Help Isom IGA recover from devasting floods
Help Isom IGA recover from devasting floods
Over the past year as the COVID-19 virus has spread and mutated throughout the world, IGA USA has been in close contact with our IGA China team, checking in on their health and safety and seeking information. IGA China headquarters is in Wuhan, the epicenter of this global health crisis, along with over 75 stores, plus over 1,000 stores across all of China. They have shared their experiences and recommendations with us as they navigated the pandemic about three months ahead of the U.S.
We recently checked in with IGA Representative to China Dr. Zhe Zeng, asking him what shopper behaviors have changed, what sales look like for independent retailers, and how the continued rise of eCommerce has impacted shopper preferences since Q3 2020.
Dr. Zhe: Life is back to "normal," but not completely across all sectors. People are gathering again in restaurants and scenic spots, and we're also seeing people returning to cinemas and restaurants, with a good percentage of them not wearing masks. This reflects a general boredom of control measures and yearning for closure.
Cross-province traveling, especially for leisure purposes, has been popular since February 2021. And the middle-aged and seniors are resuming their pre-pandemic habits of gathering closely with minimal personal distance.
Compared to the efficiency we’re seeing in many other areas of the world, China still has a ways to go. The slow rate of vaccination has little to do with production, logistics, or coordination capacities. It’s more related to the general reluctance among the public, caused by concerns about how effective it is, and also, what side effects will result.
Preventive measures are slacking as sales trump survival as the top issue. Employees still wear masks and carry out regular cleaning, but 40-50 percent of customers are entering the store without masks, and are no longer told they must put one on to shop.
Some shoppers will still avoid imported and frozen foods, but most of the sales declines are from shoppers lost to other channels, like online shopping, and the public generally getting more price-sensitive and having less disposable income.
Divided by age, income, and sub-cultural elements, shopper behavior in physical stores has become less predictable and more polarized. That said, shoppers of all groups welcome convenience, value, and omni-channel access to products.
Sharing promotions with followers on social media is very popular here, so using online content, like short-form videos, is a very successful marketing tactic.
There are also some long-term changes that have been accelerated by the pandemic:
Combining the above factors, there is a future for neighborhood-based, senior- and kid-friendly community grocery stores featuring daily solutions for food and home life. This could offer salvation for local independent retailers, as these stores offer a differentiated experience that cannot be easily duplicated by online competition.
Supermarkets and hypermarkets that are mediocre in pricing, homogenous in product mix, and dull in shopping experience are bleeding out."
Stores that outlast the pandemic and competition tend to survive on either being very inexpensive or extremely unique and sharp in what they offer and how they offer it. In most upper tier cities of China, supermarkets and hypermarkets that are mediocre in pricing, homogenous in product mix, and dull in shopping experience are bleeding out.
Chinese grocers have seen sales declines relative to the early months of the virus. Retailers who invested in digital tech, eCommerce, and digital marketing clearly grew share and expect to grow at a faster rate compared to their traditional grocery rates. Retailers who did not reinvest in either physical business or in digital are seeing sales declines greater than expected.
Among IGA China retailers, the fast movers are actively mobilizing their cash reserves to help the business go online. Among them are Xinyulou (The Store of Integrity, Retailer of the Year in 2018 and 2019) and BuBuGao (Retailer of the Year in 2020). They are aggressively expanding their online footprint, becoming more differentiated in branding, more creative in content generation, more digitalized and granular in store operation, supply chains management, and inventory control.
On the contrary, the stragglers are busy focusing on the short-term patchworks including doing more sales, setting up more WeChat group chats among neighbors, and having the group operators bombard customers with photos of promotional items.
It depends. For retailers who are in big cities where competitions from crossover online platforms are relentless, eCommerce is more like a must-have survival pack rather than a differentiating edge. For established retailers in lower-tier cities or towns, eCommerce generates new shoppers and increases sales in a steadily incremental manner. By rough estimation, eCommerce covers about 8-12 percent of the current total sales, depending on the effectiveness of digital marketing channels and promotion.
It’s unfortunate to see that some Chinese independent retailers are not holding on to the COVID ‘boon’ in sales. To avoid the pit, retailers around the world must avoid complacency, misjudgment, and wishful thinking. Consumers are shopping faster and in a more disruptive way than many retailers prefer to believe. Location matters less as alternative retailers with strong eCommerce platforms capture previously loyal shoppers.
Independent retailers must offer unique in-store experiences, be constantly ready to engage with online shoppers via content and products, and be committed to invest in digitalization and make necessary organization changes. Only then can they stay competitive and hold on to those COVID sales increases.
8745 West Higgins Rd. Ste 210
Chicago, IL 60631
Phone: (773) 693-4520
Fax: (773) 693-4533
No Comments Yet
Let us know what you think