How China is changing the future of shopping

One of the trends I have seen concerns the spontaneity of shopping. Five years ago, in a fashion study, we found that on average, a Chinese consumer would be buying five to eight pairs of shoes. This number tripled to reach about 25 pairs of shoes a year. Who would need so many pairs of shoes? So I asked them, “What are the reasons you buy?” They told me a list of inspirations: blogs, celebrity news, fashion information. But really, for many of them, there was no particular reason to buy. They were just browsing on their mobile site and then buying whatever they saw. We have observed the same level of spontaneity in everything, from grocery shopping to buying insurance products. But it is not very difficult to understand if you think about it. A lot of the Chinese consumers are still very new in their middle-class or upper-middle-class lifestyles, with a strong desire to buy everything new, new products, new services. And with this integrated ecosystem, it is so easy for them to buy, one click after another. However, this new shopping behavior is creating a lot of challenges for those once-dominant businesses. The owner of a fashion company told me that he’s so frustrated because his customers keep complaining that his products are not new enough. Well, for a fashion company, really bad comment. And he already increased the number of products in each collection. It doesn’t seem to work. So I told him there’s something more important than that. You’ve got to give your consumer exactly what they want when they still want it. And he can learn something from the online apparel players in China. These companies, they collect real consumer feedback from mobile sites, from social media, and then their designers will translate this information into product ideas, and then send them to microstudios for production. These microstudios are really key in this overall ecosystem, because they take small orders, 30 garments at a time, and they can also make partially customized pieces. The fact that all these production designs are done locally, the whole process, from transporting to product on shelf or online sometimes takes only three to four days. That is super fast, and that is highly responsive to what is in and hot on the market. And that is giving enormous headaches to traditional retailers who are only thinking about a few collections a year.

(Applause)

The following two tabs change content below.
Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

Latest posts by Shayne Heffernan (see all)

You must be logged in to post comments :  
CONNECT WITH