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Burberry and Tencent Are Building a New Kind of Store in China

Burberry will open what it calls luxury’s first “social retail store” in partnership with technology giant Tencent in Shenzhen, China, on July 31, according to reports from Retail in Asia and Marketing Interactive. The companies first entered into an exclusive partnership in November to announce the creation of the concept store, which is designed to combine social media and retail for a digital and physical experience.

The digitally interactive experience will also be used as a laboratory where Burberry can trial innovative projects that can be expanded to the rest of the fashion house’s network across China.

Burberry did not respond to a request for comment.

Drawing on Burberry’s luxury reputation, the store will offer a series of spaces with their own concept and personality celebrating the company’s “house codes” as reinterpreted by chief creative officer Riccardo Tisci, including the Trench Coat, the Thomas Burberry Monogram, Nature and the Burberry Animal Kingdom.

Through a dedicated “mini program” through Tencent-owned WeChat, customers can unlock exclusive content and personalized experiences within the store and share them with their communities. The mini program is a customized digital companion tailored to enhance the way customers experience the store physically or virtually.

Via WeChat, shoppers can access features such as store tours and learn about the products sold in the store. It also provides a platform for dedicated client services, in-store appointment bookings, events and table reservations in Thomas’s Café, the store’s eatery and community space. Additionally, shoppers can earn rewards through the Burberry social currency feature. Each customer is given an animal character that evolves as they engage in-store and socially. Rewards range from exclusive café menu items to specialized program content.

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Tencent has launched tools to help merchants build virtual shops on WeChat, which is the most popular social media and messaging app in China, with Tencent claiming it has more than 1 billion users. Tencent has said that its mini programs support livestreaming capabilities for its retail partners, but Burberry hasn’t said whether it would use the platform for that purpose. Mini programs also provide merchants with order management services, transaction, logistics and after-sales support.

Burberry has already leveraged WeChat in April, offering a limited-edition Pocket Bag for WeChat followers of the influential fashion blogger Mr Bags as part of a larger leather-goods campaign that drove strong double-digit full-price category growth in China.

“The reaction was exceptional with the limited-edition bag selling out within a minute of becoming available and Pocket Bag styles overall selling out within three weeks of the campaign going live,” the company said in its earnings report.

As many as 84 percent of shoppers that follow brands on social visit the brand’s physical store, while 75 percent increase their spending with that brand, according to data from the most recent Sprout Social Index published in June. Given that retailers also saw a 72 percent increase in the average number of daily inbound messages in the second quarter, compared to a year earlier as the COVID-19 pandemic led more consumers to shop from home, Burberry is well positioned to ride the increased engagement to promote the new store opening.

“The retailer excels at using social media to engage with consumers, boosting loyalty among its young shoppers,” Emily Salter, retail analyst at GlobalData, wrote in a research note to clients. “Though the future of experiential retail remains in doubt due to the impacts of COVID-19, experience is likely to remain important among luxury shoppers, and will help cement brand identity and loyalty.”

Both the store and the WeChat integration can benefit the retailer’s overall presence in China, where Burberry has sought to make a bigger splash prior to the COVID-19 pandemic. Last year, the luxury retailer launched flagship stores in Beijing and Shanghai. The Burberry/Tencent store will open in the new Shenzhen Bay MixC high-end development complex, which is designed to be a major technology hub within the city.

In the first quarter, sales in China grew in the mid-teens, but in June, sales rose ahead of January’s pre-COVID level of 30 percent, signaling that the region had bounced back and was buying luxury again. China’s sales recovery was one of the only positives in an otherwise difficult quarter for Burberry, which saw comparable sales drop 45 percent, leading to 500 job cuts. Across the Asia Pacific region, sales were down 10 percent overall for the quarter, but returned to growth in June.