How Social Media Is Changing Physical Retail

On any given weekend, Shanghai’s Wukang Road, located in the heart of the city’s former French Concession, will heave with locals and visitors in their most stylish outfits.

Street style photographers working for dedicated social media accounts on Xiaohongshu frequent the historic street searching for subjects. Some are caught waiting at intersections, shopping bags in hand; others perch on bar stools outside one of the area’s many photo-friendly brunch spots. Attention-seeking KOLs (influencers, in local parlance) also join the spectacle, as everyone vies for the coolest places to “daka,” or check in, on social media.

The street, along with neighbouring thoroughfares Anfu Road and Yongkang Road, started trending in recent years after social media-friendly cafés and bakeries popped up in the vicinity. An ice cream store named WIYF, or What Is Your Flavour, famously drew two-hour-long queues.

“I’m sure the ice cream was good, but you could get that anywhere,” said James Macdonald, senior director of real estate firm Savills Research, China. “It was just the place to be seen.”

After the arrival of hipster food and beverage establishments, it was only a matter of time before fashion and beauty businesses followed suit. Alongside multi-brand stores Looknow and In the Park, the likes of Prada, Samuel Gui Yang and C-beauty player Harmay have based pop-ups, boutiques or events on and around Wukang Road.

The area is a crash course in how social media is changing physical retail in China: in addition to a well-curated selection and cushy service, shoppers want photogenic stores that serve as backdrops for user generated content that in turn drives traffic and helps brands build KOL networks. But a shopping space that centres on experience also hinges on newness, something not every brand is equipped to provide.

The wutong tree-lined streets and historic art deco villas of the Wukang Road area, captured in popular music videos and films, have attracted people from across the country looking for a shopping experience that has more charm than China’s malls, many of which inevitably look and feel quite similar.

In recent years, government efforts to beautify Chinese cities and moves such as “undergrounding” telephone lines has benefitted Wukang Road. “There is a growing demand in major Chinese cities for more vibrant street life and indoor-outdoor dining, [which] has allowed areas like Wukang Lu [Road] to flourish,” said Ben Cavender, managing director at China Market Research Group.

This demand is also reflected in the growth of open air, pedestrian-friendly shopping spots like Shanghai’s Xintiandi and Columbia Circle or the area around Chengdu’s Taikoo Li, which are run by developers that renovate a historic location but preserve some of its original structures, notes Macdonald.

Though Cavender expects that similar street-level, mixed use shopping areas will develop in other Chinese cities, they don’t always work. “Sinan Mansions in Shanghai was meant to offer a similar experience to consumers and similar commercial opportunities to brands, but it has yet to really find its footing despite its central location and historic buildings,” he says.

For brands looking to situate their pop-up or boutique outside a conventional shopping centre, Wukang Road has obvious perks.

“It has a strong cultural atmosphere and when it’s not very busy, the street is extremely beautiful,” says Samuel Gui Yang, the eponymous designer who hosted an event to celebrate his Fall/Winter 2021 collection in partnership with interiors brand Fnji, which operates a three-story, 80-year-old building on the road. The area’s reputation as a KOL hunting ground caused some apprehension at first but this mattered less as Yang’s get-together was invite-only.

There is a growing demand in major Chinese cities for more vibrant street life and indoor-outdoor dining.

For most brands, the Wukang Road area’s high levels of foot traffic is a draw. But retailers with a strong online following, like multi-brand store Looknow, which operates its flagship and a newer gallery space on Wukang Road, are more often sought after rather than stumbled upon, says Sisi Cheng, the company’s head of marketing. “People do their homework; someone might find themselves in the area, but they’ll still use social apps to see what’s popular nearby.”

A ground floor space at Looknow’s flagship is devoted to pop-ups; brands like By Far, Mismin and Apede Mod have partnered with the boutique to showcase their wares there. “If you’re popular, unique and people can create interesting content [in your store,] people will share it; when users see it, there’s a snowball effect that brings in a lot of organic traffic,” says Cheng. The By Far pop-up, which spanned two months, drew over 20 million views through KOL posts on Xiaohongshu and Weibo, according to Looknow.

The key is user-generated content. “There’s only so much you can do in terms of direct marketing to consumers,” says Macdonald. “The other stuff has to be driven by consumers themselves. That’s the advantage of Wukang Road.” Not only does seeing the store through users’ posts help inform Looknow of ways to develop the in-store experience, they can also be a lead-in to working with new KOLs and key opinion consumers (KOCs, the local equivalent of microinfluencers).

But being based in the area also has its challenges, especially when compared to more commercialised developments and malls — think licensing, landlords, permits, nearby residents, noise pollution and more, notes Macdonald.

He adds that spots like Wukang Road are better suited to pop-ups, industry events and product launches where brands aren’t trying to drive sales and service a large number clients. “You don’t have parking and it’s inconvenient, so it’s not about targeting high-net-worth, middle-aged consumers that want to drive cars to buy luxury goods.” With the number of malls and department stores like SKP across Chinese cities increasingly focused on in-store experiences and social media friendly installations, brands shouldn’t underestimate the ease of a more established location.

For some businesses, the ideal location is neither in the bustle of Wukang Road nor in a mall. Yang hasn’t opened an own-brand boutique yet, but would opt for somewhere more secluded in the French Concession. “Every time we come back there are new stores, the turnover is quite fast. Traffic is important for us too, but we want a location that’s more sustainable.”

Ultimately, the benefits of an area like Wukang Road outweigh the drawbacks. “Brands should absolutely tap into these hot spots and make them part of their marketing strategy,” says Cavender. Prada’s recent pop-up concept in the street known for its youthful character is likely to validate the area in the eyes of other high-end brands. But to be cost-effective and true to brand, players must be quick, flexible and have a granular understanding of the consumer demographics these areas typically attract.

A heightened appetite for newness among Chinese consumers means brands need to think long-term. “The traffic doesn’t just happen when you secure a good location,” says Cheng. “You need to build loyalty by giving people good experiences, making the store fun and different.” Staying creative to keep up with the area’s turnover isn’t easy. “How can brands keep people coming back? That’s the big question most brands are still trying to answer.”

Source: Business of Fashion