Much has been written about how brands should handle the coronavirus situation, in terms of a communications angle and general business perspective.
Already having said handle on the current-yet-evolving situation, brands now need to re-assess their strategies for the entire year – and decade – ahead, and how such an impactful issue will have longer-term cultural ramifications.
The recent Insight Report from Reuter Intelligence – Luxury Chinese Consumers in a New Decade – looks at five key macro-trends that will shape the next decade.
In a post-coronavirus society, these will become magnified further due to understandably heightened sensitivites following a time of prolonged anguish, self-imposed home-quarantine and daily tension that the Chinese population have been through.
This excerpt from the report – available to download here for free – looks at how brands must act now and simply cannot take a ‘wait and see’ approach to this key theme:
Seeking Sustainability
With consumers’ environmental consciousness going one way only, they will have new expectations for openness and information. Brands should prepare to have the impact of their China operations analysed.
While no one is suggesting that all purchases will be made in order to save the planet, environmental consciousness has been growing, and will not decrease. Worldwide awareness of the current state of the planet is growing and the international discussion flows into China. The impact that production and consumption have on the environment are growing social and political causes.
In Chinese cities, air pollution has been recorded since the previous decade, after the U.S. Consulate first started measuring this in terms of the Air Quality Index (AQI). While the more globally aware, urban populations still tolerate comparatively high air pollution, there is a growing care about green issues and sustainability.
Tmall’s Double 11 shopping festival which celebrates sales numbers and big-RMB headlines still felt the need to mention that 2019’s Double 11 was the ‘greenest’ ever. Whether this is true or not is unknown, yet the message is clear – businesses must address their environmental impact.
In the market, there is already an accepted status quo with brands across sectors keen to promote their no-plastic, low impact and holistically healthy ethos. In luxury, it’s more prevalent for some than others – hospitality has it easier, able to offer sustainability programs and vegan menus, creating a healthier Earth and body respectively.
This is a key perspective: the world’s environment and personal health are well intertwined from the angle of the consumer. It’s all part of a healthy lifestyle and personal brand that’s chased by the affluent segment.
Affluent Chinese consumer interest in all things sustainable is no assumption – in the 2018 report on Chinese travellers, “Next-Gen Luxury Leaders: Affluent Chinese Families” by ILTM China and Reuter Intelligence, over 71% of survey respondents said that a hotel’s sustainability offering was a top factor in their decision-making process.
Beauty brands are already aware that natural and organic ingredients tick boxes high on their customers’ shopping lists. For others, the issue is less clear: aside good old-fashioned CSR that pops up in B2B media, the fashion industry is at something of a crossroads in terms of both lowering environmental impact and deducing how much their customers truly care about the whole thing.
To this point, fashion (and any) brands can look to the sports and health world for a key point: do consumers buy activewear and such because it assists with the exercise, or because it assists with the feeling and the social media photo opportunity?
Manifestations and drivers of sustainability
As mentioned, the interest in sustainability is no assumption – key drivers and examples are clear to see:
- At Shanghai Fashion Week 2019, logistics company S.F.-Express launched an environmentally friendly express box that is more trackable, recyclable and apparently reduced carbon emissions by 464kg during fashion week alone. In Shanghai Fashion Week 2018, the theme of ‘green everyday’ promoted events such as “green sharing meeting”, “workshop for green”, “environmental protection art installation”, “green fashion limited time store” and “green fashion brand exhibition”.
- On lifestyle sharing platform Red Book, sustainability is a popular theme. The hashtag roughly meaning “shopping lasts bag after bag” (in Chinese it also rhymes with “shopping lasts generation after generation”, since “bag” and “generation” sound the same) generated over 6,000 user posts. Lifestyle blogger @Ritatawang and @Irene, inspired by the Scandinavian running movement ‘plogging’ that combines jogging with picking up litter, documented a day of plogging under the hashtag meaning ‘running while picking up trash’ that reached around 250,000 views.
- After Shanghai’s new regulation on waste treatment, luxury hotels do not provide toothbrushes, combs, razors, nail polishers, shoe wipers and loofahs in rooms. Hong Kong and Shanghai Hotels, owner of The Peninsula hotels, recently partnered with Hong Kong-based textile company Novetex, to recycle its linens which are usually thrown away by hotels.
- The Chinese authorities are keen to have eco-goodness in the news. In 2018 the official slogan was ‘protect the blue sky and water, clean the land’. Regular performance confirmations such as thousands of villages being cleaned up, gas companies being regulated and water being cleaned
are common in the news. Ongoing updates on the health situation of the virus will only increase such news and projects. - Despite some leaping on the headline of ‘China cutting electric car subsidies’ for brands, it does not reflect the complete situation. Consumers are still being encouraged to purchase electric cars, with registrations approximately RMB 70,000 lower than for a petrol car. Electric car sales are set to continue to grow.
Implications for Luxury Brands
Now, they can essentially get away with meaning well and setting a target date, such as Zara’s “100% sustainable by 2025” statement. The issue for brands will be that 2025 and the like are actually in this decade – and the internet (WeChat in China’s case) remembers.
No matter the country’s own issues in environmental impact, it is not beyond possibility that impact on China’s environment from foreign corporations may come under the spotlight.
Currently, businesses deal with the topic by having senior figures appear at panel discussions, agreeing that the planet should be saved. Soon, the consumer will want to know how.
Burberry faced backlash after not only burning clothes but claiming that the ‘energy was captured’ so it was in fact positive for the environment. This claim was followed up by a shift in action and new sustainable initiatives, and it was presumably a coincidence that they realised this just after burning the stock, and not prior to inflaming both actual products and consumer ire.
Luxury brands are savvy on corporate comms and few customers are going to chase them up on claims. But as the luxury consumer scales tip past a balance of what they want versus how they feel about it, luxury brands may not only need to talk more corporately but act more believably in order to satisfy an intensifying interest in sustainability.
The right question might not be if you need a China-specific sustainability plan, but how quickly the business can create one that’s holistic, trustworthy and inspiring.
Future Forecasts
1) Be Pro-active on Transparency
In a consumer environment where care is being shown for the actual environment, it would be more strategic to plan for this, rather than react to it. How is your brand going to really open its books on the impact it’s making? Or would you rather that Chinese consumers ‘find out’ that your domestic operations are less than pure toward China’s environment?
2) Give Customers Sustainability Selfie-opportunities
Back-end supply-chain sustainability sounds great, but it isn’t the most provocative attribute that a customer can show off on their social media. ‘Look at my new luxury handbag that was supposedly manufactured in a sustainable supply-chain!’, said no one ever.
Just as physical venues – hotels, restaurants, stores and pop-ups – need a big selfie-opportunity in place, what’s the selfie-opportunity of eco-goodness? How are you letting your eco-conscious, global citizen consumer easily show that they are saving the planet, one luxury purchase at a time?
3) CSR Needs To Be Revolutionised
An initialised team that sits somewhere in the business hierarchy and does things like organise fun-runs or recycle something back into the environment is a wasted opportunity.
Your customers also neither know nor care if your CEOs convened in a glamorous city venue and ‘signed a sustainability pact’. Any real care that is had for the environment needs to be pushed to the forefront of consumer-facing activity and woven in to all products and services for all to see, understand – and be able to directly engage with.
