GUEST OPINION How New Retail can help take the offline world online
Talk about the decline of the UK High Street is rife, and it’s easy to think that the future of retail is exclusively about the rise of ecommerce. But the truth is that it doesn’t have to be a case of either online or offline, it’s more a question of how the established world of physical stores can best be combined with the world of ecommerce and technology to create seamless, super‐convenient and fun ways to shop.
The most impressive demonstration of the power of New Retail to date was at this year’s 11.11 Global Shopping Festival. Now the biggest single shopping event in the world by a substantial margin, this year’s event not only generated record breaking revenues of $25.4bn, but crucially enabled the brands taking part to engage with their customers in many different innovative and immersive ways that help to build their brands, too.
Across the 24 hours of 11.11, China’s burgeoning 300m strong middle class took to their smartphones and made 1.5 billion payment transactions, up 41 per cent from last year, buying everything from shoes and lipsticks to electronics, fashion and household goods.
Traditional retailers with substantial presence on the high street here in the UK can be forgiven for feeling a little despondent in the face of such mind‐boggling numbers. But should they? A closer look at the success of 11.11 and the principles of New Retail that underpin it shows that there are real opportunities for all retailers to attract new customers, as well as increase the spend of existing ones through blending online and offline channels more effectively.
New Retail defined
New Retail is Alibaba’s strategy to redefine commerce by enabling seamless engagement between the online and offline worlds. There are two key aspects to New Retail. First, working with offline merchants to help digitally transform their businesses so that they can provide a more tailored shopping experience for their customers and second, how we respond to Chinese consumers who see shopping as a social activity and ultimately a form of entertainment.
At this year’s 11.11 Global Shopping Festival this year around 100,000 ‘smart stores’ helped merchants to deliver that bespoke shopping service in 334 cities across China, and the opening of 60 pop-up stores in 52 malls enabled international brands to curate consumer experiences specific to their brands and products.
Smart stores help brands to use technology to deliver more personalised and interactive shopping experiences. For example, in certain stores if a product is not in stock shoppers can browse a wider range on electronic ‘cloud shelves’. These shelves automatically recognise when an item has been picked up and provide information about it on an adjacent screen. Customers can then buy the product there and then through their smartphone, meaning they don’t have any bags to carry as they continue shopping in the mall.
Make the offline, online…
One of the biggest advantages of online vs offline has conventionally been the ability to mine the pools of data generated by e‐commerce, to target offers and new product suggestions.
This is one of the biggest opportunities for offline retailers, and also an area in which there is a lot of exciting technological innovation. Two examples of bringing online tech into the offline store are the virtual changing room and the magic mirror. The magic mirror uses augmented reality technology to help users test out a whole range of lipstick and eye‐make up combinations, on screen, to find the ones they like the best. It’s try before you buy taken to whole new level, and it’s being trialled by L’Oreal at a number of locations in China.
The virtual changing room does what it says on the tin, putting a photo of the customer on a large in‐ store screen and allowing them to ‘try on’ multiple different outfits – and even hairstyles to match – in an instant. All without the hassle of having to get changed half a dozen times. Exciting and innovative, these new technologies are both fun and functional ‐ making the most of the in-store experience as well as helping shoppers to buy.
Among Alibaba’s most high‐profile recent initiatives in China are its Hema supermarkets. Hema has digitalized the entire store providing consumers with a 3-in-1 retail experience that encompasses all modes and desires of modern urban shoppers including technology-driven fulfilment of online delivery, seamless in-store purchases and in-store consumption. Consumers can not only make orders online, but can scan every product in store to find information about it. In turn, Alibaba can leverage consumer data, including purchasing habits and history and store visits to provide a more personal experience to each consumer
Make it mobile
Just like their Chinese counterparts, British consumers love their mobile phones, and increasingly want to be able to use them to manage all aspects of their lives. A good example of how we drive mobile engagement was the ‘See Now, Buy Now’ fashion show which kicked off this year’s 11.11 season. Viewed on TV or mobile phone, shoppers could buy the clothes they saw on the catwalk instantly, on screen. Payment was via Alipay and fulfilment via our Tmall platform. It was a great way of capturing the energy of the moment and converting it to sales.
Make it fun
Gamification is a buzzword across multiple industries right now, and retail is no exception. Giving consumers games to play creates terrific engagement for brands and retailers alike. Competing with friends to win vouchers, for example, taps into social media trends and turns shopping into a shared experience. Alibaba’s ‘Catch the Cat’ game goes one step further: thanks to augmented reality technology, users chase the Tmall cat into stores, restaurants and cafes hoping to catch it and win vouchers to spend there. Chinese consumers see shopping as a form of entertainment, a trend which is also becoming increasingly evident in the UK. For example, we saw Westfield Shopping Centre use virtual reality last year to show off the latest seasonal fashion trends, giving potential shoppers the option to customise designs to their taste.
All of this goes to show that for UK retailers with the foresight to get on board, the seamless offline/ online world of New Retail has a great to deal to offer in terms of giving the 21st century, mobile‐loving shopper the immersive, cross‐channel experience they desire and will soon come to expect. 11.11 is a window into the next era of retail, where the old boundaries between ‘real’ and ‘virtual’ are breaking down. It’s a transformative business model that is being invented in China and exported to the rest of the world. David Lloyd is Alibaba Group managing director for the UK, Ireland and Nordics