Business / Industries

Retailers misunderstand their shoppers

By Mike Bastin (China Daily) Updated: 2014-03-04 07:59

The size of the stores, for example, should be slightly smaller than those of the mass market, bargain basement food retailers. This is also a quite deliberate design feature of a typical Waitrose store in the UK.

Not only slightly smaller stores but appreciably more spacious environments will also contribute to a superior, more refined image. Larger stores, which lead to greater economies of scale, lower costs and prices, aren't necessary for such an exclusive brand.

Tesco brand reportedly to be dropped

How the cookie crumbled for Tesco

The name is also important. The Chinese are very familiar with CRE's successful Vanguard brand and are also aware of the Tesco brand name, which launched in mainland China in 2004.

However, the Tesco name does not represent "success" in the minds of the Chinese and no effort has been made to communicate any sort of superior image.

To build such an image of superiority and exclusivity, therefore, CRE's Vanguard brand name should be retained but another, secondary name should be added to differentiate from the current Vanguard offering and build an image of "luxury".

Such a dual name approach will capture attention, with the very well-known Vanguard name and, at the same time, convey a far superior brand with a new name, which has obvious associations with "status" and "exclusivity" and "luxury".

Such a pioneering move would probably allow for a second brand name that simply communicates "luxury" or "prestige" with no major competitors at present.

This double brand-naming strategy could, therefore, simply make use of "Vanguard" and "shechi" (luxury) will communicate precisely this new, exclusive form of food retailer. At present, none of the major food retailers operating in China offer anything remotely similar.

It is also crucial for this new, luxury brand of food retailer to communicate links with many of the most famous luxury brands in the world such as Burberry Group Plc, Prada SpA, Rolls-Royce Holdings Plc and Louis Vuitton Malletier.

In summary, the Chinese people's insatiable appetite for luxury brands and social climbing appears undiminished and stretches across the entire spectrum of goods and services - and food retailing should be no exception.

In much the same way that Haagen-Dazs transformed the branding of ice cream, so now do Tesco and CRE stand at the vanguard of a revolution in food retailing in China.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer of marketing at Southampton Solent University's School of Business. The views do not necessarily reflect those of China Daily.