A growing number of retail stores in China are using specially designed apps to track shoppers’ behavior in a bid to boost sales.
Yo-ren, an information technology startup, has developed an app to collect information about members enrolled in reward programs offered by stores. Convenience store operator Lawson has introduced the app at select locations in China.
The Chinese government has desire to make consumption the primary driver of growth. But spreading online shopping will bring the detriment on brick-and-mortar shops.
In 2015, the Shanghai-based Yo-ren, which provides digital marketing services in China, began supplying Lawson stores in Shanghai with an app to manage the convenience store’s reward points program. Since the beginning of this year, the companies have expanded use of the app to other cities, including Beijing, Dalian and Wuhan.
The app is designed to provide product information and discount coupons while giving customers reward points based on their purchases.
Under the current plan, members earn 10 points for each yuan they spend, exchangeable for store coupons, at the rate of 1,000 points for 1 yuan (15 cents).
Since the service was rolled out, the number of members in Shanghai increased to 350,000. About 15% of them use the app at least once a week. These active users visit Lawson stores three times per week on average.
Lawson has invested around $900,000 in Yo-ren, which is now using the money to enhance the app’s features.
Tailored services
Lawson plans to analyze information collected through the app, such as customer profiles and purchase records, for consumer preferences and trends. Findings will then be used to boost traffic during slow business hours, such as by offering coupons for free cups of coffee between 3 p.m. and 5 p.m. at locations close to members’ workplaces.
Chinese consumers are flocking to internet shopping services provided by Alibaba Group Holding and other e-commerce players. Soaring online purchases are denting earnings at brick-and-mortar retailers, especially department stores.
Convenience stores have proved less vulnerable to the trend, but Yo-ren CEO Osamu Kaneda said there is still a lot of room for them to boost their ability to attract consumers.
Yo-ren’s app allows stores to track members in real time. Its features enable stores to analyze customer preferences and then develop new revenue streams from makers through targeted advertising. The app will also help stores tailor their services to match customers’ needs.
China is in the midst of an economic evolution in which consumer spending is replacing investment and exports as the main driver of economic growth. The service sector is an important link in this shift because it employs large numbers of people.
But the decline of brick-and-mortar sales will inhibit consumption due to slower job creation in the service sector and lower wages for those jobs.
To make consumer spending the new engine of economic growth, China needs to engineer a balance between online shopping and sales at traditional retail stores.