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Conventional Stores Rally Against E-tailers With Multi-Channel Move

Bricks-and-mortar retailers across the mainland are adopting an array of new sales tactics and incentives to win back market share lost to online platforms, with Shanghai's No. 1 Yaohan department store proving particularly innovative.

Photo: O2O: An increasingly popular option. (Xinhua News Agency)
O2O: An increasingly popular option.
Photo: O2O: An increasingly popular option. (Xinhua News Agency)
O2O: An increasingly popular option.

Suffering from the huge inroads being made by e-tailers, a number of the mainland's more conventional shopping outlets fighting back. This has seen department stores and shopping centres adopting a whole new armoury of sales tactics, with a number of them reporting remarkable successes.

The Shanghai No. 1 Yaohan department store in Pudong, for instance, is claiming its cross-year sales activities on New Year's Day delivered a truly auspicious start to 2015. A perennial champion of year-end sales, this year saw it launch its 11th such promotion.

At the top of its strategy list were a range of attractive incentives, a comprehensive variety of merchandise and the offer of a number of high-value discount coupons. The store also began to accept mobile transactions in order to capitalise on online settlement methods, while making the payment process as easy as possible for shoppers. The promotion also adopted a truly multi-channel strategy. This incorporated an online-to-offline (O2O) element, coupled with its existing strengths of verified merchandise, reasonable prices and a good overall shopping experience.

The store kicked off the promotion at 8am on New Year's Eve, with the event generating a total sales volume of Rmb710 million before it ended at 2am on New Year's Day. This broke the store's single-day sales record, with figures 23.3% up when compared to last year's sale. The promotion also attracted 213,000 customers, representing a 22.6% increase.

Overall, the outlet employed a variety of new tactics in its bid to retain its number one position for cross-year promotions. Discount coupons, issued to customers who had reached a certain purchase volumes, were widely accepted throughout the entire store and could be used to purchase items generally not sold at a discount – such as gold bars, gold ornaments, Apple products, luxury watches and jewellery.

While it is nothing new for physical stores to offer O2O, this was the first time Shanghai No. 1 Yaohan had trialled this particular approach. As part of the promotion, the store's "I Love Food" department selected six popular food items for an online flash sale promotion, while prices for many items were set below even those offered at www.yhd.com – the mainland food e-commerce platform largely owned by Wal-Mart – during the "Double 11" shopping period. In addition, prior to the start of the promotion, customers could download "hot-selling item tokens" from the store's WeChat public account.

As of last year, as part of an initiative aimed at facilitating easier customer payments, the store has teamed up with Bailian E-commerce Co Ltd as its designated mobile payment partner. This new option is said to be already delivering impressive results, with the partnership resulting in the introduction of the "OK card wallet", an upgraded payment system.

After installing the "OK Pay" (OK Zhifu) app and activating the card wallet, customers can choose to set a limit for their mobile payment facility. During the cross-year promotion period, customers only needed to scan their QR code at the cash desk to complete a transaction. This differed from the previous year when a pre-paid method was employed, which saw any pre-paid amount not spent kept by the store. This year, any outstanding balance was remitted to the OK card and could be used for later purchases.

For the first time, the store also offered a nationwide delivery service similar to that of online retailers. This was designed to complement its existing strengths in customer service and the quality of its overall shopping experience.

According to a survey jointly commissioned by the commerce committees of Shanghai's 17 districts and counties, together with the Bailian Group, 434 large and medium-sized commercial enterprises reported a total sales value of Rmb7.488 billion during the four-day period from 31 December 2014 to 3 January 2015. This represented a10.71% year-on-year growth and established a new cross-year sales record.

Kelly Dai, Shanghai Office

Content provided by Picture: HKTDC Research
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