Lessons from lockdown: Adapting to life during the pandemic
Originally published on April 1 2020 for Red Unit
China has paved the way for coping with the COVID-19 crisis
Photo credit: Timon Studler/Unsplash
China's entrepreneurial spirit is unshakeable, businesses big and small have adapted to a world changed by quarantine and social distancing. From restaurants operating as takeaway services to retailers moving online, there are a few lessons from the first nation to control the pandemic.
E-commerce thrives despite uncertainty
E-commerce is not a new industry in China. Tech giants Alibaba and Tencent have landscaped and dominated China's tech scene for over 20 years. In that time, both companies have become digital and commercial powerhouses. Tencent has seen tremendous success with WeChat, the Swiss-Army Knife of apps, which is inescapable in Mainland China. Alibaba's Alipay is a close second, but it is e-commerce platforms Taobao and Tmall that set the company apart in the digital world.
At the peak of the COVID-19 outbreak, domestic and international retailers found themselves at the mercy of closures across the country. Those that preferred traditional outlets found themselves scrambling to move offline sales online.
IKEA, known for favouring traditional retailing, finally went online after two-months of nationwide store closures would have spelled disaster for the company. Their flagship store on Tmall gained 874,000 followers in 5 days and the company's top 15 products generated over 408,000 RMB in sales. As a big name brand, IKEA had an easier transition than most. Chinese consumers connect with IKEA on a personal level and going online could only benefit the company by making them more accessible than before.
Not all areas of retail suffered during China's lockdown with cosmetics and skincare companies reporting steady growth during the quarantine. Estée Lauder saw a growth of 135 percent as online sales skyrocketed. With time on their hands and delivery services still operating, Chinese consumers experimented with products at home. Millennial and Gen-Z shoppers led the charge to find the next big thing in beauty. Allowing consumers to create their own stories has brought many brands to new clients as they connect with products their peers recommend. Fresh produce and medical supplies are at the forefront of the consumer's mind While modern Chinese consumers frequently used delivery services before the COVID-19 outbreak, they became a lifeline during the lockdown. The number of users on fresh produce platforms such as Hema and Dingong Maicai doubled. Compared with Chinese New Year 2019, Hema saw triple the number of daily active users over Chinese New Year 2020, going from 1.3 million users last year to over 3 million in the same period this year. This uptick in users wasn't limited to fresh produce apps as international e-commerce apps saw a rise in engagement and popularity throughout the outbreak. Omall and Haitunjia saw a massive increase in popularity as they shot up the iOS store charts. Omall went from 161st to 2nd in less than two weeks as Chinese consumers looked to these platforms for surgical masks after a shortage hit the country in February. Much like the retail sector, the fresh produce market relies on peer reviews, however, during China's quarantine consumers prioritised staying healthy and maintaining social distancing protocol. The Chinese government created a heroic narrative around kuaidi, healthcare professionals, and retail workers, commending them for their bravery and contribution to society. These stories allowed isolated citizens to emotionally connect with key workers and pushed them to make their own contribution to society by bringing the world to their doorstep.
China's healthcare system also underwent a technological revolution Automated drones were deployed in hospitals and across areas of high infection allowing people to maintain safe social distancing practices. Many hospitals employed robots to diagnose patients, creating minimal human contact and slowing the spread of the virus among medical professionals and the general public. Drones weren't limited to the medical and healthcare sectors, as JD.com had already been experimenting with self-driving drones. As COVID-19 spread, delivery drones were also used to minimise social contact during the delivery of food and medical supplies, especially in hard-hit areas such as Wuhan. Minimal social contact isn't the end of retail or tourism
Consumers have moved away from in-store experience after many retailers went online. Even after lockdown has ended shoppers continue to favour VR experiences as they regain the confidence to visit malls and increase their social contact. After months of watching KOLs live-streaming online, customers want an immersive online experience to connect to products on a personal level.
Unboxing videos and instruction video content aren't new in a world of Youtube influencers, but Chinese KOLs and consumers are looking for something that stands out. Young shoppers aren't as brand loyal as their elders and unique brands with bold presentation or innovative style are going to look great on their Douyin feed, Little Red Book or WeChat moments. Online experiences weren't limited to retail, the tourism sector saw the benefits of virtual reality too.Galleries, museums and tourist sites across China gave virtual tours during quarantine, Beijing's Ullens Center for Contemporary Art (UCCA) offered VR tours of their exhibitions throughout lockdown. Theatre and arts groups also saw the benefits of online concerts as quarantine friendly content gave undiscovered and struggling artists a platform to share their talents. These grassroots movements and collective concerts connected amateurs and professionals during collective isolation as well as offering support to those most in need, including groups of artists creating online mixed tapes to support health care works in Wuhan.
Being sensitive to the current climate pays off
Compared to the same period last year, companies working in China reduced their Chinese New Year marketing budgets by around 11.5 percent. Instead many chose to focus on what their customers were doing during lockdown, including sharing short video content and live streaming online. Strengthening online presence and watching customers create their own experience has been a boon to companies struggling through the COVID-19 crisis. Peer reviews are incredibly important in China, and high praise means higher sales. The ever-expanding Chinese middle class wants to engage with brands that share their values and align with their lifestyle.
As consumers recover from lockdown, companies will have to pay close attention to what they are looking for. In a post-isolation age, the general public is already looking to reconnect with society. Brands that can cater to this need will no doubt find greater success than those that lean into commercialism.
Prepare for 'revenge spending'
As Chinese consumers grow more hopeful, they are willing to spend more on leisure after months of uncertainty. Spending has increased by 38 percent across all age groups as quarantine restrictions are lifted and people are able to socialise again. Taobao is known for promoting 'shopping holidays', including China's Black Friday equivalent, Single's Day. Single's day is notorious for being China's biggest shopping day of the year. Enter International Women's Day 2020, this year companies across the board saw increased spending on March 8th outstripping Single's Day 2019. Tmall flagship stores in the fashion, cosmetics and food sectors saw a huge increase in sales. Nike saw a 25 percent growth in sales this Women's Day as consumers moved away from medicine and healthcare to sport and fitness. Snack aficionados, Three Squirrels, grew by 19 percent and cosmetics retailer Perfect Diary boasted a 29 percent growth for the same period. These companies saw moderate impact compared to retailers who were previously reliant on offline sales.
Runaway success stories come from brands that boosted their online presence during lockdown. After moving their sales online, Lancôme saw an unprecedented growth of 110 percent this Women's Day compared with the same period in March 2019.
How can you adapt to the current landscape?
As the UK struggles with quarantine, planning for the future is key. Creating sustainable strategies for what comes after COVID-19 means strengthening your online presence. Experimenting with digital marketing is a great way to see what will come next for your business as the world moves towards a new normal after the pandemic.
China is bouncing back from lockdown. In this uncertain time, the Chinese economy will be the blueprint for recovery as well as a bolster for businesses struggling with the lull across Europe and North America. Moving away from pure commercialism and connecting with consumers on a personal level is instrumental as individuals look to society for reassurance after months of isolation. COVID-19 has changed the way people view the world and connect with each other. It's time for brands to create deeper connections with society and aid long-term recovery in a post-pandemic world.