Ignore local knowledge at your peril: this is the lesson for retailers heading for China in the recent Wall Street Journal article “In China, Ikea is a Swede Place for Senior Romance” which Laurie Burkitt capably details.
Ikea: At the weekly IKEA romance session in Shanghai, the elderly arrive in swarms of 70 to 700 to get the free coffee offered to holders of the IKEA Family membership card. Ms. Tang, seated amid the backdrop of Poang reading chairs and Vreta poufs, sips coffee and says she is grateful to have such a meeting place. “I make more senior citizen friends when I come here,” said Ms. Tang. In China, IKEA is planning to up its nine locations to 17 stores by 2015 to meet demand from the nation’s growing middle class, who aspire to Western lifestyles at affordable prices. On a recent Sunday in Beijing, Liu Yunfeng sat in a 3,999 yuan ($625) white leather Tirup chair, watching home videos from the screen of her Sony digital camera while her shoeless daughter jumped on the Nyvoll bed of a mock-up room.
Wal-Mart: Several years ago, some Wal-Mart stores in China set up a children’s camp for summer and winter school breaks. During daily sessions, children are encouraged to try their hands as part-time greeters and announce deals over the broadcast system. “If I go to Wal-Mart I’ll want to go for the day,” said Cui Hongyan.
McDonalds: With its free Wi-Fi and clean bathrooms, is adding more electrical outlets to most of its China stores in hopes that people will actually come and hang around longer. In Hong Kong, the fast food giant is developing a service known as “McWedding” to encourage people to marry in their stores. One proposed feature of the ceremony: When it is time for the big kiss, the bride and groom can each chomp on the end of a french fry until their lips meet.
But did these retailers do their homework? Were they prepared for Chinese consumers expectations?
It seems that the retailer s relied on what worked in their home markets and are now struggling to adapt to consumers wanting to turn the retail experience into a full day social experience – “retailtainment.” Chinese consumers love Western and European brands and generally prefer them to their own Asian options. Retailers need to be educated about the unique demands of customers – they need to be relevant and have personality, which is exactly what Ikea, Wal-Mart and McDonalds have done – just a little too late. IKEA, however, is missing one of the biggest brand lessons – cultural sensitivity – when they propped up a notice board at the entrance of the cafeteria, which stated “IKEA would hereby like to inform this group and its organizers: Your behavior is affecting the normal operations of the IKEA cafeteria,” the notice said.
Comparably, Mercedes called on the local culture by flying over some of its best customers from China to join in a focus group to determine customer expectations in a new market. The brand not only differentiated itself, but it also went through the brand localization process, increasing its brand relevance and image in China. Again the key lesson here is to always challenge your assumptions and be prepared for foreign consumers’ very different expectations, particularly in the Chinese market.