Consumer habits have dramatically changed in the past decade in China, owing to the rise in disposable income and the prevalence of technology.
One significant growth area resulting from this change is the metamorphosis process that is affecting the entire traditional retail sector. The offline sales methods of physical stores, in fact, are increasingly being revisited and adapted to the world of digitalization and e-commerce.
In the last two years, online shopping has become a well-established trend in China. A multi-channel approach capable of combining factors typical of online with those offline was therefore needed in the retail sector.
Considering that 70% of Chinese consumers are omnichannel (McKinsey, November 2021), the so-called online-to-offline (O2O) integration strategy, has become the most important growth driver for brands and their FMCG (Fast-moving consumer goods) businesses.
O2O boutiques are new places where the boundaries between physical and digital are gradually disappearing. The main characteristics of these new spaces are:
– unified loyalty systems which create a solid community capable of taking advantage of the same advantages both in the online and offline purchase phase;
– online customer service equal to the in-store experience, in which the shopping assistants present themselves as highly qualified;
– the increasingly “experiential” offer, having digital elements that allow for both face-to-face and online purchases.
An example is the TX Huaihai Youth Energy Center in Shanghai which presents itself as an innovative shopping center that speaks to the new generations: a space used for shopping but at the same time an immersive art center, mainly digital, to promote young artists and the latest cultural and artistic novelties.
Online flagship stores, on the other hand, are becoming spaces in which to fully express brand values, knowing that in most cases the consumer will finalize his purchase offline, after having experienced it in person.
In the retail world, O2O is set to double the market share by 2022. The impact of these new business models is expected to be strong enough to increase from around 10% of the market in 2019 to 20 -25% by the end of 2022.
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