the move comes at a time when sales in Asia are struggling and economic uncertainty dominates China. The company reported a slowdown in sales in Hong Kong and China in October, leading to it missing its sales growth forecasts and warning of an increasingly challenging environment for luxury goods, according to Reuters. While it suggested signs of recovery during November, the share price remains at a three-year low.
For anyone not familiar with WeChat, the free messaging and calling app was developed by Chinese company Tencent. It has nearly 650 million active users worldwide. Recognising the platform’s potential, Burberry first partnered with it during London Fashion Week in February 2014. This initiative focused on delivering an interactive catwalk, where users could personalise a digital version of the brand’s Made to Order plaques with their name in either English or Chinese characters.
The second stage of Burberry’s WeChat innovation, involved a parallel social experience at its Shanghai event in April 2014. Followers were able to interact with 360? views of the London & Shanghai set/skyline. This type of brand interaction was designed to appeal to tech-savvy Chinese millennials. The hope now, is that they start to spend more again.
Gillette has launched a game that invites mobile users to imitate the movement enabled by the brand’s latest Fusion ProGlide Flexball to win points.
Integrated into the Gameloft Advertising Solutions suite of games, the initiative gives players 30 seconds to move the Flexball to fire balls and smash as many bricks as possible. Available in Singapore, Thailand and Malaysia only, the campaign also airs the brand’s latest video ad.
“Gillette is a brand that prides itself on innovation in keeping up with consumers’ ever demanding needs and lifestyle. This absolutely includes our marketing strategies such as making use of highly engaging media and being at the forefront of the latest technologies on mobile advertising. Our collaboration with Gameloft is a great match in creating an innovative way of engaging today’s consumer,” said Stephanie Chan, brand manager at Gillette Southeast Asia.
François Munck, director of business development at Gameloft refers to the mini game as a “fun way to discover the brand”. And discover they will: Gameloft has a monthly global audience of more than 173m active players and an inventory of more than 10bn mobile impressions across the world.
Online marketplace Farfetch is dutifully nodding to Japan’s Manga art form with the launch of an interactive campaign video in tribute to the fact it is now shipping to and from the country.
The move comes thanks to the introduction of Tokyo boutique Restir on the platform (Farfetch’s first Asian store), as well as the launch of the company’s Japanese language site.
Game On, as the campaign video is called, allows users to choose their player and change up their look as they ride the streets of Japan. Hyper-real versions of the country’s diverse landscape are showcased throughout, and every piece is shoppable through the addition of Restir on the site. Check out the experience via the Farfetch website, or watch the teaser below.
Restir competed against five other boutiques in Farfetch’s third-annual Superstore contest in order to join its network. It won by public vote against Mahani in Dubai, Alter in Shanghai, Merchants on Long in Cape Town, Common People in Mexico City, and Koon with a View in Seoul.
Said José Neves, CEO and founder of Farfetch: “By signing Restir we are opening up the shopping world to Japanese fashion and designers – the fashions we will now be able to bring to our customers is even more diverse and exciting. Through Restir, we are able to give access to this unique viewpoint on fashion to a global audience and in turn offer Restir a new global customer.”
Previous winners have included Voo Store in Berlin and Le Mill in Mumbai.