How Russia is Winning with the Affluent Chinese Traveller

With a rise that began a several years ago with state-approved ‘Red Tourism’, Russia has become a destination for affluent Chinese shoppers looking to combine national history with off-the-beaten-path luxury travel shopping.

Proximity and friendly relations have seen over 100,000 Chinese travellers confidently jetting off to Russia for the World Cup – even though their nation isn’t taking part. With 57% of those travelers being female (source: Ctrip), it’s a clear indication that Russia has now planted a flag on the international luxury map.

Red Tourism is the combination of travel with sites relevant to patriotic history, approved by Xi Jinping back in 2014. The shared history led the directors of the China National Tourism Administration (CNTA) and the Federal Agency for Tourism of Russia sign a plan for ‘red tourism routes’, along with twenty tour operators getting in on the patriotic glory.

This sparked a surge in visitors which has seen Chinese as the number one tourists ever since, increasing by 30% every year.

Recently, ties are ever closer – with Tmall aiming to dominate the Russian e-commerce landscape. Looking specifically at luxury, one example stands out as a vanguard of engaging with the Chinese luxury traveller – TSUM, the historic department store just besides the Bolshoi Theatre in Moscow which is a global leader in luxury fashion.

TSUM has won the hearts and minds of affluent Chinese shoppers by not only adapting to their tastes but by pioneering in several innovative ways to ensure that the experience of the affluent Chinese client is seamless.

They also played on the huge draw of the World Cup, with creative pop-ups – an adidas ‘premium Deluxe Football’, inspired by Russian gold embroidery and hand-stitching and produced exclusively for TSUM, as well as a collaboration between Vogue Russia and TSUM on a limited edition collection of customisable football-style shorts and t-shirts.

We spoke to Andreas Schmeidler, Chairman of TSUM, to find out more about how they stay ahead of the luxury game:

What moves has TSUM made to please the Chinese shopper?

Our main initiative was to review the price policy. In line with its pioneering spirit our department store was the first retail player in the industry to revise its price policy in 2015 and introduce a transparent strategy of “Milanese prices” – cutting down the price level to match prices in Milan and Paris. TSUM also introduced “Best Choice – Best Prices” policy: collections of clothing, shoes and accessories from the likes of Valentino, Dolce&Gabbana, Balenciaga, Versace and other brands can be purchased at the lowest price in Europe.

Chinese people are really advanced in terms of using different electronic payment options in their country. Therefore, TSUM offers customers the most advanced services: Apple Pay, Alipay, Union Pay and TSUM was the first Russian retailer to introduce WeChat Pay.

This year, TSUM became the pilot store to offer its customers Tax Free refunds under a dedicated governmental program. We think tax free shopping might be a deal breaker for thousands of Chinese customers, so we created a lot of noise with this. In partnership with the government of Moscow and Global Blue Company, we hosted a “Moscow as a Tax Free Shopping Destination” event at the Russian Embassy Hall in Beijing, announcing the news and reaching more than 150 publications within 48 hours.

Also, TSUM has been approved by the China Friendly Association with the China Friendly status. That means aside Chinese-speaking staff and materials, TSUM and DLT offer their clients English and Chinese in-store navigation and suitable services such as VIP-shopping with professional stylists, unique cosmetic services, a clients’ loyalty system, gift cards and more. In collaboration with VIP tourism companies we also offer unique tour programs as Star City (Cosmonaut training Center) tours, L-39 Albatross jet fighter flights, Tank riding and Demonstrational shooting.

On Chinese social media, we promote exclusive capsules, fashion shows and more specific campaigns.

How has the percentage of Chinese shoppers/visitors risen in the last year?

If we compare SS18 season with SS17 (YTD) the rise is up to 70%, and it keeps growing substantially. The rate of Chinese customers, on average, accounts for about 12% in TSUM and up to 20% in DLT, but certainly, it’s not the limit.

How are Chinese purchasing preferences different compared to that of other nationalities?

TSUM and DLT are the most experienced in product offer and boast the best choice of world-famous brands as Louis Vuitton, Gucci, Dior, Valentino, Dolce & Gabbana, Celine, Burberry, Moncler, Hugo Boss, Saint Laurent Paris and other top-fashion brands, we have the opportunity to observe the narrow preferences of customers from different countries. TSUM has one of the most professional and experienced team of buyers headed by Alla Verber – TSUM and DLT Fashion Director, who has a 40-year working experience in fashion retail and 25 years’ experience in buying: she was the first to present in Russia such brands as Dolce&Gabbana, Giorgio Armani and many more. We are convinced that in terms of product offer we have one of the best in the world.

Chinese consumers’ shopping habits have changed a lot within a decade as incomes have risen, and many now experience a high-quality lifestyle. Chinese people also value quality and the “face” associated with social status and pride. As well as maintaining a love for top luxury brands, such as Rolex, Louis Vuitton, Chanel etc, we also notice that Chinese clients are very experienced in the latest fashion trends, loving the trend-setting pieces that are already sold out in Europe, as Balenciaga, Celine, Saint Laurent Paris, Off White, etc.

Chinese clients are very keen on the beauty segment of our retail: TSUM has one of the biggest beauty and cosmetics department in the world. They prefer La Mer, Cle de Peau Beaute, Tom Ford, La Prairie, Chanel, Yves Saint Laurent and Jo Malone.

TSUM also offers the unique format of shopping: for example, interactive experience in Guerlain perfume boutique – with the help of digital technology, the customer select the perfect perfume composition for her or his personality. It is the only one Guerlain perfume boutique in Russia. To have an opportunity to fully express their creativity, customers may visit our Denim-bar on the 4th floor and use the customisation service with wide range of all kind of patches, embroidery services and personal sketches. Chinese people highly appreciate these personalised, creative and fun opportunities. Also in TSUM and DLT Chinese people find the brands that are not available for purchase in China, this also attracts them a lot.

What other activities your Chinese customers like to do while they are visiting the city other than shop?

The boom in tourism from China has not escaped Russia. Moscow and St. Petersburg are top-travel destinations. For example, according to statistics, more than 40 000 Chinese people were expected to come to Russia for Football Cup, they all go via Moscow of St. Petersburg. Group travelers do not need to apply for Russian visa; this makes the procedure of coming to Russia much easier and attracts visitors.

TSUM aims to be the destination of choice for international shoppers and travelers. We are aware that Chinese tourists generally prefer to combine shopping and sight-seeing, and the Bolshoi Theatre is one of main tourist destinations ituated right at the heart of Moscow and just across from TSUM.

As Chinese travellers are very sophisticated, we arrange tailor-made activities, leveraging on the unique options secured by the fact that TSUM is managed by Mercury Holding, the biggest luxury player in Russia and Eastern Europe. These include cooking workshops at Cristal Room Baccarat, jet-fighter flights and invitations to VIP social events.

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Followers feelings – both aspirational and practical

Recent KOL visits to Russia showed the various styles of promotion that turned on Chinese affluent travelers, with a mix of the visual and aspirational, to the logistical and practical.

Paris and Claire Xiao Ai, with 2.3 million and 2.1 million Weibo Followers respectively (and of course more across WeChat, Xiaohongshu and Instagram etc.), visited Russia and showcased the architecture, hospitality, shopping and the like. As well as the usual intrigue on the unique shopping (Chinese international shoppers love to buy what cannot be found elsewhere), the tendency was for Followers to ask about the practical aspects of visiting – precisely where to shop and how to do tax refunds, as well as detailed information about price points across a wide range of collections. Satisfaction with the ‘China friendly service’ was also a huge plus point commented upon.

The Takeaways:

  • Russia is a destination which has the advantage of being able to ‘do it all’ – tourism with historic sites that are not only relevant to China but a strong part of its national promotion. Never under-estimate the power of ‘state-approved’ travel, even for the modern generations.
  • As well as this patriotic point, Russia blends luxury aspirations with the practical values of Chinese travellers – even highly affluent Chinese shoppers appreciate a good deal. When you speak to your target – when they are at home in China, before they travel – don’t promote only the aspirational and emotional in lieu of the practical.
  • Any brand or destination should now have moved far beyond any kind of ‘initial Chinese integration’. If your brand, venue or city destination is still ‘considering opening a WeChat account’ then you are literally years behind. WeChat and Weibo accounts that have creative content, mini-programs for loyalty programs, store-locators, tax-back explainers and more are nothing less than a must. In-store or at-venue China payment options, staff and more are now expected.
  • Chinese luxury shoppers want it all – as shown by the strategy of TSUM, the niche brands have just as much pull as the headline names, personalization options are a must, digital gadgets and games are a draw – but the price and taxback options are seen as “deal-breakers”.
  • Once you have shown that you can meet their needs, ‘upselling’ from products to experiences is a reliable point of interest for affluent Chinese travellers. As evidenced by TSUM, if the offer hits the right aspect of being truly one of a kind, the sky’s the limit for the adventurous Chinese client.

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