What: A joint White Paper from Bain & Co and Alibaba on Chinese customer loyalty

Why it is important: Although China is a specific market, some trends might be reproduced in other ones, such as the group-buying options provided to customers from lower tier cities, leveraging digital capabilities.

Bain & Co and Alibaba released a joint White Paper, “Hyperlocal Retail Brand Growth”, analysing the evolution of the Chinese market, from mom & pop to hypermarket (2000 – 2010), then the massive digitalization (2010 – 2020) and the current competition for customer loyalty. It anticipates a stronger and fiercer competition as the e-commerce market is going more mature, meaning that the focus is not anymore on customer acquisition, but increasing the share of customer spending, thanks to hyperlocal retail, including proximity e-commerce and online to offline sales.

Interestingly, in China, only 15% of customers are loyal category shoppers, dedicated to one specific brand in a given category, and contribute to 20% of the said brand’s sale. 60% are much more spontaneous and tend to increase their options, thus being less loyal to brands and retailers.

There are different preferences according to the regions: in top tier cities, customers favour one-hour delivery, while in lower tier cities, customers prefer to opt for group-buying, in order to lower the prices, instead of paying a premium for speedy deliveries.

In 'new era', hyperlocal retail to be future, finds Bain study