Hong Kong consumers in a 'casual' relationship with fast-fashion retailers

They like the brand but do not want to be too engaged.

Global loyalty marketing agency ICLP surveyed 750 consumers in Hong Kong and asked them the brand that comes to their mind first of the retailers that they shop regularly. The survey reveals a correlation between characteristics of sectors and brand relationships, and found that the two “most named” retail sectors are supermarkets and fast-fashion retailers.

The findings show that Hong Kong consumers lack passion and commitment towards supermarkets. On the other hand, though 64% of Hong Kong consumers naming fast-fashion retailers as their top-of-mind brands are Millennials, one of every three are in a ‘casual’ relationship with that brand. Brands need to understand the individual buying behaviours and purchasing decisions of their customers in order to map out suitable solutions to engage them and thus strengthen the customer relationship.

The survey, which reveals underlying gaps in the retail experience of Hong Kong consumers, asked respondents to rate their expectation and experience of core relationship criteria to determine if their relationship contained commitment, intimacy and passion. These criteria were then mapped onto a model based on Sternberg’s Triangular Theory of Lovei in partnership with an expert on relationship dynamics, Professor Ron Rogge at the University of Rochester in the United States. While retailers should be aiming for a devoted customer relationship which incorporates commitment, intimacy and passion, the study showed that Hong Kong retailers are still far from achieving this.

Missing Passion and Commitment towards Supermarkets
In the ICLP survey, over 30% of the total respondents named supermarket brands as their top-of-mind brands. More than half of them are Generation Xers born between 1965 and 1980. This is may be because, while supermarkets target the mass public, their most frequent customers are from mature age groups such as the elderly and housewives. Among those who named supermarket brands in the survey, 35% are in a ‘liking’ relationship which lacks passion and commitment. They only feel intimacy towards the brand, meaning that many come into contact with the brand on a regular basis, and are willing to share information and interested in obtaining information about products.

The nature of the business and characteristics of the sector could well be one reason for the results. Supermarkets are where consumers acquire their daily consumption needs, and players in this retail sector offer close to the same selection of products, consistent quality, standardised commodities and self-service. Supermarket customers emphasise value for money and are price-sensitive. They are likely to switch supermarket brands when the next best offer comes along. This is also reflected from the smallest gap of reliability between expectation and experience of relationship criteria according to the study. Minimal brand enthusiasm with no engagement has resulted in the large percentage of ‘liking’ relationships.

The study also reveals the disconnection between expectation and experience of core relationship criteria is mainly attributed to communication, followed by rewards, representing 26% and 25% of experience not meeting expectation, respectively.

Looking into the gap in these relationship criteria, the respondents’ actual experience compared to expectation fell behind in the following areas:

– 9% in getting access to special and exclusive offers
– 8% in being asked how they would like to be communicated to, e.g. phone, email, SMS
– 6% in feeling that their custom and loyalty is rewarded
– 6% in feeling that they are rewarded with offers that are tailored to them

Mary English, General Manager at ICLP, commented: “The distribution of relationship type for supermarkets best demonstrates the application of the Triangular Theory of Love. It is normal for supermarket to achieve ‘liking’ relationships as customers actively look for daily product information from supermarkets and emphasise value for money. However, supermarket brands should consider how to create stronger reward programmes and ensure consumers access to special and tailor-made offers in order to enhance the emotional connection between their brand and customers, thus developing ‘devoted’ relationships.

Loyalty strategies for supermarket brands have to evolve as the market is changing. Nowadays, comprehensive personalised loyalty programmes are more significant than traditional points-based reward programmes. Supermarkets need to understand the key drivers that build more loyal relationships, which encourage customers to spend more and become better brand advocates. Communication is of paramount importance to create a reciprocal sense of passion that drives ‘devoted’ relationships. It is recommended that supermarket brands maintain a close, interactive and instant communication with customers in the way that their consumers prefer, and be mindful of the tone of communication with customers.”

Fast-Fashion Retailers Missing All Three Relationship Components
In the survey, 15% of total respondents voted fast-fashion brands as their top-of-mind brands. Over 60% of them are Millennials born post-1980, as fast fashion targets the younger generation who keep updated of the latest trends and expect a rapid response. Among those who selected a fast-fashion brand, 33% respondents are in a ‘casual’ relationship with limited passion, intimacy and commitment; that is, they like the brand but avoid getting too engaged. This may be explained by the characteristics of the fast-fashion sector. Fast-fashion brands do not heavily emphasise brand character and identity, but focus on the availability of options and trendiness, coupled with relatively low prices.

Disconnection between expectation and experience of core relationship criteria in this sector is mainly attributed to recognition, followed by respect, representing 42% and 33% of experience not meeting expectation, respectively. Looking into the gap in these relationship criteria, the respondents’ actual experience compared to expectation fell behind in the following areas:

– 16% in sending them a message, gift or offer on their birthday
– 9% in feeling that the brands have their interest at heart
– 8% in feeling that their personal information is treated with respect and is used for their benefit

Mary added: “As a majority of Hong Kong Millennials are less committed and passionate towards their favourite retailers, fast-fashion brands need a cohesive consumer engagement strategy to improve commitment and passion, and foster ‘devoted’ relationships with Millennials. While fast-fashion retailers keep customers updated with the latest trends and products information, they still have some way to go in structuring their brand character and identity, and incorporating these elements into their loyalty programmes, which are only price-driven, in order to enhance emotional connection between customers and their brand.

As a segment with high spending potential, Hong Kong Millennials are seen as an influential generation that loves online shopping. They can easily access online shopping platforms to review product information and comment before making purchase decisions. Any brand that is able to develop an innovative online-to-offline customer engagement strategy will have a chance to stay ahead of the competition. While online shopping brings convenience to both brands and customers, the conversion of online shoppers into real-life foot traffic remains essential for brands to succeed in an increasingly digital retail environment.

With the rise of digital platforms and e-commerce, retailers need to understand individual customers’ needs by leveraging customer data such as purchase preference and consumption habits, and by big data analysis. To build closer connections with Millennials, fast-fashion brands should fully utilise social media such as fan pages, forums and social media activities with incentives to engage Millennials who frequently use digital media during their shopping journey, and actively listen across channels to win long-term trust from customers. Relevant recommendations and insights on the latest trends from the brand based on their preferences are top of Millennials’ demands. ”

No Standard Formula for Customer Loyalty Approaches
When comparing the two sectors – fast fashion versus supermarkets, fast-fashion retailers have more ‘casual’ relationships than supermarkets by nearly double. The uniqueness of each sector plays a certain role in affecting the distribution of relationship type. Compared to supermarkets, the disconnection between the expectation and experience is also larger for fast fashion. However, all retailers should acknowledge their shortcomings in order to build devoted relationships with as many of their shoppers as possible.

Mary concluded: “Despite the same backdrop, different sectors of the retail industry require different customer loyalty approaches. Brands should start by understanding individual buying behaviours and purchasing decisions with the aid of different customer data analytics, in order to map out integrated solutions to engage customers and thus strengthen the customer relationship.”