Why Brands Are Embarking on a New Journey With China’s Traveling Shoppers | China Decoded, BoF Professional

Golden Week, China’s seven-day holiday beginning Oct. 1, has long been a barometer for consumer sentiment. But this year’s holiday is proving to be a break with tradition for a number of reasons, leaving brands and retailers in a race to capture new consumers in an environment of uncertainty.

For weeks, pressure has been intensifying on brands and retailers to make up for ground lost in August, when the traditional sales boost from Qixi, China’s Valentine’s Day at the beginning of the month, failed to materialise. The main culprits: new Covid-19 outbreaks in Fujian and other provinces leading to a retightening of restrictions, exacerbated by Typhoon Lupit.

“No one expected sales in August to suffer like they did… A lot of brands underperformed, so they’ll have to make up for it,” said Pablo Mauron, managing director for China at research and market intelligence firm Digital Luxury Group.

The big challenge is that though holiday travel — and shopping — appear to be resuming after 2020′s decline, the profile of a typical traveller is changing. While the “silver generation” still might be an important part of the Golden Week travel brigade, younger Chinese are increasingly travelling and whatever the age, Mauron expects China’s consumers to be looking for opportunities “to indulge themselves.”

Closer to Home

As brands are learning quickly, that indulging will very likely take place closer to home, as domestic travel booms, against a backdrop of new consumer-spending policies from Beijing and a resurgence in national pride, or guochao, in local heritage destinations.

“[The pandemic] has helped a lot of people discover the beauty of travelling in the mainland,” said Martin Moodie, Hong Kong-based founder of travel retail business intelligence publication, The Moodie Davitt Report. “A year ago [celebrating Golden Week locally] was the only alternative,” marking the start of what might be a longer-term trend given that he doesn’t expect outbound China to pick up substantially until after the Beijing Winter Olympics in 2022.

Travel agency platform Ctrip reports that bookings for scenic attractions are up more than 30 percent from last October, leading it to forecast that this year will beat 2020′s figures, when 637 million domestic visits generated 466.6 billion yuan ($72.2 billion) in revenue for the tourism sector.

As for this year’s Golden Week, the cities receiving the highest bookings for the weeklong holiday on Ctrip were Shanghai, Chengdu Sanya and Hainan, while Beijing leads the pack, thanks in part to the recent opening of Universal Studios, the travel site reported on Sept. 21.

The choice of destinations certainly has been influenced by Beijing’s policy initiatives to spur national consumption. This includes 2020′s increase in the annual amount of tax-free shopping for individuals visiting duty-free hub Hainan to 100,000 yuan from 30,000 yuan, the highest allowance in the world.

One destination that is benefiting from the policy change is Hainan. By July 30 this year, the island’s duty-free market reported 226 percent year-on-year growth, to 46.8 billion yuan.

As Moodie puts it, “Hainan is ticking a lot of boxes as a shopping destination,” which now includes the glitzy new duty-free shopping complex from luxury travel retailer DFS Group and Shenzhen Duty Free Group. Located in downtown Haikou Mission Hills resort, the complex will eventually cover 30,000 square metres and is already home to the largest beauty hall in DFS’ global network.

Demographics are also reshaping spending trends during Golden Week and other holiday seasons. According to Ctrip, travellers born after 1990 account for 40 percent of Golden Week bookings while those born after 2000 (an age bracket roughly synonymous with Gen-Z) are catching up, with their bookings up 5 percent year-on-year. Various surveys are showing that these travellers are different from their older counterparts, more swayed by destination recommendations made on social media while opting for more adventure holidays and preferring solo to group travel.

A Local Backdrop

Amid all this, Digital Luxury Group’s Mauron said Golden Week is a time for brands to be more creative than, for example, during Qixi, since the weeklong October holiday does not have any particular narrative or parameters that brands need to work within.

“Tap into travel but give it a much more local flavour,” is the way Mauron puts it.

That is the case with this year’s Golden Week campaign from Foreo. As part of an afternoon tea theme, the Swedish beauty device maker is gifting customers who spend a certain amount on Foreo product tea-for-two at resorts on Hainan island.

As China’s domestic travel retail thrives and travel restrictions continue to keep mainland visitors out of flagships in Europe in the US, Mauron encourages brands to make the most of the situation to build longer-term brand loyalty.

While capturing customers’ digital information after shoppers return to their home countries has long been a challenge for brands, it’s much easier for brands to stay in touch with local shoppers in China by integrating data with apps like WeChat.

Even when global travel retail resumes, maintaining those relationships will give some brands an edge, said Mauron. “Locally, it’s nothing but opportunity.”



Taikoo Li Qiantan, Swire Properties' new shopping complex in Shanghai, stretches over 120,000 square meters. Swire.

Taikoo Li Qiantan, Swire Properties’ new shopping complex in Shanghai, stretches over 120,000 square meters. Swire.

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New competition rules has led Alibaba to add Tencent’s payment system to its apps. Shutterstock.

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Chinese state media has begun chastising actors who promote “twisted aesthetic standards” by wearing heavy makeup. Shutterstock.

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Planned shutdowns in industrial hubs like Jiangsu, Zhejiang and Guangdong could send prices of textiles and garments up in coming weeks. Getty Images.

Planned shutdowns in industrial hubs like Jiangsu, Zhejiang and Guangdong could send prices of textiles and garments up in coming weeks. Getty Images.

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