The sudden Covid-19 outbreak halted the fierce competition that had been going on in the traditional retailing industry forever, forcing companies to start self-introspection.

It reminds people of 2003.

During the SARS outbreak, when most people saw a life crisis, LIU Qiangdong identified the opportunity of e-commerce; while all employees of Alibaba were in quarantine, Jack Ma spotted the demand for personal online retailing and launched Taobao.

Where there are risks, there are opportunities. This year may witness a reshuffle in the retailing industry.

 

 

#1 

With in-depth online operations,

the retailing industry turns danger into opportunities

 

Despite dampened domestic consumption market, the companies that planned online channels in advance managed to succeed.

For example, the turnover of Lin Origin rose by 20% during the pandemic. In the beginning, 157 out of the company’s 300-plus stores were on the brink of closing, and most employees had to stay at home in quarantine. On January 31, SUN Laichun, its founder, posted a letter on WeChat Moments that called for all its employees to seek self-salvation.

 

 

The letter also helped the management to have a clearer picture of how they could survive the crisis. Based on its Mini Program, private traffic (Moments) and live streaming channel, it shifted the focus to online operations. The employees used Moments as a marketing platform and promoted the products in short videos and live streams. The products ordered by patrons were sent from physical stores, and those bought by new customers on Tmall were delivered by SF Express.

Over the past several months, more than 2,000 of its service assistants became veteran live streamers. SUN Laichun, who used to ignore this channel, started to tout his products on live-streaming platforms himself. The preemptive online operations prevented a meltdown in Lin Origin. The company even performed 20% better year-on-year.

 

 

Multiple brands under L’Oréal rolled out “no-contact” extra service like online make-up tutorials and skincare consultancy. Estee Lauder actively sought cooperation with China’s e-commerce platforms and adopted online marketing models like live streaming on the counter. Dior opened a virtual make-up shop where customers can browse products and make purchase with the help of 3D technologies.

In addition to extensive marketing on online platforms, cosmetic companies also used social media like WeChat and Weibo to recommend ordering channels and discount activities to their customers in a targeted manner.

 

#2 

Self-service retailing thrived unexpectedly

 

Just as companies like Taobao, JD and SF Express prospered after the SARS epidemic, 17 years later in the Covid-19 pandemic, e-commerce and fast logistics also made a breakthrough that was in line with changes in consumption scenarios. Self-service that received much investment but scant public attention presented tremendous commercial value during the pandemic. Companies in this sector like Newland, Newcapec Electronics and Client Service International saw their stock prices climbed to various extents.

 

 

Back in 2017, vending machines, self-service shelves and self-service stores flourished in the retailing market. According to statistics from iResearch, China’s self-service market is expected to reach RMB 65.74 billion in 2020.

No-contact courier service will continue after the pandemic. Application of AGV, drones and self-driving cars controlled by AI will shorten the time needed for logistic tasks. Shopping methods like live streaming, AR and VR will also give consumer experience a leg-up.

 

JD’s underground capsule logistic system

 

#3 

Female-oriented consumptio went through drastic changes.

The cosmetic market surged despite hardship.

 

Statistics from QuestMobile show that in February, time spent monthly by females on internet rose 42.7% year-on-year, though the number of female internet users remained mostly unchanged. Women now have more diverse ways to access media and information about products. WeChat Mini Programs are highly representative of their shopping models. QuestMobile reported that more than half of the users of Jing Xi and Pinduoduo were female. By February 2020, Monthly Active Users of Jing Xi have reached 134.5 million.

 

 

As more and more women consider active and sensible shopping as something desirable, new opportunities are brought to the cosmetic market, thanks especially to the vindictive consumption mentality after the outbreak.

Despite the reduced sales of lipsticks due to the virus, makeup brands have been trying hard to survive. The turnover of Colorkey fell 14.1% early in the pandemic but rose to RMB 22 million in April. Eburn reported that the trendy lipstick product of Colorkey made an RMB 10 million turnover record in the past few months.

 

 

Meanwhile, facemask makeup is another fad in the pandemic. Eyeshadow has become the pillar of makeup sales.

Perfect Diary collaborated with LI Jiaqi, a well-known live streamer that sells lipsticks, to print his dog on one of its eyeshadow products. 80,000 copies of it were sold in his channel soon after its premiere, and it was even sold out for a time.

 

 

Unquestionably, the pandemic has caused economic damage to the whole country, but its impact on consumption is not permanent. On the contrary, females in China are already upgrading their consumption of make-up. The size of make-up market is estimated to reach RMB 423.9 billion by the end of 2020.

 

#4 

How should retailing companies improve themselves

 

The adverse impact brought by the virus is only temporary, but a company’s development is a long-term process. For those who can make it through this crisis, it is of crucial importance to seek transformation if they want to grasp future opportunities.

 

Expand from public traffic to private traffic

Traditionally, companies rely on public traffic, like physical stores, Taobao, and JD, to do marketing. Though the virus caused many companies to close their stores, Lin Origin has prevailed over it. Online channels seamlessly connect service assistants and customers. The highly personalized community can guide employees’ personal traffic into the private traffic pool of the brand.

 

Conduct intensive operations with whole-channel marketing

After the pandemic, sales of healthcare products are expected to go up. Retailers need to make preparations by planning whole-channel marketing. Leveraging traffic entrance like WeChat, Mini Programs, official accounts and RED to do intensive operations and finding selling points that satisfy customers’ emotional needs are the most significant lessons companies have learned from this crisis.

The success of Colorkey’s lipsticks can be attributed to intensive operations.  In addition to spotting the potential of a certain product category, Colorkey has also won Gen Z students by pricing their products below RMB 100.

 

 

In practice, Colorkey conducted targeted operations. For example, it chose a word-of-mouth fission model. It valued cooperation with famous bloggers but was also ready to work with those with less popularity.

The pandemic served as a catalyst to accelerate the development of retailers who were still in infancy. Some companies haven’t started online operations; some are trying it out; some have been proficient with it.

Though online shopping will be more popular among the public after the pandemic, physical stores are still of great significance. What brands need to do is merging online and offline channels to construct a full-fledge service system that is centered on user experience.