WHAT’S IN STORE FOR
THE YEAR OF THE HORSE?
CHINA AND RETAIL
ARE A DYNAMIC
As China rebalances there will be significant changes and challenges
which bring with them tremendous opportunities.
Retail is always fast moving, dynamic and change is a constant.
The two together, retail in China, represent a potent recipe for success
as long as you can orchestrate it effectively and no one has more
experience in the field, at the sharp end of retail, than the Smollan and
Always partnership, with activities in field marketing and activation in
well over 600 cities right across China.
So, as we enter a new Chinese year - the Year of the Horse, we have
put together the 8 key retail trends you should be watching out for and
creating strategies and activities around them.
To learn more about the Chinese New Year and how the holiday unlocks
year-round Brand and retailer opportunities download this informative
and visual BrandZTM study: www.wpp.com/chinanewyear
We hope that this will help your China insight and to better understand
the fast changing, retail China.
Wishing you a very happy and successful Year of the Horse.
E-COMMERCE WILL CONTINUE TO ENGULF MANY
AREAS OF RETAIL WORLDWIDE, BUT IT’S IN CHINA
THAT WE FULLY EXPECT TO SEE THE BIGGEST SURGE.
So much that by the end of the Year of
the Horse China will become the biggest
e-commerce market in the universe. Rising
digital penetration amongst the Chinese
and the development of digital banking (see
‘bank in the hand’ below), is set to sharpen
both the appetite and ability to purchase
anything and everything online. Businesses
like Taobao (consumer-to-consumer online
retail) and Tmall (b2c online retail) are
already leading the charge – and indeed
Taobao’s creation of a safe and cheap
option for everyone to be buyers and sellers
in a digital market place looks set to cement
e-commerce in Chinese daily life.
It’s inevitable that as other enterprises
realise that online can provide a greater
return on investment, they will start to
put more effort and resources into it.
We foresee more and more businesses
beginning to use the digital platform
to stimulate their flat traditional retail
sales, further fueling the digital retail
revolution. Undoubtedly a key enabler of
this continued growth will be China’s low
cost, dynamic supply chain; products can
be delivered swiftly with little or no extra
cost to consumers and this, coupled with
the decreasing amount of time available to
visit stores physically, will help make online
shopping a nationwide norm.
PULLS A PUNCH
RELATIVELY LOW NUMBERS OF CAR OWNERS BY POPULATION,
COMBINED WITH CITY CONGESTION, HAS MEANT CHINESE
SHOPPERS HAVE ALWAYS VALUED CONVENIENCE RETAILING.
So far this has not represented a competitive
threat for large format retailers but in
the Year of the Horse we expect this to
change. Convenience retailers’ growing
understanding of the power they have to
compete as a true retailer – rather than
just an ‘impulse location’ – will exert more
pressure on ‘traditional’ retail. Their vast
distribution network is already in place and
as they tweak their product offering to
increase the value of basket sizes, we predict
Around the world, we’ve witnessed this retail
approach lead the consumer away from
larger formats and we fully anticipate it will
now do the same in China. Look out for
competitors vying to buy the well-established
traditional branded convenience stores as
international retailers realise that these small
outlets are real strongholds. Winning will
come at a price however, as critical mass and
distribution affordability will ultimately be the
determining factors for business success.
These will take time to set up, and whether
already entrenched convenience brands will
be able to leverage their head start remains
to be seen. Regardless of who and how
this slice of the retailing pie expands, we’re
confident that it will prove to be a very robust
format in years to come.
A BANK IN THE HAND
AS E-COMMERCE CONTINUES TO DEVELOP FAST,
SO TOO WILL THE ABILITY OF CHINESE CONSUMERS
TO BANK VIA MOBILE PLATFORMS.
We’re already seeing this happening
in multiple ways, from street vendors
processing credit cards via their android
tablets, to e-commerce companies like
Alibaba offering their consumers small
savings accounts, to phone-to-phone SMS
transfers. Tencent (China’s largest internet
portal) has started offering customers a
banking platform and with its 400million+
users, it’s destined to have a big impact.
In the Year of the Horse we’ll witness
consumers being able to use, share and
spend money faster and more easily, leading
to more transactions in more locations.
This is good news for small businesses
that have previously been constrained by
payment issues, and might well regenerate
the steadily shrinking small, informal trader.
Just imagine how the ability to transfer
a relatively small sum of money with a
simple cellphone connection will enable
transactions that were simply impossible in
smaller rural areas. We expect to see points
of purchase springing up virtually anywhere
– not just in markets, but even on the most
remote street corner. Such is the growing
power of digital and peer-to-peer banking.
BECOME MASTERS OF
THEIR OWN UNIVERSE
YOU CAN SAFELY ASSUME THAT LOCAL RETAILERS
WILL CONTINUE ON THEIR PATH OF EXTRAORDINARY
EVOLUTION TO BECOMING WORLD CLASS.
Undoubtedly, they will become more sophisticated in their
deployment of systems, stricter in their management and
begin to deliver better value than the international retailers
currently fighting for market share inside China. Local
retailers, either national or region-specific, are already
starting to outstrip their international counterparts and in
the Year of the Horse you can expect this to accelerate,
with geographic expansion and increased output through
existing sites. Local retailers already have the ability, through
multiple means, to extract more profit from their locations,
with the added advantage of ‘neighbourhood’ knowledge
and connectivity. As they absorb elements of global retailing
best practice, we forecast an ever-improving performance.
EXECUTE TO SURVIVE
AS SUCCESS OUTSIDE ‘TRADITIONAL’ BRICKS AND MORTAR
RETAILERS CONTINUES, WE ANTICIPATE INCREASED
PRESSURE ON MANUFACTURERS TO CONJURE UP GROWTH.
This is most likely to be achieved through a
combination of basic marketing principles
and decreasing costs in the system which,
in turn, will demand greater sophistication
in retail execution and sales forces across
China. However, this kind of expertise and
culture is not developed overnight, and it’s
reasonable to speculate that specialists
in this area will start taking over from the
distributors that typically undertake this
function. This does not bode well for these
distribution companies that, until now, have
had significant power – handling everything
from the book, to the movement of physical
stock, to in-store dealings. All this has
been done with very little visibility for the
brand owner, but as growth was so good,
everyone was happy. Now, with the slowing
in retail sales, we predict that a laser-sharp
focus will be on delivering growth at lower
cost. What will this mean? More science
in field sales operation, better technology
to drive execution, and complete visibility
for the brand owner in terms of what it is
paying for. All of these demands present a
very real problem for distributors that are
currently not geared for this level of in-store
implementation. Don’t be surprised if there’s
a sudden growth of outsourced sales force
specialists, and an increase in the standard
of in-store execution as a consequence.
PRIME TIME FOR
LUXURY HAS BEEN A COMMON THEME
IN CHINA’S RECENT RETAIL HISTORY.
From the Chinese going abroad to buy,
Hong Kong as a luxury goods market and
every global luxury and premium brand
finding a home in the ‘high streets’ and
top class malls of China, luxury is seen
as more than a status symbol; it is the
evaluation of the elite and the definition of
the ladder of success. The hunger for luxury
is, indisputably, one of the most defining
features of the rising middle class and new
Chinese generation. It was only a matter of
time before we saw the emergence of home
grown luxury brands and we envisage them
gaining traction in the Year of the Horse
– the ability to mix national pride, artisan
skills and high-end luxury is an unbeatable
formula in China.
In our opinion, this segment will take time to
build as the mindset of ‘foreign = better’ is
still entrenched but we nonetheless believe
it will continue to grow and result in the
formation of some very strong, innovative
Chinese luxury brands. We expect to see
these starting to assert their place in
Chinese decadence and also emerging
as global players within the luxury market.
Having watched the creation of Chinese
brands in the toughest of conditions
locally, we have no doubt that if they can
establish their presence overseas, they will
significantly strengthen their position within
the minds of local Chinese. This is a long
road and the Year of the Horse will be an
important staging post in the journey.
通 提 GAMIFICATION
过 供 DATA INSIGHT
DATA IS OF COURSE ONE OF THE MOST IMPORTANT
戏 据 AND ALSO COMPLEX KEYS TO THE RETAIL CASTLE.
There are massive amounts available from
‘likes’ and ‘wants’ to shopping patterns
and the Chinese consumer is constantly
inputting data to social discussions, chats
and review sites. However, for some time
the burning question has been how to
extract relevant and usable data for a brand.
In the Year of the Horse, we foresee gaming
will become a major part of the plan.
Consumers in China love the novelty of
gaming and we know they will provide
information if asked. The ability to ‘gamify’
users’ experience with a brand to get the
best quality consumer feedback has proved
to be one of the most powerful forms of
information gathering, and we expect to
see this gain real traction and begin to drive
brand behaviour. Social media has given us
some insight into the users’ experience but
none has engaged, connected or interacted
with consumers in the way gamification
has proved itself able to. There is no doubt
that eliciting meaningful data is of the
utmost importance in driving growth for
brands and that gaming will play a key part
in the process for smart brand owners and
信 并 TRUST IS PRICELESS
AND WILL CREATE A
任 为 CLIMATE FOR GROWTH
FOOD SAFETY WILL CONTINUE TO BE A MASSIVE
无 务 CONCERN THROUGHOUT CHINA, IN THE TRADINGPAST
IT HAS EVEN SPARKED CROSS-BORDER
价 成 PRODUCTS SUCH AS INFANT FORMULA MILK.
For many there is a breakdown in trust for
some homegrown food brands, with the
quality perceived as being far lower than
the comparative imports. We anticipate
this will create a great growth opportunity
for multinationals. With their ability to
claim global standards and the trust and
footprint to back these claims up, we
foresee international brands able to push
slightly harder on sales and margins.
However, the pedestal is a wobbly one
as any perceived advantages can just
as quickly disappear at the emergence
of any hint of scandal, no matter how
small. Nevertheless, we will be looking
to international brands in key categories
of food, infant care and the like to really
lead the way with growth in the Year of
the Horse. Chinese put the value of trust
way beyond a premium price point and if
a brand can guarantee them that safety,
they will be willing to pay the extra for it.
Expect Chinese brands to intensify their
efforts to improve their supply chain,
production chain of custody and intensify
their communication on safety and
security in store. This sector is going to
be hugely dynamic.
HISTORY OF THE
CHINESE NEW YEAR
THE CHINESE NEW YEAR, KNOWN IN
CHINA AS SPRING FESTIVAL, IS THE
COUNTRY’S MOST IMPORTANT HOLIDAY.
The Chinese New Year is based on a calendar established
about 4,700 years ago. Various legends explain the origin of
the Chinese New Year. One describes how people dreaded
the New Year because a fearsome beast named Nian
annually terrorised the population and devoured children.
Then one year a child appeared dressed in red. The beast,
frightened by the colour, fled and never returned. That’s why
the Chinese New Year traditionally features red lanterns and
noisy firecrackers to ward off evil spirits.
The Chinese New Year is based on a calendar that
calculates time using both lunar and solar events. Time
passes in 12-year cycles with each year represented by an
animal of the Chinese zodiac.
Traditionally, people prepare special foods and hope for
a future of good luck. They attend many family dinners,
starting with a New Year’s Eve feast. Travel home for the
family reunion produces a mass migration. The New Year
period culminates in the lantern festival, a joyful celebration
around the first new moon in the lunar New Year.
To learn more about the Chinese New Year
and how the holiday unlocks year-round
Brand and retailer opportunities download
this informative and visual BrandZTM study.
Get the interactive version on your iPad
Download the free WPP BrandZ app and
select the ‘China New Year Publication’
THE YEAR OF THE HORSE
Believers of the Chinese astrology attribute a person’s
personality characteristics to the profiles of their birth year
animal. It’s not that simple of course. Following the Chinese
view of the world as comprised of opposites, the zodiac animals
are equally divided into yin and yang. They are also combined,
according to their similarities, into categories called trines.
In addition, each animal is connected to one of five elements:
wood, fire, earth, metal and water. The possible combination
of animals and elements produces a 60-year cycle and a
People who are born in the year of the horse are believed to
have these characteristics:
Cheerful, popular, quick-witted, changeable, earthy,
perceptive, talkative, agile – mentally and physically,
magnetic, intelligent, astute, flexible and open-minded.
They can also be fickle, arrogant, childish, anxious,
gullible and stubborn.
Smollan is an international field marketing
organisation delivering growth for clients
across five continents. With extensive
industry experience, an exceptional human
platform and sophisticated systems,
Smollan has provided consistent excellence
in operational execution to retailers and
manufacturers for three generations.
Smollan delivers growth by acting as an
extension of our clients’ brands:
• Ensuring perfect representation on shelf
through outsourced sales forces, and instore merchandising, stock management
and promotional implementation;
• Engaging shoppers to create an
experience that delivers on the client’s
brand promise; and
• Providing actionable insights into the trade
through Smollan’s technology offering
of category management, dashboard
reporting and a custom mobility platform.
From a traditional sales agency, founded in
South Africa in 1931, Smollan has grown
into a full-service fieldmarketing company
with over 49,000 employees.
Always is the largest field marketing
services agency in China, providing
total field marketing solutions from
“Sell In” to “Sell Out”, from “Activation
Strategic Planning” to “On-The-Ground
Execution”. With a network of 90+
fully-owned offices throughout China,
Always has the capabilities to activate
in 600+ Tier 1 to Tier 6 cities. Services
include Promoter & Field Marketer
Management, In-Store Activation /
Promotion, Retail Audit / Mystery
Shopper, Event / Road Show, POSM
Management and Premium / Gifting.
Always manages 800+ projects on
an annual basis across 500+ cities,
executing more than 3.5 million
activations on behalf of a portfolio of
President, Always Marketing Services
CEO, Smollan China
Established in 1998 by WPP and constantly updated, the BrandZ™ database of brand analytics
and equity is the world’s largest and most authoritative containing over two million consumers
interviews about more than 10,000 different brands in over 30 countries. BrandZ™ is
proprietary to WPP companies. For further information about BrandZ™ contact Doreen Wang,
Millward Brown China Doreen.Wang@millwardbrown.com or David Roth firstname.lastname@example.org
PHOTOGRAPHY BY CECILIE ØSTERGREN
IN COLLABORATION WITH