Chinese lessons: how Russian retailers earn on buyers from China

TsUM and DLT spent 50 million rubles on sinification of their stores, hoping that in two years the Chinese will generate up to 30% of their revenues.
10.08.2016
Forbes
Origin source
"Targeted to work with the Chinese clientele, we started from February, although two years ago realized that they may become for us the important customers", - says Alexander Pavlov, general manager of the Central Department Store and DLT ( "Leningrad House of Trade"). For six months the share of the Chinese had 5% revenue department store in Moscow and 20% in St. Petersburg. The Mercury Group of Companies, which owns these shopping centers, hoping that in the next year or two, this proportion will increase to 30%.

The first large-scale wave of tourists from China to Russia surged in 2015, when the ruble has stabilized after the devaluation. Traffic from the PRC, calculated in the Federal Tourism Agency, was up more than 60%. The influx of Asian visitors immediately felt the hospitality and retail. "Over the past two years, Chinese people have become rich considerably against the background of inflation in Russia. Hence the increased interest. We joke that the goodies from "Izmailovo" they moved to the Four Seasons and Ritz Carlton », - says Stanislav Ivashkevich, deputy director of Development for the hospitality industry CBRE. According to him, if in 2014 the cost per night for a three-star hotel in the center of Moscow, in reaccount for the currency, was $ 300-400, now and pay only $ 100, you can stop at the Ritz Carlton. The "Metropolis" confirm that the demand for suites has increased markedly in 2016, while the average amount that visitors from China to spend at the hotel, in January-June increased by 9% compared to the same period last year.

In Europe, the Chinese have been actively buying luxury goods - clothes, shoes, watches, jewelry, and so on (up to a third of all sales in the high segment). Russia was for them tourist interest, but not as a country for shopping. After the ruble devaluation situation began to change.

According to estimates of the Association "The World without Borders", in 2015, Chinese tourists spending in Russia amounted to between $ 800 million to $ 1 billion, and about 60% of the budget had to travel for shopping.

In the Central Department Store and traffic DLT Chinese buyers than increased by 2.5 times, the volume of purchases in 2015 year - up to 300%. The Mercury are confident that this strategy consequently "Milan prices", developed with the aim to increase sales is also due to the Russians who were forced to abandon shopingovogo tours to Europe. By the beginning of the campaign it was also developmn media plan that focuses on Chinese tourists. Prices in stores almost the entire range (except for subtenants-brands) have been reduced by 25-30%.

Enhance the effect and special marketing activities. After the January holidays showcases CUM and DLT "talking" in Chinese, appeared in the sales area corresponding navigation. The post of a sales assistant was invited ethnic Chinese, owning three languages: Chinese, English and Russian. The company has already hired about 20 such employees. "The Chinese need to see in the store" their ". With the advent of new consultants cost Chinese customers and the number of units sold increased by several times. The average bill - up to $ 500-600 ", - says Pavlov.

The problem, which is now working on a retailer - brand promotion CUM and EBRT, whose names are virtually unknown to foreigners. Advertising in Chinese in Moscow and St. Petersburg airports is not enough. Mercury plans to attract celebrities and bloggers from China, so they talked on the Internet about the benefits of shopping in Russia, associativetimente and prices in Europe. In this direction also operate joint advertising program "Aeroflot" tour operators "Intourist", "Alian-Tour", Chinese Beijing Global Travel, hotel chains Marriott, Four Seasons, Radisson.

Make shopping in Russia convenient for the Chinese are trying to owners and other major shopping centers in Moscow.

PVM does not comment on the topic, but the director of retail space SBRE Marina Malakhatko sure that the developer always skillfully worked with foreign flow. "80% of the traffic GUM - are tourists, including foreign ones, so those brands that sit in a department store, for a long time to understand how to manage such an audience - says Malakhatko. - "Afimall City", "fleet", "Metropolis", in which a high proportion of premium-class shops, develop special programs to attract Chinese. One of these centers can even build a hotel complex for tourists from China and some other countries. " Outlets company "Hines Russia» (Outlet Village Belaya Dacha, Ouitlet Village Pulkovo) and Vnukovo Outlet Village in agreement with the Hotel Moscow and St. Petersburgozyat guests to shopping at branded shuttle bass.

Retailers are turning to China Friendly program developed by the tourism association "World without Borders" in 2014. In the first quarter of 2016 to the project joined TSUM and EBRT, implementing with the help of consultants China Friendly convenient navigation at department stores and shopping payment through UnionPay China's national payment system. Adaptation passed several Corner L'Oreal in Moscow (for example, introduced a special tool to convert standard dialogs consultant and buyer in Chinese) and the St. Petersburg jewelry retailer "Amber Russia." Negotiations on participation in China Friendly underway with major jewelry manufacturer and the network for the sale of expensive watches.

"The Chinese are interested in luxury goods, jewelery and cosmetics, which in Russia is 20% cheaper" - explains Anna Sibirkina, head of China Friendly program. The department "Color" in the department of cosmetics and perfumes especially for buyers from China brought food carts, as usual basket of goods were placed.

in Jewelryo-hour Mercury division argued that the greatest interest of the Chinese cause watch brands Rolex, Chopard and Patek Philippe.

Sometimes, when clients to travel to Russia asking for phone or email to defer a certain model of the limited edition. Most often it is done by collectors or lovers of a particular brand.
A truly master this trend CUM and DLT started to spring. Six months ago, the company faced with a large influx of Chinese and sales growth: running fashions, shoes, bags run out too quickly. In Sinification two stores was invested 50 million rubles. The money paid for itself in May and June. In the season "Autumn-Winter 2016/17" Purchase of increased and a half times and planned taking into account the preferences of the Chinese and Asian dimension lines (eg, women's shoes size 34-36, men 37-38).

By increasing the turnover CUM expects to compensate for the lower margins associated with the launch of the strategy of "Milan price", when it was necessary to reduce the trading margin. According to Pavlov, the volume of sales in the Chinese TSUM m DLT and largest Département Stora Europe & ndash; Paris Galeries Lafayette, Printemps, Le Bon Marche, Milan's Piazza Duomo and other - is now an order of magnitude different. To overcome this difference and begin to seriously compete with France and Italy will be possible, when Russia will be introduced tax free (refund of the amount paid as VAT). Deputy Prime Minister Igor Shuvalov has instructed relevant ministries before the end of 2016 to develop the introduction of tax free system.






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