[China Glass Network] China's second- and third-tier cities account for 87% of China's total population of 1.3 billion, while modern retail sales account for 64% of the country. This is undoubtedly a high demand market for potential retailers. So, how can retailers win the second and third tier cities? Polyester Neckerchief,Polar Fleece Neckerchief,Fleece Neckerchief,Knitted Shawl Factory Baseball Cap Co., Ltd. , http://www.beaniescarf.com
The reporter interviewed Chen Junliang, executive director of retail services in Nielsen China. Based on the overall situation of China's retail industry, he integrated the retail status of the three provinces and the behavior patterns and purchasing dynamics of second- and third-tier consumers. He proposed five strategies to solve the retailers' success in the second and third tier markets. The business challenges faced.
Strategy 1: Pick the right city
Chen Junliang pointed out: "Reducing risks and increasing the rate of return on investment are the top issues that retailers should consider when selecting cities to expand their business." The Nielsen City Development Index comprehensively examines trade development, purchasing power, measurement trends and retailer data, The potential of the city is systematically summarized to ensure that the expansion plan achieves its strategic objectives.
Taking the three eastern provinces as an example, Nielsen's research found that in the capital cities of Changchun and Shenyang, the retail demand is relatively large. Due to the complete supporting facilities, the market competition has entered the stage of “close-knitâ€, and in Qiqihar, Yichun, Tonghua and other places. The city has already had a relatively good infrastructure, and the demand of consumers is also at a high level. The market potential cannot be underestimated.
However, at the current stage, the competition in these urban retail markets has not yet reached a feverish state. Retail enterprises should especially increase their expansion and investment in such cities, seize the opportunities and lay a solid foundation for long-term development.
Strategy 2: Create an effective channel strategy
It is vital to choose the preferred store format from a variety of channel formats and concepts to meet the requirements of local customers. Different formats can satisfy the consumption demands of different types of customers, such as hypermarkets, more choice of goods, longer shopping time, and relatively cheaper prices, suitable for casual shopping. The convenience store offers convenient and fast shopping, suitable for young but price-insensitive consumers. As a complement of the two formats, the supermarket also has a good living space.
Nielsen's research shows that community malls perform well in large and fast-growing second- and third-tier cities, and the “one-stop†concept can satisfy consumers' daily food, department, entertainment and banking services. In small and medium-sized second- and third-tier cities, neighborhood stores are more popular, and the friendly atmosphere meets the individual needs of customers.
Strategy 3: Win the second and third line consumers
Consumers in second- and third-tier cities prefer one-stop shopping, shopping for fun, and finding good quality products. Nielsen's research found that in second- and third-tier cities, more than 40% of consumers use shopping as a leisure activity, and 10% of consumers think that “a good place to spend time shoppingâ€.
At the same time, consumers in second- and third-tier cities are more inclined to habitual consumption and less converted stores. Local retailers are familiar with the needs of consumers and provide a friendly shopping environment while providing localized daily necessities. As consumers become more connected with stores and their staff, loyalty to retail brands continues to increase.
In addition, traditional festivals are important for consumers in second- and third-tier cities, and retailers have the opportunity to hold theme promotions and product combinations during the holiday season to stimulate sales.
Strategy 4: Provide the right combination of products
To find the best product mix in second- and third-tier cities, you need to understand the differences in regional preferences. Compared with the inland market, consumers in coastal second- and third-tier cities are more likely to accept imported products and new products.
In the Pearl River Basin, consumers demand high product quality, Fashion, consumer experience and service. Retailers can hold theme promotions twice a year, selling some imported products to highlight differences. In northern or western Guangzhou, prices are more attractive, requiring retailers to offer cost-effective combinations of products.
Strategy 5: Set the appropriate price and promotion for each second- and third-tier city, and promote the price and promotion factors of consumer purchases. Similarly, the discount scale varies by type, region and store. For example, in first-tier cities, biscuits are reduced by 13%, but in third-tier cities, prices are only reduced by 10%, while in second- and fourth-tier cities, the same type of goods are reduced by 8%. Price competition in second- and third-tier cities is not as intense as higher-level cities.
Product quality is as important as price in second- and third-tier cities. If a business wants to succeed in second- and third-tier cities, it cannot rely on experience to choose a city. The adaptability of the store format is a necessary condition, and customer loyalty is important for long-term success, and businesses must recognize that customers in second- and third-tier cities have special needs.
Retailers face huge potential in the expansion of the second and third tier markets. Obstacles to sales have decreased and purchasing power has risen. To take advantage of this opportunity, retailers need to understand the intricacies of the market.