The new retail: what China can teach us

China has been described as a ‘borrower’ of western technology innovations. In the retail sector, however, the country has increasingly followed a different path to respond to its own unique market and consumer demands. The results are interesting to say the least – and will reach well beyond China as western retail markets continue changing and evolving.

One mega-trend stands out: the ‘mobile-first’ capability of China’s e-commerce giants. Last year, Forbes magazine suggested that “while ‘mobile first’ has emerged as a commerce buzzword, thus far there has only been one true mobile nation: China.” Dropping in the fact that Chinese consumers already accounted for 1.1 billion mobile Internet subscriptions (more than 2.5 times that the next largest market, the USA), the article commented that China’s race to be “a mobile-first commerce nation” is based, in part, on how social media is now so “interwoven into the fabric of everyday lives”. Mobile retail is simply part of the wallpaper.

In 2015, for the first time, consumers in China made more purchases through their mobile phones than through computers.

More recently, market research firm Mintel, discussing Chinese consumer trends for 2018, commented that “Looking forward, consumers will become comfortable with the idea of everything being available via mobile and will question brands that are unable to provide this option.”

So how is retailing responding? Well, the Chinese experience can serve as a model for companies elsewhere to emulate, as they look to make digital the backbone of their business and ideally integrate with physical spaces as they tap into a huge potential market of mobile-savvy young shoppers. It requires a fresh look at retail models, understanding how mobile can enhance (and integrate) the online and in-store experience, and working even harder to deliver that truly omnichannel 24/7 customer experience.

For a start, you need only look at how China’s Alibaba and its various offshoots are using technology to capture the market to get a real sense of what’s possible. 

Following its record US$25 billion initial public offering in 2014, Alibaba has continued to go from strength to strength, capturing a more than 80% market share of China’s online shopping market. The company’s approach to “new retail” includes developing an ecosystem that skilfully blends online and offline channels to create an experience that is new and exiting - with the consumer at its heart, and using opportunities presented by a ‘mobile first’ world. Examples have included smart pop-up stores that blend customer ID and the Alipay online payment system with, say, real-time dynamic electronic price tags, facial recognition tech, discounts pushed in real-time to customers for products they’ve already shown an interest in online, or are smiling at in-store, as well as using augmented reality (AR) technology, offering fast and easy home delivery options, and more.

This simple (although difficult to get right) example shows how mobile can help blend and enhance the online and in-store experience with a clear focus on the customer (and, incidentally, demonstrates how much-maligned ‘failures’ like Near Field Communications (NFC) may become a force again). It highlights the possibilities of creating that ‘true’ omnichannel experience by linking physical with digital, and all in a mobile context: seamlessly integrating store-based devices with your e-commerce, payment and AI systems and the customer’s own handheld devices - so the customer is known to you, and they can buy quickly and easily, on any channel, and without cannibalization.

Indeed, mobile is helping to drive the rise of unmanned, cashless and ‘checkout-free’ stores in China (a ‘bricks-and-mortar’ retail trend that Amazon has also been getting excited about closer to home) – most notably with Alibaba’s 10,000-square-metre Hema fresh food market in Shanghai. It’s huge.

Other retailers, like Chinese start-up BingoBox, are growing into the same space: from real-name verification at the door via your smartphone (and facial recognition inside to identify unregistered users) to product barcode scanning, cashless mobile payment, and camera checks on exit to make sure everything is paid for. Even the BingoBox convenience stores themselves are mobile: yes, they’re on wheels, so franchise owners can relocate them as needed. 

In yet another example of China’s ‘new retail’, the Alibaba LST initiative also aims to connect thousands of local bricks-and-mortar convenience stores with customers, so they can stock the most in-demand products based on the needs, wants and behaviours of consumers in the surrounding streets.

 As retail spaces like these continue to develop and mobile technology increasingly blurs the lines between online and in-store, a new world of opportunities opens up. But technology can only take you so far: it’s what you do with it that counts. 

This is why retail strategists and retail technologists are, increasingly, working together in collaborative shared workspaces like those provided by Dropbox, pooling their ideas and using smarter workflows to deliver retail innovation faster. In fact, being able to work together seamlessly is just as important as being able to deliver that seamless experience for consumers. As the old Chinese saying goes, “Only when all contribute their firewood can they build up a strong fire.” So let’s get building.