World Retail Voice Blog Post
Chinese New Year goes global
Guest blog post by Christina Rosén, Associate Analyst Asia, Planet Retail
First published on Planet Retail on 19 February 2015
The Chinese New Year (CNY) as a new marketing opportunity is being increasingly explored by a number of international retailers as Chinese consumers continue to assert their global purchasing power. Planet Retail examines how some savvy operators are tapping into the boom in travel retail as well as the ecommerce opportunities surrounding the festival.
Also known as Spring Festival in China, the Chinese/Lunar New Year (CNY) is the prime national holiday in Greater China. It is also celebrated anywhere with a substantial Chinese population, particularly in South-East Asia and in the Chinatowns of cities worldwide, from Vancouver in Canada to London UK, to Lima in Peru. In China, the official holiday lasts seven days. The Year of the Goat begins today, 19 February.
Is CNY equivalent to Christmas?
CNY is often compared to the Christmas bonanza in Western countries, but differs in its gifting practices. These can be separated into two categories, which affect spending patterns in pre and post-CNY sales. Traditional gifts indicate status or show respect to family members, with the main product categories being food, alcohol and Chinese medicines among others.
The quality of one’s gift is afforded considerable importance as regards showing respect and retaining face. Enabling gifts are normally given by elders to younger recipients in a family or work context, and largely consist of the wellknown cashfilled red envelopes or hongbao.
Although the weeks leading up to Chinese New Year are considered particularly important for retail promotional activity, driven by traditional gift categories as well as apparel, it is also important to not overlook the post-CNY period. Here, spend is stimulated by enabling gifts and year-end salary bonuses.
Product categories like electronics or luxury consumer goods are most likely to be the beneficiaries here though sales in the latter have recently been negatively impacted by the Chinese government’s antigraft campaign.
Travel retail experiences CNY boom
Overseas retailers, including department stores and duty free shops are increasingly taking notice of the rising numbers of Chinese tourists during the holiday. In recent years, a shift in attitudes away from celebrating CNY at home allied with increased discretionary income have created an uplift in foreign travel during this period.
Traditionally, the festival used to be about reunions within China, where many families are separated by work during the year. Millions of economic migrants, students, office workers and others made the annual exodus from the megacities the world’s biggest mass-transportation occasion.
The relatively new idea that families can enjoy time together elsewhere is now becoming widely accepted. Major Chinese travel websites such as Ctrip and Ly.com told the Beijing Daily that bookings for the week-long Spring Festival (19 - 25 February) have almost doubled compared with last year, and that over 60% of these travellers hope to travel abroad.
In the past year alone, a number of countries, including France, Indonesia, India, Thailand, US and, most recently, Malaysia, have announced the easing of visa regulations for Chinese nationals in order to attract a lucrative influx of free-spending travellers.
Overseas retailers tap CNY tourism
Upscale department stores in the US are ringing in the Year of the Goat with CNY-themed merchandise, special events and cultural activities, catering not only to the country’s Chinese-American community, but also to tourists.
Bloomingdale’s is staging its third annual CNY celebration, with spectacles like Chinese Lion Dances, along with a store-wide Red Envelope prize promotion. Similarly, Macy’s is hosting family-friendly activities and offering an increased selection of Lunar New Year-themed merchandise, focusing on colour palettes traditionally associated with the festival, in particular, red.
Across the Pacific, Japanese department store chain Isetan Mitsukoshi is adapting its merchandise and services specifically to CNY travellers in its outlet in Tokyo’s Ginza tourist district. Duty free purchases there account for more than 15% of total sales. Service initiatives include doubling the number of Chinese-speaking staff and providing floor maps in Chinese.
Meanwhile, discount store operator Don Quijote launched a service on Monday that allows visitors to reserve products online and pick them up from its stores later. They can also have purchases delivered to
airports, should they so wish.
The Visit Korea Committee has aggressively promoted the Korea Grand Sales shopping festival that falls during the CNY period in collaboration with Weibo, China’s largest social networking site. The pre-event marketing for the shopping festival, already launched last November, recorded more than 4,000 content shares and over 1.2 million clicks in just a week.
Payment options, social media driving online spend
Given the breathtaking adoption of ecommerce overall, it is perhaps no surprise that Chinese consumers are increasingly inclined to shop online during CNY. The Ministry of Commerce recently revealed that, according to a 2014 survey by Chinese online ad tracking company AdMaster, the number of respondents intending to shop online had risen 14% compared to 2013. The trend is pointing upward, with attendant lucrative retailer opportunities.
Overseas, the introduction of payment options with Alipay and through various social media platforms are assuming greater importance as enablers to drive overseas CNY promotions and target the Mainland market.
More and more overseas retailers, especially in luxury, are making use of the event on their online platforms to sustain sales momentum with Chinese tourists who have visited their physical stores. Bloomingdale’s and Saks introduced Alipay to their US websites in November last year, allowing Chinese tourists to easily shop their respective assortments on returning home. For the Lunar New Year, both department stores have showcased specially curated CNY microsites, featuring apparel, accessories and lifestyle goods.
A good example of an effective use of social media in participating in global conversations around CNY is Hudson’s Bay-owned Saks, with its #SaksStyle content hub. It is curated by customers who contribute shoppable selfies from a range of social media sites. As an homage to CNY, the retailer partnered with colour system specialist Pantone to encourage users to share their favourite red-coloured items under the theme of Pantone®Chinese Red.
CNY will only grow in importance
With the numbers of Chinese travelling over the CNY period booming, and with retailers always on the lookout for new sales opportunities, we expect to see a growing focus on the event in future.
In fact, the globalisation of CNY fits into a wider trend, which is seeing the reach of once-local events and promotions extend across the globe. Previously exclusively market-specific events, such as Black Friday, Oktoberfest or Singles Day, are increasingly being adopted internationally – due to increased travel, the growth of ecommerce and social media and the globalisation of media in general.
With this in mind, retailers everywhere will have to take CNY seriously. This could mean partnering with strong, authentic Chinese brands (providing them an opportunity to develop in new markets), as well as investing in instore service addons such as hiring Chinese-speaking staff, or even websites and bespoke promotional material specifically targeted at those shoppers.