Green Shoots: Business recovery in China post Covid-19 by Chloe Reuter
Chloe Reuter, Founder Partner of Reuter Communications discusses the key ways in which China is getting back on track.
In China, after two months of paralysis and very few new cases of COVID-19, there are encouraging signs of recovery. In our headquarters in Shanghai, we are back in the office albeit with some new measures such as regular temperature checks and frequent disinfecting of the premises. Everyone, and I mean everyone, wears a face mask. Schools may still be shut, much to the frustration of parents and children, but retailers and restaurants are open for business. Apple has reopened all of its stores, Starbucks has reopened 90% of its outlets, luxury brands have followed suit. Last week there were even queues outside the Chanel boutique in Shanghai.
Here are key positive trends we are seeing in the immediate and short term.
Spending at home
In the short-term luxury spending will be focused on China. The current travel restrictions mean that Chinese consumers will not be traveling to the usual shopping destinations outside of the country for retail therapy in the very near future. Malls and shops have reopened, and people are eager to get out and enjoy “feelgood spending” after being confined to their homes. Queues last week at Chanel in Shanghai were an early sign of what we can expect. Simon Williamson, Chief Merchant at Value Retail China, says: ““Our guests are craving experiences and a safe environment in equal measure, it’s the ‘new normal’. Recognizing these key components and our unique ability to stimulate our guests’ senses has benefited us in an earlier than expected return in both footfall and sales.”
With overseas travel restricted in the short term, we see an opportunity for domestic tourism. After being cooped up at home for many weeks, people are looking for ways to get out and experience nature and explore new things. According to online travel company Tongcheng-Elong, the number of daily bookings for hotels and domestic flights is on the increase. Compared to February, there has so far been a 250% growth in bookings for domestic flights for the month of June, and 40% growth in daily bookings for hotels. Michael Faulkner, General Manager of The Middle House (Swire Hotels) agrees: “In the last week or so we’re definitely seeing a pick up in bookings, and also traffic to our restaurants. We are optimistic.”
With ecommerce an integral part of life here, a good way to take the pulse of the recovery is by looking at results. Many high-end beauty brands, such as Shiseido, Lancôme, Estee Lauder, Laneige and SK-II, who took part in Tmall’s 8th March Women’s day promotion saw a 200% increase in sales thanks to discounts and express delivery returns. Elizabeth Arden sold USD21.6 million worth of product during the promotion, accounting for a quarter of its 2019 total sales.
More events – online and offline
After cancellations of major events across the country, there is reason to cheer. Shanghai Fashion Week has moved its iconic week online: 150 brands are expected to live-stream their autumn 2020 collections in late March. WWD China is holding an online-only sustainability-themed campaign, including a digital fashion week and a summit. WWD China’s chief executive officer Lena Yang said the summit “is designed as a solutions-focused conference with companies sharing their strategies, processes and practices, with environmental and social responsibility in mind. The idea for the online summit was born out of the necessity to keep moving our industry forward despite the recent challenges of holding “offline” conferences due to COVID-19.” Key fashion brands such as Hermes and Dior are preparing events in September in China too.
WWD China is holding a 6-week-long online-only sustainability-themed campaign, including a digital fashion week and a summit between March and April
China is indeed on the road to recovery. It won’t be completely smooth. Everyone has been affected on a personal level, and businesses have been hit hard. But there is resilience in the air and an affirmation that with the start of Spring, green shoots are indeed emerging. In my world, those green shoots look like a recovery in online sales, brands reactivating marketing and communication campaigns and traffic jams.