China marketing latest trends: June 2022
This is a series from our weekly newsletter in which we cover consumers, marketing, platform, economic and tech trends that brands in China need to know. Get the latest TRENDS newsletter edition sent directly to your inbox instead of having to visit our website next time.
TL;DR
The critical role of WeChat during lockdown
The influencers of group-buying
New ‘unfixed’ consumption pattern
Challenges & opportunities ahead for brands
Since mid-March Shanghai has endured some of the most strict lockdown measures thus far in the pandemic, dramatically impacting how residents shop, what they purchase and their relationship with brands. Now that the city is slated to "open" (we're using this term cautiously) what behaviors, both short-lived and those here to stay, should you know about?
The Dynamics of Group Buying on WeChat
Due to the limited access to goods, group buying became the most practical way for consumers in locked down cities such as Shanghai to make purchases. All search, purchase and payment took place within the WeChat environment,which made WeChat payment far more active than other mobile payment methods such as Alipay and online banking(*something to keep an eye on for the future).
Here's something we found particularly interesting about the group buy phenom on WeChat...
Volunteer residents turned group-buy influencers 👇🏼
Individuals from each compound began to take on multiple roles including;
Customer Service: Communicate/negotiate deals with brand salespersons
Last mile delivery: Once the goods are delivered sort out and carry to residents within compound
Influencer: In addition to the group owner publishing important notices, people can also set 1-4 key members to ‘follow’ so as not to miss any time-sensitive information. These individuals are spending time promoting brands in order to convince the minimum number of residents to commit to a group purchase
Although group buying on WeChat exploded during the lockdown, we believe it is bound to gradually loose steam as more businesses figure out how to fulfill smaller orders. But some people have 'tasted the fun' of group buying, expressing that they are willing to stay in the groups even after the lockdown, continuing to follow organizers for more group buys in the future - think discounts in the 20-30% off range. At the same time, if lockdowns continue, it is indeed a safer choice for everyone to retain this purchase channel.
Consumer Behavior Changes
Preferences towards different e-commerce platforms & "unfixed" consumption habits
We observed the consumption habits of post-90’s consumers start to become more rational and noticed an "unfixed" consumption pattern begin to take shape. The final purchase decision is made not only by comparing costs, but also by taking into account the entire chain of efficiency and comprehensive services.
Before the lockdown consumers had more or less fixed habits with preferred e-commerce channels/brands. After experiencing a lengthy lockdown with numerous uncertainties, users who were previously loyal to platforms such as Taobao, Tmall, and Hema turned to JD.com, Meituan, and Dingdong who have done better to help during the lockdown (yes, e-commerce giant Alibaba became surprisingly ‘useless’ during the lockdown).
Loyalty to brands has been shaken
The relationship between brands and suppliers, distributors and local government has become particularly important. In the unstable market during lockdown, whoever was able to deliver to consumers quickly and safely earned the potential to gain more long-term users and foster a strong bond.
Take the brand Bright Dairy for example, as the most accessible local dairy company the brand basically monopolized the supply of all dairy goods during the lockdown period, winning a new group of loyal customers.
Depending on the length and severity lockdowns, consumer loyalty to brands will be further tested. Whether voluntarily or not, during the lockdown most people "had" to try new brands and products. Some of them are likely to abandon their previous go-to choice and turn to more flexible options. At the same time, many consumers have also redefined what is “necessary” and what “can be discarded". These ideas will further affect China's consumption trends in the future.
"Blind worship" of imports will further weaken
This trend has already been observed before 2022. Coupled with the shifting and uncertain anticipation about the future leading to a heightened sense of crisis, more and more young people will gravitate towards economically attractive domestic brands with more stable supply chains.
Which Products & Experiences are Here to Stay
Hoarding food and necessities
We predict that even when supplies become more easily available many households across the country will have formed the habit of hoarding enough food and daily necessities to last for at least a month.
Consumers will stock up on refrigerators and freezers for long-term food storage, bread machines, ovens, rice cookers, and air fryers for various at-home food preparation.
If conditions permit, some families will also begin to seriously consider the possibility of growing food at home.
This is a stark contrast to the delivery-dependent lifestyle many city dwellers (especially the younger generation) have enjoyed.
Products related to at-home personal health and wellness maintenance such as household cleaning equipment/supplies, vitamins, gut health, teeth health, pain killers, and other OTC medicine will be kept on-hand.
Staying safe & enjoying life outdoors
Equipment suitable for indoor sports will also continue to grow in popularity, such as yoga mats, dumbbells, skipping ropes, etc., and along with the equipment, free online tutorials.
For cities which are not under lockdown, camping, a leisure experience that both connects to people to nature while also allowing for a safe distance from crowds, is becoming one of the most popular recreational choices. Related products such as tents and RVs, outdoor clothing, will usher in continuous consumption growth.
Challenges for high-end products
Expensive imported skin care products, mid-to-high-end fashion brands and other brands that aim to add "sophistication" to life will face challenges. In an environment of economic downturn, these items risk being passed over by users first. In the meantime, the offline stores which have been used to create added value for VIP experiences also face the risk of being closed at any time.
