When research by Alibaba found that a majority of shoppers in China (82%) still like to shop at physical stores, the retail giant responded by creating and testing a fresh business model.

A major element of the aptly-named ‘new retail’ model is the integration of online and offline commerce. Rather than being two separate channels, each one is used in ways to enhance or build on the other.

In the new retail model, the customer is more than just a passive consumer. New retail aims to turn customers into participants in the retail process, and even into ‘mini-influencers’ for brands.

Alibaba is the major player in new retail, but it’s not the only one – Tencent, JD.com and other retailers are also on board with the new model.

How new retail manifests in China

  • Smart popup stores – Alibaba tested 60 of its popup stores at the Double 11 Festival in November 2017. These are small physical stores that blend offline and online. For example, customers can go to a big screen and order and instantly pay for items online (on Tmall) that are not available instore. Customers can even use a ‘magic mirror’ to virtually try on clothing, sunglasses or makeup. While instore shoppers may also play video games, scan images and collect coupons, have their photo taken and wander through a virtual store.

  • Blending retail and entertainment – new retail aims to make shopping more than just shopping, but to intertwine it with socialising and entertainment. Double 11 is a classic example, with its mix of shows, entertainment and celebrities before and during the festival. Viewers can also go to the relevant product page to purchase an item by simply shaking their phone at their television screen.
  • Personalised marketing and participation – new retail is very customer-centric and more individualised than in a traditional model. For example, consumers can get personalised feeds based on past searches and behaviour, and discounts on preferred items. Customers may also be offered the chance to participate in campaigns, such as by evaluating new products, and by posting online about their experiences.

  • Extra services – new retail also involves expanding in-store experiences through complementary services such as libraries and cafés, which may encourage shoppers to linger longer.

 

Some of the technology used in new retail includes RFID, virtual reality, facial recognition technology, location-based notifications, QR-code scanning, warehouse robotics and big data for customer analytics.

Making the most of new retail in China

It’s important that businesses operating in this market are aware of the way retail in China is changing and evolving, and consider how they can adapt accordingly.

Taking on aspects of the new retail model in China will involve creating a very customer-centric business, making the most of smart technologies and data, and considering the ways greater flexibility can be built into all parts of the retail chain.

To find out more about the new retail model and how to incorporate it into your business, get in touch with our multilingual China marketing team.

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