Article

McDavid Stoddard
McDavid Stoddard 10 November 2016

The Experience Economy with Chinese Characteristics

A quick look at how services enhance the consumer experience in The West vs. China.

The notion of an “experience economy” entered Western discourse as early as 1998. The first dot com boom created an atmosphere of innovation and technological advantage to drive prices down and commoditize certain industries (for example, think Amazon supplanting Brick & Mortar book stores).

A company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event. - HBS 1998

Fast forward to 2016 –the retail experience is such an important part of the product that Apple stock moves based on key management changes to its retail division. Is it the Target / JC Penny guy now or the Burberry CEO? I can’t keep up (Okay, I checked. It’s the ex-Burberry CEO and she makes 60 million more than Mr. Cook).

For US consumers the experience economy of retail serves the needs of the tactile shopper who needs to touch, try-on, and try-out. But, in addition and more importantly, the modern retail space serves another need for both consumers and companies. It is the physical embodiment of the brand – a brand which is otherwise merely an abstract concept that only exists as an aggregation of various marketing touches. The store experience is vital. All the items not for sale – from the trendy exposed electrical conduit to the brazenly detailed mannequins (looking at you American Apparel) – become equally as important as the products.  

Moving forward 12 time zones to China you’ll find a vastly different landscape. Terminology like socialism or consumerism manifests themselves differently (to illustrate, romantic first gestures: US = boom box outside the window, China = bouquet of iPhones (plural)). The consumer experience in China is queered by alarmingly high fake rates from the homegrown Amazon equivalent (Taobao / Tmall) causing consumers to increasingly desire authenticity over price or convenience. This consumer class is so marred by fakes, some of quite high quality, that they desire more than just the real product – they want the real experience. Chinese consumers desire the authentic product plus the authentic online shopping experience and all the peace of mind that comes with shopping on the official dot com. Small things like the official order confirmation screenshot are taken for granted as a sign of authenticity in the west. For Chinese consumers the out of box experience is even more important: think of the fine cardboard with its smooth oiled finish, the ornately folded tissue paper covering your Polo inside, the fold of the tissue held together with a Ralph Lauren label sticker, underneath is tucked a small note from Ralph himself, “Thank you for ordering from RalphLauren.com, our commitment to providing the finest products…”

Today’s consumers are less and less interested in buying counterfeit products. They desire the most authentic brands and the most authentic products. So, the "buy real  mantra" is merely the consumer’s way of identifying the real from the fake, Pine says, “For these consumers this is their number one criterion for how they choose to purchase goods and products.      – Translated from Business of Fashion -China October 31st, 2016

The number of affluent Chinese consumers is set to grow. According to McKinsey, by 2022 over 700 million Chinese urbanites will have a middle-class purchasing power similar to that of the Italian middle-class consumer. These new consumers will continue to search overseas for the authentic shopping experiences their income stratum desires. Haitao (overseas shopping) apps like Beyond help deliver these very experiences. 

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