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Jun
2015

Adapting international luxury retail service for the Chinese consumer

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Much has been written by me and others about luxury retail service in China, and in particular changing consumer expectations. It’s a topic of constant discussion in the industry because it’s currently not to a standard that many mangers would like it to be, but to some extent it is driven as much by the consumer, as by the brands. I decided therefore to talk to some expert practitioners in China on the subject, one from the luxury retail sector and one from the hospitality sector, because in five star hotels, service is of a very high standard. I wanted to compare the two different viewpoints, and compare them, so my sincere thanks go to Pisces Huan and Charles Law for their comments and opinions.

As with many things in life, there are two sides to the story, and in may 2013, the Luxury Insights China research team carried out the first ever audit of luxury retail service in Shanghai, visiting 39 stores from 39 different brands to benchmark how they performed against one another, and a set of base service standards we would expect to be delivered by them all.

Cause or affect?

The results indicated great opportunities for improvement, and a wide variation of service standards across all the stores assessed. The findings were shared and discussed with many HR and training heads from the brands concerned, and those subsequent discussions have led us to consider the ‘cause and affect’ phenomenon. Is the retail service quality the cause of consumer expectations towards service in luxury stores i.e. consumers are the affect, or is consumer attitude and behaviour the cause, and the actual service delivered in luxury stores the affect of this?

We know that many brands spend a great deal of time and money training their staff in the areas that we found weak in our auditing, so do staff immediately forget what they learned once returning to their store, or do they find that because consumers behave in a particular way, they are unable to execute what they were taught and give up following ‘the rules’? Is it that Chinese luxury consumers don’t take time to understand what luxury service is because they are too busy shopping to appreciate it, or are the retail staff not taking the time to understand the type of customer they are dealing with in order to deliver what they as individuals would like, assuming every customer is the same?

Industry opinion

The questions raised and challenges faced are applicable in China, but should also be considered by luxury retailers elsewhere in the world, because understanding that all Chinese consumers don’t think and act the same could be a way to differentiate your service, and win and retain their custom. Charles, Pisces and I considered what retailers outside of China could learn from those operating here.

Our first point of discussion was whether luxury service in China is bad, or just different?

Pisces the retailer suggested that it is not bad or good, but suitable depending on the consumers attitude. ‘When shopping in a top mall such as Plaza 66 in Shanghai, there are customers who don’t want to be overly serviced, they want to select a product and buy it. No recommendations and no delays’.

From a hotel perspective, Charles would not consider it as bad, but ‘work in progress’, he made a point that the luxury market has grown up dramatically in the past ten years, and in fact so have the consumers ‘moving from unaware and uncertain to becoming more educated and sophisticated in what they are buying’.

Charles also highlighted a point that we at LIC have discussed with our readers in the past, which is that retail staff must quickly determine the customers needs and wants, so that the individual appropriate level of service is provided. By doing this, the staff deliver to every customer what they need and not standardised, and impersonal service. ‘This approach allows the staff to explore ways to connect with customers and make greater sales’ as Pisces pointed out

We see many Chinese choosing to spend their time in five star hotels, not only those who are wealthy. We all agreed that this is because the hospitality and general comfort make people feel relaxed and safe, as we’d expect, but Charles added that five star hotels specifically set out to deliver a memorable experience to the guest. Is this an important attitude lacking in luxury retail? From Pisces position, he sees hotel staff as more elegant and well educated, but are they really that different from those working in luxury stores? We think not, as it is perhaps the way hotel staff are made to feel about their job, and the environment in which they work, that lifts them to appear more graceful and more interested to serve, than those working in luxury retail.

Luxury retail in China is and has always been totally focused on selling, and as was pointed out by Pisces, those working in a hotel do not need to sell. Although this is true, they do have to deliver on the brand promise constantly, and have no product to hide behind as those in retail do. As Charles put it ‘luxury retail is still very sales driven and short term. Hotels are service-oriented and build on the long term with the guest’s to develop trust and loyalty’. In luxury retail, store staff are driven by targets so they may be able to sell, but their ability to service a client could be poor. As Pisces puts it ‘it’s the sales numbers that drive everything’.

There was some debate in terms of measuring service, and whether this is more difficult than sales. Clearly, sales numbers are objective, and service quality is subjective, which can make rewarding good service performance very difficult, and why a luxury hotel succeeds in this area because its environment creates the boundaries within which the staff operate. Is this the failing of many luxury stores, a very glamorous environment with no personality?

Sinocizing international luxury service

It is clear that Chinese luxury consumers are not one homogeneous group, and continue to fragment, and cannot be treated as one; no doubt we could probably say this about many nationalities and cultures. But, the extremes in China can be more significant, and hence, so can consumer behaviour. So what can you as an international brand learn in terms of ways to receive and sell to Chinese luxury consumers?

Charles makes a point that localisation of service is not about changing what you do, but making your existing service appear to be more familiar to a Chinese consumer than it might otherwise be. This way the service standard remains high, but the execution is localised. Earlier in this piece Pisces spoke of consumers in the high-grade luxury malls just wanting to walk in, select an item, buy it and leave immediately. They may even know what they want before they arrive, so don’t attempt to sell them something else, but make the purchase process as smooth as possible; they may appear cold, but don’t worry about it.

Those who come from smaller cities or who are newer to luxury, may in fact not know what they want, but will not communicate this to you, as it could cause them to loose face. Present them some choices soon after they arrive in the store in order to start a line of communication and to break down the cultural barriers that may prevent a sale. They will say yes or no to it, and the engagement process has begun.

Providing choices may help Chinese men as much if not more than woman, as men are more likely not to show that they don’t know what they want. It will also help connect across language barriers, and make the Chinese consumer relax, in addition to visually demonstrating that all-important respect for the consumer.

If you have mandarin speaking staff, ensure they are up to speed with some current topics of discussion in China, and can use this to make small talk. The more relaxed atmosphere will not only enhance the potential of a sale, but also in gathering valuable CRM data,which might otherwise not be forthcoming.

A last and valuable point from Pisces is that for many global international brands, the travelling Chinese represent a chance to rotate Chinese speaking retail staff across different territories, which in turn keeps the store ‘culturally current’, enhances staff motivation, delivery of high service standards, and increases loyalty amongst the staff. The Chinese luxury consumer can be difficult to understand, but applying time to learn their key characteristics will pay off, and start to establish and build the appropriate brand reputation and loyalty you will require for your long-term business with China.

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