Reports on the demise of China’s brick-and-mortar department stores from Covid and online shopping, it turns out, are highly exaggerated – at least when it comes to Intime.
The Alibaba-owned department store was the world’s top-performing retailer for 13 of its international beauty and cosmetics tenants in 2020, according to a set of brand statistics Intime released in January. Digging into those figures, Intime also demonstrated that physical stores can be a valuable asset for e-commerce, especially in the post-pandemic world.
Despite ongoing Covid-related disruptions and a slowdown in global retail, the Alibaba-backed department store chain effectively fused its online and offline assets into what’s referred to as “New Retail.” The digital transformation of its 65 locations didn’t just allow it to weather the effects of the pandemic, it also created opportunities to revitalize hundreds of beauty counters across China.
Three beauty and cosmetics brands, including La Mer, Lancôme and Estée Lauder, each surpassed RMB100 million, and 22 other brands, including those from Japan and Korea, each exceeded RMB10 million in over-the-counter and “ship-from-counter” sales online.
“We were lucky to come out on top of this crisis thanks to years of digital innovation and transformation,” said Yan Xuekun, Intime CTO. “At Alibaba, we always say believing is seeing instead of the other way around. For Intime, everyone from CEO to store staff embraced digitization very early on, when few believed in the power of new retail.”
Capturing China’s Consumption Boom at Home
Over the past 12 months, China has seen a boom in the market for high-end, imported products, with double-digit growth in luxury goods during the pandemic. According to the latest annual report from China Outbound Tourism Development, Chinese tourists made 155 million outbound trips in 2019, and last year, the pandemic swayed this group and their strong buying power to spend domestically.
As authorized sales channels, high-end department stores like Intime were the next best thing to buying imported luxury goods abroad. Chinese consumers are comfortable paying over-the-counter for products with steeper price tags than online, mainly for the factor of authenticity and instant gratification, explained Zhao Chen, head of Intime cosmetics.
However, with foot traffic reduced early in the year, due to lockdowns, these new, pandemic-motivated consumption patterns would have been impossible to capture without Intime’s online shopping app, Miaojie, which now has over 20 million paid members in China according to the company’s latest statistics.
Building Connectivity Online and Offline
Intime has been merging its offline department sales and operations through Miaojie since 2017. Prior to the pandemic, the retailer had brought most of its retail value chain online. Its merchant-facing side of the app doubles as an all-in-one operating system, offering everything from livestreaming, customer communication, online and offline order processing, inventory management, payments, shipping, after-sale services online and more.
By leveraging Alibaba’s technologies and logistics, the app-enabled beauty counters to transcend physical retail spaces. Over 6,000 sales reps turned to livestreaming to maintain connections with existing customers and reach younger, more digitally native consumers. Retail sales stayed hot, with the Miaojie app taking preorders online during Covid-related lockdowns and beauty counters turned into makeshift mini-distribution hubs, upon store reopening, to shorten inner-city delivery.
“Our goal was never to replace traditional retail stores. Unlike other e-commerce platforms, Miaojie was born to elevate the importance of physical stores. We built the app with offline retail spaces in mind and this integration became critical during the early months of the pandemic,” Yan said.
For La Mer’s beauty counter at Intme’s Hangzhou flagship location, 50% of its sales were online through Miaojie last year, and 5,000 bottles of its most expensive facial serum sold out within minutes of the debut. More importantly, these sales contributed to an overall 200% increase in their overall over-the-counter performance and pulled in new offline customers.
Upgraded Omnichannel Strategies
While most stores stayed idle during lockdown, Intime took aggressive measures to upgrade its omnichannel strategies. The retailer set up a special workforce to analyze new lifestyle shifts, realign purchasing priorities and new engagement strategies.
New trends have emerged: At-home consumption spiked, counter-to-home delivery and in-store pickups became the norm, and demand for skincare and eye makeup soared as people focused on self-care and beautification.
“It was wartime for many of us. The stores were dealing with a new set of challenges, and the key was to reinvent and re-strategize,” said Zhao.
To build a competitive omnichannel strategy, online coupons were injected to reduce retail markups. Livestreams and flash sales were paired with high-end cosmetics and luxury goods to encourage rapid conversion. Pro-bono perks and integrated memberships were bundled at online checkout to encourage repurchases and in-store visits. Users were able to redeem dry-cleaning services, movie tickets and beauty consulting sessions after stores reopened.
As foot traffic slowly returned to normal in the second half of 2020, Intime remained flexible and responsive to a post-Covid economy.
“The pandemic challenged us to reconceptualize the consumer experience. We hope to build more-immersive, entertaining and content-driven scenarios, so to bring a world of wonders to local shoppers,” said Yan.
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