Burberry opens world-first social retail store in Shenzhen

British luxury brand Burberry opened the first-of-its-kind social retail store on Friday in Shenzhen, claiming to blend physical and social worlds with a suite of digital technologies powered by Chinese internet giant Tencent.

Through a dedicated mini program backed by WeChat, Tencent's iconic messaging app, customers can unlock exclusive content on the brand and personalized experiences, and then share them with their communities.

With a complete product portfolio and the in-store Thomas's Café, the 539 square-meter store epitomizes the brand's ambition to target a Chinese audience with a growing penchant for socializing and immersive experiences, said Josie Zhang, president of Burberry China.

"China is definitely a highly dynamic market for luxury brands, which see growth momentum largely coming from the country," Zhang told China Daily in an interview. "With the younger Generation Z consumers shaping up to be the backbone for luxury brands, their desire for socializing, interaction and sharing are propelling us to delve into the realm of social retail."

The mini program is designed as a digital companion. As long as customers walk into the store, they stand to access features such as store tours and product information. It also offers access to dedicated client services, in-store appointment bookings, events and table reservations in the in-store café.

"Through connecting social and retail environments, we will create innovative digital services and delightful experiences for our users, help brands build deep emotional connections with consumers, and support the laying of strong foundations for the long-term growths of brands,' said Davis Lin, senior vice-president at Tencent, who is in charge of the company's smart retail strategy.

Another concept introduced by the tie-up is "social currency", a mechanism to encourage customers to spend more time navigating the experiences in the mini program. According to Zhang, the more a user engages with the brand, the more likely he or she receives rewards from café items and can unlock personalized mini program content regarding the brand.

China is bucking the relatively gloomy trend for luxury sales globally dampened by the COVID-19 pandemic. In the case of Burberry, the Chinese mainland grew in the mid-teens in quarter one but grew ahead of the January pre-COVID-19 level of 30 percent in June, according to company figures.

"Travel restrictions caused by the contagion have to some extent fueled local consumption of luxuries," Zhang said. "But to harness mid- to long-term growth, it's critical to reach out to new customers, build connections and stay agile in digitally innovative ways."

Consulting firm Bain estimated Chinese consumers accounted for about 35 percent of 281 billion euros ($317 billion) last year in global luxury spending.

New measures by the Chinese government also aim to support more Chinese mainland luxury shopping within its borders. As of July 1, authorities have more than tripled the tax-free shopping quota to 100,000 yuan from 30,000 yuan. They also removed an 8,000 yuan per item limit on goods bought in the duty-free shopping hub of Hainan province.

"It's unsurprising to see a gradual pickup of the luxury market in China, because people simply lack the conventional channels they normally turn to for luxury purchases, such as duty-free shops and outbound trips," said Peng Yanyan, head of the China consumer sector at UBS Securities, who remained rosy about the sector's performance in the country.

"As overall disposable income rises, for notably the well-off population, luxury products are 'a must have'," she said. "So the demand is always here to stay."