Image credit: Shanghai Observer
Shanghai’s post COVID-19 consumption accelerated by super-fast opening of new stores and millions of coupons issued
(SOURCE: Shanghai Observer, 3rd April 2020)
Shanghai’s daily life is gradually recovering, both online and offline, since citizens were allowed to return to work. Recent data shows that compensatory consumption in Shanghai has entered what is called a ‘window period’. Merchants are stimulating consumption by accelerating the opening of new stores and issuing large quantities of coupons, which have received a very positive response from the market.
On March 28th, the Hema Store opened in Shangbin Life Plaza, Hongkou District. This is the first new store to be opened by Hema in Shanghai this year. The store was originally scheduled to open in late February but due to COVID-19 was postponed for a month. General Manager of Shanghai Hema, Chang Yubing, said that production resumption, migrant workers gradually are returning to Shanghai.
To demonstrate how quickly this new store was able to opened, proceedings began on March 16th. With the support of the Municipal Commission of Commerce and Market Regulation Department and other departments, the Shangbin store only took 10 days to complete which included all decorations, installation and cleaning/sterilising of equipment. Due to Hongkou District Market Supervision Administration’s on-site counselling and survey the application was able to be submitted quickly and was reviewed and approved on March 26th. The food trade license was issued within half a day!
Hema Yi, the CEO of Hema, recently revealed the ‘Double Hundred Strategy’, that is, this year Hema mini (Hema Fresh 500 to 800 square stores) and Hema Fresh membership stores will open 100 stores respectively. According to reports, the Hema mini model has been verified during the COVID-19 period, and its effectiveness is more than four times of that when compared to ordinary community supermarkets and front warehouses. As such, the Hema mini will cover the main city area of Shanghai and will be also be located in each subway station. Hou Yi told reporters that it was difficult to find a store about 600 squares in the past. However, recently, some restaurants have closed down due to COVID-19, and many stores are vacant that are looking for new lessees, which lead to lower costs.
Strong consumption recovery and confidence in Shanghai is evidenced by data. Hema’s sales of fresh flowers have more than quadrupled this week, but instant noodles that were popular during the COVID-19 period are out of favour and sales have fallen by 51%.
On March 18th, Alipay brought the top 100 brands and millions of merchants to launch the “City Life Week” promotions. This promotional event continue until April 6th. So far, the sales of over 600 brands including Lao Niangjiu and Manji Dessert have increased by more than 1,000% month-on-month.
The reporter also found that in recent various promotional events, pre-order discounts, vouchers, and coupons have been widely used. These measures are in line with the needs of the public and are realising the effect of “stimulation equals to consumption”. For example, on the Alipay platform, a seafood buffet restaurant offered a 69-yuan lunch buffet voucher. Shanghai foodies bought 32,000 vouchers after 5 days! On the Ele.me food delivery platform, one famous milk tea brand issued 16,000 vouchers per day.
The promotional events of Jingdong Group and Shanghai Suning were even crazier, with millions of consumer coupons launched. For example, Shanghai Suning launched the home appliance home improvement festival from March 27 to 29 and issued 500-million-yuan consumer coupons to Shanghai residents. On the first day of the home appliance festival, , 600,000 consumers had received coupons at the offline stores of Suning Tesco. The coupon consumption accounted for 85% of sales. Among them, sterilising and “de-germing” health appliances started the ‘popular sale’ mode. The sales volume of Cobos sweeping robots and Haier washing machines also increased by more than 100% month-on-month.
The manager of Suning believes that restoring consumer confidence can tap potential from both a ‘time window’ and ‘income’ perspective to create more consumption possibilities. Suning had previously opened 24-phase interest-free after pay service with the collaboration of mainstream credit cards and UnionPay. According to consumer estimations, the iPhone 11 can be purchased at 7.3 yuan per day. It is reported that compared with the 6-phase and 12-phase instalment services launched by merchants in the past, this scale is unprecedented, and it also reflects the determination of all sectors of society to jointly help the recovery of consumption.