LONDON — While the world’s largest apparel market is expected to see a 15 percent contraction this year, some luxury brands and premium retailers are seeing a robust rebound in China.
The Alibaba-owned Intime Retail, one of the nation’s largest high-end retailers, with tenants ranging from Louis Vuitton, Hermès and Cartier to Lane Crawford, saw online business quadruple and revenue bounce back to normal in May thanks to live-streaming, free shipping, as well as a series of campaigns and sales initiatives, according to Xiaodong Chen, president and chief executive officer of the company.
Some 5,000 sales associates from Intime’s store registered as live-streamers to host around 200 sessions daily on Taobao Live during the height of the outbreak to engage with and acquire new users. Online sales now represent more than 20 percent of Intime’s business, and Chen expects the percentage will go up to 50 percent by next May.
Intime introduced free shipping for all in-app purchases and partnered with Cainiao, Alibaba’s logistics network, to help cover deliveries within a 10-kilometer radius of any store location, to further encourage online spending.
The retailer also worked with local governments and urged consumers to use coupons and subsidies to shop at its stores, which greatly stimulated price-sensitive customers’ spending, and rolled out in-store flash sale events to help tenants boost sales in a short period of time.
Founded as a department store by Shen Guojun in 1998 in Hangzhou, where Alibaba is headquartered, Intime Retail now operates 65 department stores and shopping malls across China, e-commerce application Miaojie, and four high-end retail concepts — the “in” series, with Yintai Center in01 and Wangfujing Yintai in88 in Beijing, Hubin Yintai in77 in Hangzhou and Yintai Center in99 in Chengdu.
The company was the first Mainland retailer to be listed in Hong Kong in 2007, and it teamed with Alibaba from 2015 to advance its digital transformation. Intime Retail was later privatized by Alibaba in 2017 for 19.8 billion Hong Kong dollars, or $2.55 billion at current exchange, to let the company innovate and experiment further in the omnichannel space without limitations or pressure from investors.
In an exclusive interview with WWD, Chen talks about Intime’s swift recovery, how the company retained its consumers during the pandemic, and what ailing retailers in the West can learn from Intime and China’s digital transformation.
WWD: How did Intime keep the business going and growing during the COVID-19 outbreak in China? Compared to a year earlier, how is Intime faring?
Xiaodong Chen: Intime Retail is under the retail arm of Alibaba Group. During the COVID-19 outbreak, we closed all our stores to safeguard our employees. We maintained one-third of our revenue during the same period from last year, mostly through online orders. By May, our sales number has gone back to the same level last year, while the footfall was only 70 percent in our stores. This means sales conversion has gone up. And our online sales grew fourfold, representing more than 20 percent of our business. By next May, we expect the percentage will go up to 50 percent.
WWD: During the recovery, have you seen any new trends or changes in consumer habits or preferences?
X.C: The biggest shift is that consumers are paying more attention to wellness, as well as expressing confidence and beauty. They are willing to spend on high-end luxuries across all our channels, from physical stores in prime locations in the cities to our own e-commerce platform Miaojie, and flagship stores in Alibaba’s Tmall, Alipay and live-streaming platforms. You will be able to buy what our tenants like Gucci or Louis Vuitton are selling in their stores from us.
WWD: How did the pandemic accelerate Intime’s use of digital tools?
X.C: The pandemic offers a big opportunity for us and China’s retail industry to embrace digital transformation. It also acts as a great push for our targeted customers, who were reluctant to engage with us via digital platforms to experience what we have been working on in recent years.
Digitalization at Intime has three layers. Firstly, it means the digitization of our customers. More than 90 percent of our clients finish their transactions via the Miaojie app. Secondly, the digitization of products. Some 92 percent of our offerings are available online. Thirdly, the digitization of physical space. All stores and their services, facilities and equipment have been brought to your online platform.
WWD: Have you rolled out any new initiatives to secure more customers and boost growth?
X.C: After we reopened, we worked with local governments and encouraged consumers to use coupons and subsidies to shop at our stores, which greatly encouraged price-sensitive customers’ spending. We also rolled out in-store flash sale events to help our tenants to boost sales in a short period of time. One beauty brand sold 6,000 units of beauty products in one minute with the flash sale.
We are also providing personal shopping services at your doorstep for our paying Intime 365 members who live within a 10-kilometer radius of our stores across China. When you order them online, you won’t receive a parcel, instead you will receive a well-wrapped shopping bag from the brand. Sales representatives from the brand will bring your order to your home and offer the same level of service you receive in a store.
For example, during the upcoming 618 shopping festival in Hangzhou, when you buy one dress from a luxury brand, the brand will deliver three sizes of the same style to you, and sales representatives will pick up the two you don’t need after you make up your mind. Also, we are also rolling out the zero payment shopping cart service. We will deliver what you put in your shopping cart to you and let you try them all. You only need to pay what you want to keep.
WWD: What is your outlook for Intime for the rest of the year? How do you think the pandemic has changed China’s shopping mall landscape? What is the general outlook for China’s consumption for the rest of the year?
X.C: We are optimistic about our business. We expect to achieve growth in the second half of 2020. Looking at the industry as a whole, I am cautiously optimistic. As business reopens in China, consumer confidence is on the rise. While the battle with COVID-19 is not over, I like to believe that China’s economy in 2020 will still see growth. But shopping habits will change due to the pandemic. People will tend to choose services that abide by social distancing rules in the near future.
WWD: What lessons or takeaways can you share with your Western peers as many of them are grappling with a sharp decrease in sales and customer retention?
X.C: I understand that there is room for improvement in digitization in the West. I think retailers need to think about what value you can create for your customers, instead of what the Internet cannot replace in a physical retail space. The old way of setting up a department store and leasing space to brands is no longer working. Letting the products wait for buyers while keeping the lighting and air conditioners on is low in productivity and unsustainable.
Experience is not limited to walking on marble floors and talking to knowledgeable sales representatives, it means seamless online and off-line integration. Consumers are searching for more channels to learn about the products, promotion information and experts to answer their questions online before making any purchase decisions nowadays. It means that retailers need to stimulate consumers and drive products proactively to the target audience with digital tools to boost sales and customer retention.