Retail prospects| closed doors in the epidemic, where does the survival path of high-end commercial complexes point?

On April 29, beijing SKP announced that its location has been divided into prevention areas, and in order to avoid crowd gathering, shopping malls have suspended business in cooperation with epidemic control.

In fact, this has been happening repeatedly in Shanghai over the past month or so. So, is Beijing about to be "Shanghai"? The high-end commercial complex has a full contingency plan, and the crisis should have been perceived in advance, but the crisis did not leave the mall with a chance to breathe.

In Shanghai, for example, the closure of physical stores has directly led to a complete shutdown of offline traffic, but most shopping malls will not sit still. The Internet has become another track for shopping malls and tenants to actively help themselves, through innovations such as "cloud shopping", some shopping malls have enabled stores to connect with customers "point-to-point", realizing the digital transformation of the "consumer-brand-shopping mall" relationship. In addition, online activities are also a major attempt to maintain the stickiness of members in shopping malls, and many high-end retail malls invite co-bloggers or institutions to create online interactions on the themes of sports, beauty, cooking and art for members.

Online activities can remind consumer groups to some extent that the mall is still with customers, but can this online relationship translate into actual sales performance? In the present moment, the answer is no. At present, the demand price elasticity of daily necessities has become the priority of residents to "hoard goods", the Engel coefficient of residents' consumption is unprecedentedly high, coupled with the reading volume, click rate, logistics restrictions and other factors promoted online have further increased the difficulty of consumption conversion, so these measures have not achieved the effect of stirring up thousands of waves.

Hang Lung Cloud shop and K11 online VR exhibition

In addition, the tenant side of the commercial center also brings new pressure to the landlord side. At present, the rent reduction and reduction of state-owned operating real estate has been arranged by the State-owned Assets Supervision and Administration Commission, and the state only encourages the rent reduction of non-state-owned operating real estate, and the actual policy support and transfer payment are not enough. This is in stark contrast to the situation in 2020, when the outbreak began in 2020, hundreds of shopping malls across the country took the initiative to reduce rent for tenants. This year, Shanghai shopping malls are facing about 1/5 of customer terminations, and in the face of the continuous loss of tenants, the number of private enterprise shopping malls that actively respond to the call for rent reduction has decreased significantly.

In contrast, April has gained a lot of topics and heat in the new world, and the limited virtual fashion released by designers in the virtual fashion section of The Little Red Book has attracted great attention in the fashion and technology industry.

As early as the epidemic in March 2020, Xintiandi joined hands with Tmall to create "Fashion Week on the Cloud". The 2022 Shanghai Fashion Week Autumn and Winter Show was postponed due to the epidemic, and Design Social, a content innovation arm of Xintiandi, invited nine designers (ANNAKIKI, CHENPENG, FENGYI TAN, HAIZHEN WANG, MASHA MA, ZI II CI IEN, 5MIN, JIASHENG: HALF-MADE_) to release virtual fashion in the form of digital collections in the Little Red Book virtual fashion section R-SPACE in April. Conveying the concept: Xintiandi is a new world for designers and brands. Even if fashion lovers stay at home, they can participate in this launch and realize the "buy after show" of virtual fashion.

Zhi Chen, the brand manager of zi II CI IEN, who participated in this launch, presented his ready-to-wear collection at the Xintiandi runway. In an interview with WWD, she said that its brand design department has already begun the process of fashion virtualization, and mentioned that the group of designer brands shows their personal fashion attitude and recognition of brand value through clothing, and the virtual fashion of environmental protection and low consumption is even more suitable for the development of designer brands than physical clothing.

This event may be a part of Shanghai Xintiandi's long-term strategy for commercial upgrading and business format adjustment, but the current epidemic undoubtedly provides an opportunity for it to leapfrog the restrictions of physical shopping malls to achieve digital transformation, and it is also an instant and accurate pursuit of online "fashion enthusiast" traffic during the offline traffic shutdown stage.

Xintiandi DESIGN SOCIAL linked up with cutting-edge designer Zhi Chen to release the virtual fashion

With the closure of physical stores, China's high-end consumers are currently most concerned only about the boutique chain supermarkets that provide daily necessities, rather than the commercial complex itself behind it. In fact, the main product of high-end retail is not a necessity, and behind each purchase represents the consumer's recognition of brand value and product. When the epidemic subsides and offline traffic returns, can the retaliatory consumption expected by shopping malls and brands come as promised?

Based on mobile operator mobile phone positioning data, after the unsealing of the new crown epidemic in Wuhan in 2020, the traffic of shopping malls did not achieve an explosive blowout, and even if the flow of urban population and goods returned to normal levels, the daily population flow of shopping malls was still 1/3 lower than before the lockdown. After the end of the closure, tourism, independent catering and other types of formats may become potential traffic competition for large commercial centers.

The black line in the figure shows the change in the daily traffic index of shopping malls from the lockdown of Wuhan to the unsealing stage in 2020

The data is from Tsinghua University-Chinese University, Hong Kong Economic Data Research Center

Recently, a number of commercial complexes of the Yangtze River Delta Retail Association have proposed the concept of "hugging and heating" that has returned after the epidemic, that is, the cross-selling of e-commerce platforms has been applied to offline to achieve merchant linkage, with cross-store consumption coupons deducted, multi-brand group purchases.

Designer Virgil Abloh made the following point about brick-and-mortar retail in his early years: "I personally love physical retail, I think it adds color to clothing versus online. For me,it was about making a memorable experience to sort of understand the brand even better." For me, it means creating an unforgettable experience that allows me to better understand the brand. ”

Since the outbreak, the actions of many international brands have reflected their strategy of focusing on the high-end market: Chanel launched a total of 6 rounds of price increases during the epidemic; in March 2022, Richemont Group's brand Chloé cancelled the secondary line SeeByChloé; in February 2022, LOUIS Vuitton, a subsidiary of LVMH, announced a price increase of about 10% for some products. In April of the same year, LVMH classified customers three times at a high-level meeting and used price increases as a brand moat, betting on high-end product lines and increasing the price of entry-level products.

High-end commercial complexes face a particularly special group, and the outbreak of the epidemic has led to changes in the structure of luxury goods customers. In fact, the real positioning of high-end retail is not the occasional pursuit of the mass market, but the daily needs of high-net-worth customer groups.

At the offline level, the grasp of high-net-worth customers requires close cooperation with brands and the ultimate customer experience. Take, for example, Le Bon Marché, a boutique department store in Paris, which was used in the LVMH Group report as a model for top-notch customer experience. The mall also experienced nearly 3 months of epidemic control closures within a year, but in the first week of the restart in November 2020, although it did not introduce discounts at the overall level of the mall, it created a sales record through "art exhibition + Christmas pop-up + black five atmosphere + double membership points". In addition, the shopping mall also regularly selects core customers with considerable overall consumption value to participate in brand private activities, and solves the boutique choice of all options for food, clothing, housing and transportation. The mall also has dedicated buyers and stylists for key customers, and even tailor-made them from the design draft.

Changes in the WeChat index for the keywords "Hang Lung" and "K11" between May 2020 and May 2021

In the domestic market, the most able to mobilize consumers' enthusiasm for purchasing is the 520 "Confession of Love" opportunity. According to the WeChat index, from May 2020 to May 2021, the peak data values of K11 and Hang Lung fluctuated around May 20. Predictably, if the major shopping malls open normally by May 20, it will be a great opportunity to return. If the conditions are not allowed, it is a digital contest of offline to online.

For high-end commercial complexes, the impact of the epidemic is definitely not just to press the pause button, and to continue to play the glory of the past after a day of cloud opening. According to the experience of the past few years, the new crown epidemic is more like a forced shutdown, some players have never been online since then, only active players can seize the opportunity to restart at a high speed and start a new battle in the post-epidemic era. WWD

Wrote Liu Ziyi

Editing By Carrie

Image source courtesy of the official

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