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An Inside Look – Lessons from a Fashion Retail Company
Over the past year, Hong Kong has experienced constant changes and challenges as the world tackled COVID-19. We spoke to one of our clients in the fashion retail sector to learn how they've pivoted their business and managed the effects of the pandemic in Hong Kong. Read on to find out more.
1. The past 15 months have been eventful for Hong Kong. How has your firm been impacted?
Given our consumer base has a higher proportion of tourists than local consumers, our business has been impacted by the drop in tourist volume. Apart from that, consumers nowadays also tend to go e-shopping, where they could possibly enjoy a higher discount rate.
What this means for our retail stores is that we had to reevaluate our discounts and promotions to find new ways to attract customers. We have to be careful with pricing strategies as some could lead to a lower margin for our business.
Initially, team morale was affected by the pressure brought about by the unprecedented challenges we had to face. We’ve had to make some changes to our usual methods to make sure we could mitigate the impact of the pandemic.
2. From a Sales and Marketing perspective, what strategies has your team taken to stay ahead of the competition while weathering this storm?
First of all, most brands in the industry have minimised their Advertising & Promotion (A&P) budget for better cost control. We realised it was time to build local engagement and linkage through e-commerce platforms. At this point, we do not know how traveller and local consumer behaviour will change post-pandemic and we are preparing for any possibilities and new opportunities that may arise.
In the past, we relied on online-to-offline (O2O) business whereby the company invested on digital platforms and attracted consumers to purchase from physical retail stores, with almost 90% of revenue coming from offline channels. However, the role of digital marketing and online shopping will play a more vital role. E-commerce still plays a critical role in mid-term business development because no one knows for certain when the pandemic will come to an end. From a long-term perspective, consumers will continue making purchases online at the moment even though Hong Kong is a very convenient place for offline shopping. Therefore, now is the time to focus on enhancing user experience and drive business to e-tail accordingly.
Most brands in the fashion industry have been offering discounts and promotions for the past half-year. Now is a good time to study our existing customer base as well as thoroughly understand consumer behaviour to determine what are the motivators when consumers make a purchase.
3. Sales and Marketing have always been functions that require a personal touch. With social distancing, remote working measures and travel limitations in place, how has your firm adjusted to the new normal?
Earlier, we split into A/B teams and rotated the work from home arrangements every week. Since the third COVID-19 wave, we no longer divide the team, and staff can choose to work from home if they wish to. With the current arrangements, we arrange regular team meetings and rely much more on employees to manage their time and workload.
I do not foresee any impact on work performance as regular catch-up meetings still happen, and everyone has adapted to the new normal. So, the only impact would probably be the team bonding as we no longer meet in the office every day. We have to find new and creative ways of maintaining this.
4. As Sales and Marketing professionals on the front line, what advice would you give to fellow professionals to stay competitive amidst the global health crisis and economic downturn?
Digital marketing and e-commerce are very essential to any business. In the past, every retail company would talk about it, yet not many were seriously building these functions. Now is the time to learn how digital strategy can impact sales performance. Apart from building brand awareness, tracking consumer value, traffic quality, and cost efficiency have all become essential.
Partnering closely with media agencies and ensuring they are attracting high-quality traffic is also very important. In the past, digital marketing was heavily focused on cost efficiency without paying attention to quality. With videos, for instance, teams were merely measuring click rates and operating in a format similar to television advertisements.
Driving traffic to your website is crucial as once you have third-party data, you can better understand consumer behaviour. It is beneficial for a business to segment consumers and re-target their audience.
It is not unusual for management to question and require justification for spending on e-commerce and digital platforms as most of the business revenue in the past came from offline channels. I believe that when e-commerce has become more mature and tracking to observe the purchase intention on websites becomes more sophisticated, these tracking tactics will help the business leader understand the linkage and relevancy between online and offline channels.
5. The COVID-19 pandemic is changing the economy and the way we work. What has changed or could be changed in the traits that your firm looks for in Sales and Marketing professionals?
Going back to digital strategy, the challenge that marketers are facing nowadays would be on how to enhance local relevancy. We can see the response rate from Gen C is much better when injecting local content into our digital strategy. We know tourists will not be spending a lot on e-commerce channels, so domestic consumers are our target.
It would not be too tricky for Gen C talent to generate local content. They are sensitive about what is going on in the market and understand the various e-platforms well. However, since most global brands still focus a lot or have the tendency to rely on global content, young talent must handle the local content tactically.
To help experienced business leaders understand the Gen C strategy, these young professionals need to be equipped with outstanding communication skills and know how to convert market insights and data to support digital strategy and justify the spending on e-channel development.
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