What can you do better than Temu?

The question that keeps bubbling up is Shein and Temu. As a retailer, how do you survive? They have quickly become a force to reckon with in e-commerce with their pricing and their broad product range. Especially now that logistics has moved from "months-slow" to significantly faster with air freight deliveries. With their global reach and data-driven approach they have taken the market by storm. This is a massive threat to many industries. Competition is distorted, and it is also really bad for the climate.

"The goal is not to be cheap, but to make users feel like they got a good deal."

- Colin Huang, Temu founder

Temu's core idea, then, is to trick their customers into feeling like they got a good deal. For Swedish retailers, it is about finding other values to play on. There are a number of possibilities to meet this threat by building on what the Chinese giants cannot offer: strong local brand stories, product safety and sustainability as competitive advantages, and a presence that ties digital and physical commerce together. Temu has no stores. Yet.

A company that has succeeded with storytelling to build brand loyalty is Fjällräven. By highlighting their heritage and their philosophy of creating durable products for outdoor life, they have built a global brand linked to quality and authenticity. Every Fjällräven product carries a story, from how materials are chosen to why the design is the way it is. This is something Shein cannot match. Their focus on cheap, mass-produced products leaves no room for creating an emotional connection with the customer. Swedish retailers can take inspiration from this and create stories that engage and strengthen the relationship with customers. It is crucial for building loyalty from customers. You need to be part of something more than just a low price.

Highlight that you follow the laws, and how you work with sustainability.

Temu and Shein break entirely unchecked the laws and rules we have set up within the EU, for example on product safety. And they currently get away with it without any repercussions whatsoever. At the same time, European manufacturers and retailers have fairly high costs for quality assurance, certification, chemical testing and so on. Our authorities' inability to handle this distortion of competition is very concerning. But at the same time there is more we can do ourselves. We think there is work to do informing consumers that we have taken all the steps to show that a product is not directly harmful. It is a communication balancing act of course, but no one wants to buy a phone charger that causes a fire. Few parents want to buy clothes or craft products containing endocrine-disrupting and carcinogenic chemicals. Absolutely no one wants to buy toys that can cause choking. We have to become clearer in communicating that you buy more product safety by shopping from a regulated Scandinavian retailer. There is willingness to pay if the risks are understood. Let us turn what has long been seen as a hygiene requirement into a USP.

Sustainability is another aspect where Swedish companies and retailers have a strong position. One example is Nudie Jeans, who not only sell high-quality jeans but also offer a lifetime warranty for repairs, which more and more premium brands have started to do. By highlighting sustainability and quality, they have not only managed to differentiate themselves in a competitive market, but also built a loyal customer base that values their principles. This kind of sustainability focus can be used to position yourself as the conscious choice for consumers who want to make long-term and responsible purchases. If you have a target group with strong purchasing power, this is really an area to focus on. Sustainability is however a must regardless. If we can only buy five garments per person per year in total for the climate goals to hold, then it needs to apply at all levels.

Use your physical presence.

The biggest advantage against the Chinese opportunists is perhaps the possibility of combining physical stores with digital platforms, and thereby creating a strong omnichannel experience. A good example of this is Stockholm-based Sneakersnstuff, who have managed to integrate an exclusive store experience with their successful e-commerce operation. Customers can discover new limited-edition sneakers online, reserve them for pickup in their trendy store in Södermalm, and at the same time take part in events and exhibitions the store regularly arranges. This kind of combined strategy reinforces the brand and creates a sense of exclusivity and community, something that Temu, for example, cannot match with its digital mass-market model. The stores build the brand. We at Commerce Mind see a clear pattern in Nordic commerce, that there is an interplay between how stores drive e-commerce and vice versa. Take advantage of the strengths you have and use them to create storytelling and unique advantages. Remember that the physical store is your e-commerce's greatest strength.

"If the wind is blowing hard, you can either turn your back or build yourself a windmill."

- Chinese proverb

Many of the things you can do can feel hard and expensive and uncertain, but there are no alternatives. Take advantage of the wind so you move in the right direction, strengthen the business if you can. Strengthening loyalty through local partnerships can be another powerful way for retailers with a local presence to differentiate themselves. By partnering with other players, like cafés, gyms or creative studios, you can create joint campaigns that reflect the character of the area and the customers' interests. For example, a fashion store could partner with a popular café to offer customers a discount on coffee when they shop, or vice versa. It scales of course significantly better with digital marketing where you combine influencers and social media that stitch partnerships together or promote campaigns, but do not underestimate the local. It builds loyal customers. Partnerships not only build a sense of community, they also reinforce the brand's connection to the neighbourhood. At the same time, stores can attract customers with local campaigns or exclusive offers that are not available online. By tying offers to the location and involving other players, commerce becomes not just a transaction, but part of a larger experience and local pride that creates both loyalty and engagement.

By combining the strength of a local presence with a strong digital platform, Scandinavian companies can also create a flexibility in the customer journey that few global players can offer. The obvious example is letting customers order products online and then pick them up in store, or return online purchases directly in store, to offer a smoothness and convenience many consumers appreciate.

The Swedish retail landscape has unique possibilities to meet the threat from players like Temu and Shein by focusing on what makes us strong: brand stories that engage, product safety, sustainability that attracts conscious consumers, and a seamless combination of digital and physical commerce. Those of us working in retail need to try to shift our focus and work with values other than low price to meet the Chinese threat. It is time for Scandinavian retailers to show that they can deliver both value, safety and principles. The Chinese giants can feel unbeatable, but we have to focus on the areas where we have the upper hand in order to survive.