Burberry is hoping its first “social retail store” in China’s tech capital Shenzhen will help build stronger ties with some of its most important Asian customers: young tech-savvy Chinese customers.
The new store, launching today, is 5,800-square-foot, designed through a partnership with Chinese tech giant Tencent Technology, and will rely heavily on the WeChat mini-program to reward consumers for engaging with the brand, both online and in store.
Burberry, which was one of the first luxury brands to test Instagram and in-store iPads, is hoping to maintain its reputation as a digital frontrunner. In 10 separate spaces, the store combines Burberry’s recent tech experiments, like gaming, social media product drops and app-driven customer service. China is crucial to luxury’s recovery. As both early adopters of technology and comparatively younger luxury customers, it’s one of the few regions to return to physical shopping.
“You have seen the latest results of the luxury companies. The only bright spots are mainland China and digital. So if you put them together, if you find an initiative that can touch both of them and add value, it can bring positive results,” says Mario Ortelli, managing partner of luxury advisors Ortelli&Co.
Chinese consumers account for one-third of global luxury sales and represent 40 per cent of Burberry’s business. In recent months, mainland China has been Burberry’s strongest-performing region, with sales growing by more than 30 per cent in June — higher than the growth before the pandemic. In its July earnings call, Burberry reported sales overall had fallen 45 per cent due to the pandemic.
The Shenzhen store, located in the same city as Tencent’s headquarters and considered to be China’s tech capital, meets digitally native millennial and Gen Z customers with Burberry’s social media and gaming tools, says Mark Morris, Burberry’s senior VP of digital commerce. It originated from the discovery that although most customer journeys for the brand’s target customers start on social media — particularly in China — they still want an in-store, experiential element that they then share online; 80 per cent of its customers have used a digital touchpoint before they purchase. “This store is about trying to connect your online life with your in-store life so that one adds value to the other,” he says.
The social store “marks a shift in how we engage with our customers”, CEO Marco Gobbetti said in a statement, adding that this was the first step in an exclusive partnership between the two companies. Expanded capabilities through WeChat, which Tencent owns, to provide the social retail elements like social currency and brand experiences aren’t available to any other luxury brands that work with Tencent. Many luxury brands have a shopping presence on WeChat. Farfetch, for example, recently raised $250 million from Tencent and California VC firm Dragoneer, and Farfetch operates WeChat stores for brands including Moncler and Saint Laurent. (Burberry did not disclose additional terms of the partnership.)
As customers build social currency through engaging with the brand’s WeChat mini-program, an animated character hatches and transforms.
Customer interaction on WeChat is core to the new store. The social retail experience is centered around a custom WeChat mini-program, which is somewhat like an app that operates within the WeChat ecosystem. With the mini-program, customers can do things like book in-store appointments and items to try on, contact customer service, learn about new products and exclusive content, and share their own content.
Within the store, it acts as a “digital companion”. Customers can scan product tag QR codes to view additional content like “product storytelling” and models wearing the item — a first for the brand — and book a preferred fitting room with specific playlists selected by Burberry and the ability to adjust the lighting. Every item in the store is scannable.
Each action rewards customers with social currency. As customers earn more currency by interacting with the brand, an animal character “evolves”, starting from an unhatched egg. In addition to new characters and outfits for their characters, customers can receive exclusive cafe menu items and access to the “Trench Experience”, a digitally enhanced room designed to help customers create content to share on social media, including the ability to try on a trench coat.
WeChat, Morris adds, was an important element to connecting the various elements together. For example, if a customer contacts customer service through the new mini-program, it will automatically connect to another mini-program for associates, who will be able to access a customer’s information. Morris says this was like “starting from the dream and working backwards”.
The store includes 10 separate spaces, with exclusive pieces only available to buy in the Shenzhen store. Each product has a QR-enabled tag, which is a first for the brand.
The store represents the start of a new phase in Burberry’s digital strategy, says Morris, who has been with the brand since 2011. Digital has been core to the brand since 2009, when it launched The Art of the Trench, a social media app that made use of user-generated content, and continued in 2012 with the London Regent Street store, designed to be like walking into Burberry’s website. After recent success testing separate concepts including video games, “dropping” products on Instagram and creating an app for store associates to communicate with global customers, Morris wanted to combine them through the store and the mini-program.
“It was this idea that luxury couldn’t be just top-down. It had to be an engagement with your customer base, and there was a real passion there to tap into it,” he says. The flagship London store on Regent street “was very much around in-store theatre and retail augmented by digital, but it existed within the physical environment. We’re ready to push on for the next decade of innovation, which is really around tying all of those pieces together”.
The next big retailers may look more like social apps than traditional companies, says Connie Chan, a general partner at Andreessen Horowitz. She foresees a shopping revolution focused on consumer experience, integrating e-commerce, entertainment and even gaming. “A social-first approach to commerce enables interesting network benefits, such as built-in ways for customers to browse and send recommendations from influencers and friends or virality timed to product drops.”
An interactive window, or “living sculpture”, reflects the viewer’s shape and responds to body movement.
Burberry has often been early to experiment digitally, while others have taken a “wait and see” approach, Ortelli says. However, he adds, when brands such as Louis Vuitton and Gucci go full speed toward a new technology, they tend to catch up quickly. Jumping to open a new concept after the pandemic is a move to stay a step ahead.
“We haven’t seen any other major new retail store launch in 2020 yet,” says Amie Song, senior specialist at Gartner for Marketers. “Mentions of ‘offline’ among luxury brands on Weibo are down in the first half of 2020 to one-third of the second half of 2019.” Song says that most brands have postponed plans to open stores until later in the year, but that Burberry’s decision to open now coincides with the offline recovery trend. Other examples include the opening of a Christian Dior exhibit and Louis Vuitton’s August fashion show, both in Shanghai.
Song says that while luxury brands already had “high adoption” of WeChat’s online-to-offline features such as store locators and reservations, the pandemic has increased investments in building one-on-one connections and offering personalised services via WeChat. She says this reliance could make it unlikely that they’d be able to scale these beyond China.
“Obviously, we’re interested in how you can take these themes and concepts elsewhere, but it feels like elsewhere, at the moment, you need to work with multiple parts,” Morris acknowledges. “There’s not one ecosystem where you could make it all work quite as seamlessly as you can [in China] because there’s just such wide adoption of WeChat.” Morris points to a recent bag drop with blogger Tao Liang, known as Mr. Bags, that sold out within WeChat within seconds, and a live stream that garnered 1.4 million live viewers.
Still, the store is decidedly not a “one-off concept store”, he says, and Burberry is in the process of rolling out components of the experience more broadly in China, and adding in more elements as it tests what is popular among consumers and the level of engagement.
And for those who don’t want to engage online? The store is still designed to look and feel like a familiar luxury space, Morris points out. “Each of the rooms in themselves are beautiful, luxurious experiences that without them, you can’t put together a luxury store. If you haven’t got that veneer, everything else you do is irrelevant.”
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