A CUBIC SALES FORMULA
An out-of-the-box marketing idea puts traditional Shanghai brands in a square machine as part of efforts to boost visibility and sales
Shanghai’s waning time-honored brands have literally been given a helping hand — in the form of a robotic arm within a cubic vending machine.
A survey conducted by the Shanghai Academy of Social Sciences shows that only about 10 percent of Shanghai’s timehonored brands are profitable, while 70 percent of them can barely make ends meet. The remaining 20 percent have had to shut down after suffering losses for years. There are 222 such brands in the city, ranging from food to clothes to accessories.
To help arrest this decline, 2- meter- high vending machines that dispense Shanghai’s classic time-honored products such as White Rabbit creamy candies and Tiger and Dragon Essential Balms are being rolled out across the city’s tourist hotspots. In contrast to traditional vending machines that can only display products that measure roughly the same dimensions, these machines allow for a variety of shapes and sizes because they use a robot arm to retrieve the merchandise.
More than 100 of such machines will be available across Shanghai by 2016 and there could be as many of 1,000 within the next three years, according to Feng Jionghui, deputy general manager of Signature Lifestyle Co Ltd, the operator of this new project. Feng added that between 20 and 30 of these machines will soon appear in locations such as Nanjing Road Pedestrian Street and Yu Garden, both are major tourism spots in downtown Shanghai.
“There are so many products worth recommending to domestic travelers and expatriates such as Shanghai Coffee and White Rabbit candies but these brands have entered an awkward bottleneck in terms of development,” said Feng.
“People outside of Shanghai and those from the younger generation hardly know about these brands today, so we decided to approach the TimeHonored Association and work together to rebuild their popularity.”
The first machine was set up at the Jing’an Temple metro station where Lines 2 and 7 intersect. Consumers can purchase the goods using their debit or credit cards. The machine, which occupies an area of just 2.5 square meters, requires minimal maintenance and has already attracted many customers.
“Since the machine was made available in October, we’ve seen more than 20 orders every day for the products, most of them priced between 58 and 108 yuan,” said Feng.
Shao Yuling, secretarygeneral of the Shanghai Time- Honored Brand Association, said she was hugely impressed by the spending power of Chinese consumers during the November 11 Singles Day online shopping spree. Yet, at the same time, this phenomenon spelled trouble for certain businesses as well.
“The booming e-commerce scene has overshadowed traditional purchasing habits and the physical stores for Shanghai’s time-honored brands have been impacted as a result. It’s sad to hear that some of the flagship stores for famous brands will be lowering their shutters next year,” she said.
Shao added that she felt compelled to do something to help these ailing businesses, and when her association was approached by Feng’s company earlier in June, she immediately took interest in the idea of promoting the city’s prestigious brands and products through vending machines.
Based on market surveys, Feng’s team would choose the products that will be featured in the machines. The selection of goods will also be altered over time according to factors such as purchase frequencies, timing and location.
“Take the existing machine for example. As its location is adjacent to many high-end office buildings where many white-collar workers and foreigners have the habit of drinking coffee, products like Shanghai Coffee are among the most popular,” said Feng.
According to a poll conducted by Signature Lifestyle, up to 54 percent of respondents said they would buy a souvenir during their travels, with outbound travelers being more inclined to do so. However, not many people actually buy souvenirs in China’s tourist hotspots because most of them are similar in appearance and quality — they are all made in Yiwu, a small city in Zhejiang province famous for producing such commodities.
Feng said that their project can help change the situation in Shanghai as the machines can make time-honored goods more distinctive via its unique sales platform.
“While the goods sold on online platforms enjoy good sales every year, there is no reason our high quality products cannot win over customers. We just need good platforms and these vending robots are providing one,” said Shao.
Feng shared that a 12-member design team, which is evenly divided into Chinese and foreign designers, is currently working on themed gift packages, and the first batch would be available before the Chinese New Year in February.
Consumers can expect to find themes such as “Sweet Shanghai”, a package primarily made up of snacks for those with a sweet tooth, or “Cool Shanghai”, which might feature fans and mineral water. Each of these gift packages will come in special wrapping to reflect a mix of modern and traditional Shanghai elements.
The team at Signature Lifestyle is also working against the clock to set up a WeChat platform, a popular Chinese social media platform, before the Chinese New Year so that customers can browse, buy, and even arrange for a time and location to retrieve their purchases. Besides Shanghai, similar vending machines will also be released in cities such as Beijing and Shandong province in the near future.
“Our ambition is to make our team the nation’s No. 1 brand for cultural souvenirs in the future. We look to operate up to 8,000 of such machines across China in the next five years,” said Feng.
Modern designs that reflect traditional Shanghai culture will adorn gift packages containing timehonored merchandise.
A vending machine sells Shanghai souvenirs at a metro station.