These are the seven retailers that are at the forefront of the Chinese New Retail revolution – Consultation
‘New Retail’. ‘Smart Retail '. ‘Boundaryless Retail’. The current evolution in China's retail and e-commerce sector has a number of different names, but in all cases, the use of technology to merge online and offline commerce is characterized.
New Retail was called “New Retail” (Alizila), the most commonly used name to refer to this trend, with China “settling speed for the rest of the world” (Bain & Company). Across China, grocery stores, shopping malls, supermarkets, supermarkets and convenience stores are getting digital upgrades to use the next generation of shopping experience.
With innovations such as facial recognition, digital payments, rapid fire delivery, large data, and customized shopping, the New Retail experience is designed to be seamless, fast, and convenient. It combines the convenience and accountability of offline shopping with the speed and ease of online shopping and has brought new life into brick-and-mortar retail.
Alibaba – the Chief Executive Officer of Jack Ma with the term 'New Retail' in 2016 – is one of the biggest challenges behind this trend, receiving or supporting almost half a dozen different retail companies to try make its vision to achieve your digital retail experience. But it's not the only big player in the field. JD.com, China's second largest retail company, is rolling out what it calls unlimited retail retail 'through partnerships with a number of major western players including Walmart and Intel. Tencent, the tech giant behind the current WeChat super app, has also not addressed a number of strategic partnerships.
With new acquisitions and advertisements coming up every few months, it can be difficult to keep track of who is in the Chinese New Retail landscape, why they belong, and how they are innovating in space. The following are seven retailers that are ahead of the Chinese New Retail revolution, and here they are doing to transform commerce in China.
1. Freshippo (Hema)
Freshippo (also known as Hema Xiansheng in China) is owned by Alibaba the first name usually on everyone's lips and is talking about New Retail in China. Freshippo stores were launched in 2016, the first example of Jack Magazine's vision for New Retail in action.
The emphasis – as the name implies – is on fresh food, with large displays of meat, fruit and live seafood available to shoppers to browse and choose from in the shop. The experience is a Chinese cultural, designed to be similar to traditional “wet markets” selling fresh meat, fish, products and other perishable goods. Freshippo recreates this experience with additional digital convenience: shoppers can use the Hema application to scan items and find out about their origins and freshness.
Online orders via the app are guaranteed within 30 minutes for customers living within a milestone of delivery through a kilometer of store. These quick services encourage ze graze and pay ’, really using the shop as a showroom and ordering through the Hema app. Deliveries are made directly in the shops, which are double compliance points: they are infamous from large conveyor belts that move above the heads of shoppers, carrying fresh goods to assemble behind the scenes.
Finally, he became a Hema (Freshippo). Online orders going to compliance with overhead conveyor zone. pic.twitter.com/5Qm1IQl5Pi
– Philip Wiggenraad (@philforsure) June 3, 2019
In February, Fast Company was reported there are 11 million signatures for the Hema app, representing 60% of all orders.
Freshippo uses data from its digital orders to determine which new goods are to be stored in stock, reduces waste and enables the retailer to enact any day to farm policy. Shoppers have the option of buying food in the shop, and cooking fresh fish and meat with their specifications.
Payment is also made online, usually through Alipay, the Alibaba payment service. Payment by face recognition is also available in a number of shops. Initially, it was not possible to pay for cash in the Freshippo shop, although the company had to review this policy after it had tackled the resistance of consumers, and the Chinese government indicated that it was illegal for shops. Alibaba denies cash payments. However, shoppers wishing to pay cash must queue at a separate counter so that staff can place the order on their behalf – adding a lot of friction to the payment process.
At the end of 2018, Alibaba joined Starbucks to bring another dimension of added value to Freshippo stores: coffee delivery. The company gradually began delivering Starbucks delivery kitchens, known as itche Star Kitchens ’, within Freshippo sites to take advantage of supermarkets' delivery capabilities to provide fast and convenient coffee orders. This set-up is an extension of a partnership between the two companies called bu Starbucks Delivers ’, which uses Ele.me, an Alibaba-owned delivery company to offer“ best in class ”coffee delivery across 17 Chinese cities. The alliance is helping Starbucks the threat of Luckin Coffee, a very popular online low cost online coffee delivery service – more on this later.
There is no question that Freshippo and Alibaba have set the scene on how New Retail in China should look, and it is worth encouraging it abroad: iFresh, Inc., opened. Asian grocery company based in the USA, a new outlet in New York in January 2019 which was directly inspired by Freshippo and Alibaba Group's new Retail strategy.
But while Alibaba may have been the original new retail architect, the concept developed from Alibaba and grocery to other retailers and vertical.
It is usually mentioned that JD.com's 7Fresh is the same as Alibaba in discussion on New Retail. JD.com refers to its version of New Retail as 'Boundaryless Retail', which is likely to avoid any allegations of stealing Alibaba's strategy – but of course it is clear that both concepts have the same aim: offline and offline closer to each other.
7 It is also a chain of grocery stores, like Freshippo. 7 Freshippo has recently launched its first shop in January 2018, and its stores are not as numerous, although 7Fresh aims to open 1,000 stores across China over the next three to five years. .
7Fresh supermarkets target high-income consumers seeking higher grocery experience and products such as Iberian stock, Japanese seafood and French pastries. Like Freshippo, the product is available for selection and selection in the shop, and then orders are put together and delivered to the shop house, often within 30 minutes if they live within five kilometers of a shop.
4,000 square feet is its major stores – the first 7Fresh outlet in Dazu Plaza shopping center in Beijing – has smart shopping carts to guide shoppers to the desired back, large-scale digital signals, and QR codes that can be scanned for information product. Many items in the fruit and vegetable aisle can be placed on RFID readers, where product details will be displayed on a digital screen.
– Caroline Baldwin (@cl_baldwin) June 12, 2018
7 It is likely that the new journey will compete with the most famous and established Freshippo, but it has a number of smart, strategic partnerships. There is a 10% share at JD.com in Yonghui Superstores, domestic supermarket chain, and the two companies recently joined together to invest five million RMB (nearly $ $ 750 million) in a sourced and distributed line for Thai tropical fruit. The retailer also received a $ 550 million investment from Google, and in December 2018 announced a partnership with Intel to develop smart retail experiences. US retail giant Walmart is a major shareholder, both working together to expand JD.com operations into Southeast Asia and the US.
As China's largest omnichannel retailer, Suning.com is a natural entrant into the New Retail space. Unlike Alibaba and JD.com, Suning did not need to open new brick-and-mortar shops to enact its Smart Retail strategy, and integrate smart technology into its current stores. The retailer opened its first smart bhíse self service store in Nanjing in August 2017, and subsequently added four others in Shanghai, Beijing, Chongqing and Nanjing's second site.
As an electronics retailer selling household appliances, cosmetics, books and general merchandise, Suning.com has built a New Retail over groceries and perishable goods and demonstrated how the concept can apply to other vertical.
Suning.com electronics retailer has shown that New Retail can go beyond groceries. Image by Slisalsok, provided by CC BY-SA 3.0
Profile July 2018 at Drum it reveals how Suning integrated smart technology in its stores. Shoppers must download the Suning Finance application and connect it to their bank card to shop in Suning smart shops, which they then access through facial recognition. Within the store, customers can use a range of goods including electronics, sportswear and equipment, and even some groceries. A complex measure of RFID technology, video analytics, Bluetooth technology sensors and button gravity finds when an item is collected from the shelf, thus encouraging the display of product information on a smart screen.
It is not surprising that Suning smart shops are gold mines – that is to say, all types of data would be collected in relation to purchasing behavior and activities within the shop. The shelves will record how often items are collected and how long, and an indication of the popularity of individual products. The shops also collect data about age, gender and emotional reactions of customers with different products – all in the name of optimizing the shopping experience, but also in the interests of the retailer.
At the 2019 Consumer Electronics Show, Suning showed some of the futures innovations he will be bringing to his future smart shops, including AR virtual fashion experience called Magic Runway, and Biu Robot, a smart vending machine that will move around a place where shoppers carry goods for sampling and purchase.
By Q1 2018, the Suning Smart Retail strategy was already paying dividends in the form of a 46% increase in omnichannel sales – and Suning intends to increase significantly. In February he received 37 outlets from the Wanda Department division's major chain chain and, as such, plans to open 15,000 new brick-and-mortar stores this year.
In addition, Sun Suning announced that it had purchased a controlled share in Carrefour China. French multinational retailer Carrefour was another player in the New Retail space, and previously opened two smart supermarkets in Shanghai and Shenzhen. However, this is not enough to save Carrefour's expectations in China, and sales decreased by almost 10% in 2018 compared to 2017.
The discussions between the two companies are expected to finish by the end of the year, and will see an offline online network and an integrated Suning logistics network with a strong Carrefour supply chain and experience with FMCG.
4. Luckin Coffee
Starting Luckin Coffee in China started as a potential challenge for Starbucks. In October 2017, Luckin opened its first warehouses in Beijing and Shanghai in January 2018, and reported that it sold more than five million cups of coffee in four months. An aggressive growth strategy is being pursued by him, opening more than 2,300 stores to date and proposing a further 2,500 to be added in 2019, bringing more outlets than Starbucks in China opened over two decades year in the country.
Luckin has succeeded in significantly lowering the competitive price, pricing his cup 20% cheaper on average than Starbucks. It can do this thanks to the cost savings achieved by digitizing its operations: many of the Luckin centers are rebellion kitchens, where coffee customers order through the app to collect or collect. delivery. If delivery does not arrive within 30 minutes, customers will receive free coffee. These kitchens are revoked without outstanding money, and all payments are made digitally (a policy that could come with resistance, because the turmoil occurred when Freshippo succeeded the same approach). ).
However, it is mentioned by Luckin Coffee that “coffee delivery brand” is not: Jenny Qian Zhiya's chief said at a press briefing in Beijing that in the kitchens will only resurrect 15% of their network, to sit down cafes. makes up bulk. But the delivery kitchens worked in favor of Luckin in the early stages of this, by allowing it to expand rapidly and increase the product.
One of the cafes sitting down Luckin Coffee, which currently makes up an elite of the coffee shops. Image by Lao Men Faei, provided by CC BY-SA 4.0
In May, Luckin Coffee attended a $ 4 billion IPO arising from his shares – but slipped below their IPO price a few days later, and analysts questioned the viability of the Luckin business model. Like many start-up start-ups, Luckin Coffee has prioritized the initial growth above all else, and has taken huge losses to capture market share, with three-hour operating costs.
However, others see huge potential income opportunities in the coffee market that has not yet been reached in China. While it has always been possible for Luckin to restore public faith in its business model, it has certainly changed the game for coffee in China by bringing coffee sales to new retail and creating a fast, negligible demand, online coffee experience offline. The Starbucks aforementioned partnership with Freshippo is just one example of how competitors at Athlone have to recite their success.
5. Wanda / Tencent
Wanda Commercial Management Group, owner and operator of the largest shopping centers in the country, has teamed up with Tencent, the technological giant, to develop the first smart shopping center in China.
The Mall, located in Fengtai Science Park in Beijing, opened in May 2019, with holographic announcements, advanced payment technology (including face recognition and online vouchers), and a CC gaming zone. It uses Tencent proprietary technology to entertain shoppers, part of a growing trend of “retailing” which aims to turn shopping centers into leisure destinations.
Both the Wanda and Tencent co-operation contributed to the Smart Retail map and have direct benefits for both parties in terms of data and income. In a statement announcing the partnership between the two companies in May 2018, Wanda said “the massive online traffic co-operation will deliver through WeChat and other platforms, which will enable them to make smart upgrades, a system. build strong membership, and contribute to the overall value of the company. ”
For Tencent, it will offer “access to a huge number of offline traffic and various consumer scenarios, guiding its traffic and online technology into its offline resources and accelerating Tencent's smart retail strategy implementation.”
In 2017, Alibaba invested close to US $ 3 billion in a 36% share in Sun Art Retail Group, a Chinese hyper-market complex worker with a new e-commerce business. Sun Art has a supermarket chain called RT-Mart, and last year Alibaba completed 100 RT-Mart technology 400 and developed New Retail technology, shaping its Freshippo stores.
Alibaba is upgrading the RT-Mart stores with New Retail technology. Image by Chi-Hung Lin, provided by CC BY-SA 3.0
As part of the upgrade, RT-Mart has delivered a delivery option for in-store shoppers, which is guaranteed to be reached within an hour for addresses within a radius of three kilometers of a shop (a very familiar setup). now). In-store orders are carried out in the same way as at Freshippo, with goods moving on a conveyor belt above the shopping floor. RT-Mart has also started making more fresh items available through its Daily Fresh program, with daily meat, vegetable and dairy products returned.
In addition to the newly upgraded directories, a Smart Mommy and Me ‘corner has been provided with imported and home-produced products for new infants and parents. These booths allow customers to browse through Tmall, Alibaba's large B2C store, and purchase products by scanning a QR code.
As a result of the new Retail upgrades, there has been a huge increase in the number of online orders from RT-Mart shops: according to Alizilla, 5,000 Irish shops see 5,000 online orders per day at the peak, up to zero. before the upgrade. Alibaba plans to complete the upgrade of 300 remaining centers at RT-Mart by the end of the year.
7. Super Species
Yonghui has superstores, supermarket chain operator in China, competent to change its business model to cope with the times. He stayed floating by testing various sizes and storage formats to offer different types of shopping experience to consumers.
In 2017, the company started rolling out Super Species, a smaller supermarket brand aimed at Yonghui online platform to introduce shoppers. Super Species focused on middle-class consumers who want to shop with food, allowing customers to choose their favorite foods to cook in the shop. It places more emphasis on offline shopping than competitors such as Freshippo, but it still allows shoppers to buy goods through the Yonghui Life app and provides deliveries in homes in three kilometers of shop. Investment from Tencent in December 2017 helped strengthen the technology infrastructure of the Super Species, adding WeChat Pay to the range of payment methods.
So far, this sounds all for New Retail – but there is one area where Super Species stands for the crowd. In June 2018, the Super Species store in Guangzhou was the first to deliver delivery through the drone.
Yonghui and Tencent teamed up with drone maker Ehang Smart Technology to deliver aerial air deliveries, reducing the delivery time from 30 minutes to 15-20 minutes. The deliveries are made through four wheel tones which carry up to 500 grams of goods to houses within a 4.5 km radius. In the future, Ehang intends to increase this radius to seven kilometers, with a drone carrying up to five kilograms of goods.
See this space
There is a lot of dependence on New Retail in China, both inside and outside the country. All of China's major technology and retail companies are competing intensively for participation in space, perceived to be a retail future. With brick-and-mortar retailers declining in countries like the United States and the UK, it is very exciting to see a model that goes with its greatest strengths, combined with the strengths of online commerce and the most advanced technology. recently.
However, New Retail is not a silver bullet – and casualties occurred. Last week, Nikkei Asian Review They reported on unmanned convenience stores around China, with companies like Buy-Fresh Go and i-Store greatly reducing sales and bankruptcy. The report indicates that a combination of factors, including the high margin required to retain unmanned open shops, has reduced the nature of the goods placed in unmanned convenience stores, and the fact that shop operators did not. maximizing their data.
It is an important lesson for retailers in the space, and it shows that there are some vertical areas where the New Retail model would be so unsuitable – or that careful handling will be necessary for its success. It is clear that companies such as Alibaba, Tencent, Suning and Yonghui are at the moment, and are willing to invest the resources they need to carry out New Retail work. But there is also a certainty that there will be many changes as new companies and technologies enter space, become serious competitors or a warning story.
More about retail innovation