New Retail: More Than Online to Offline Integration

Retail is Now at a Crossroad and we have seen China becoming the Leading Innovator in E-commerce and Retail Practices

Driven by digitalization, the development of the omnichannel and new customer requirements, trade, and retail have undergone profound changes in recent years. As we know, the “New retail” model, was a concept introduced for the first time in 2016 by Jack Ma, founder of e-commerce giant Alibaba. The philosophy behind this project it is easy and simple: The future of retail is not a question of channels, but experience.

In China, Alibaba has taken the leadership of this revolution by unveiling its new retail project in a 2017 letter to shareholders. The “New Retail” aims to offere a new shopping experience without boundaries, combining online and offline commerce aims to combine the best of both online and offline shopping experiences. In China, the traditional marketing strategy called O2O (Online to Offline) is now becoming OMO (Online merge Offline). The entire customer journey was redesigned.  The main purpose of New Retail is to bring customers a highly personalized, interactive and satisfying retail experience by utilizing the power of new technologies and data science.

Nowadays with new retail model, the consumers will no longer think in terms of separate purchasing channels, but use all of them at the same time for various purposes: product research, comparison, Click and Collect, Store To Home, delivery or customer service. Brands also have more ways to interact with targeted consumers and thus ensure deeper brand engagement. Let’s see some key words to better understand New Retail.


1. Extreme Digitalization and Virtuality


New Retail believes on digitalization. In China, consumers are already used to scan dozens of QR codes every week with their phones. Moreover, New Retail stores allow users to try on clothes virtually, fill a virtual cart that will then be delivered to their home, or pay via facial recognition without going to a checkout counter. But such a strategy is essentially based on collecting personal data collection. Data is the most important element in redefining retail. New Retail makes stores omniscient: phone numbers, purchase history, payment activities, financial transactions, addresses, they will know everything. Trought big data, multi-dimensional digital marketing can help increase the monetization rate of advertisements as well as the conversion rate of the online and offline merchants with the platforms.


2. Immediate Shopping: See now Buy Now

Live-Streaming is China’s New Form of Digital Communication - video e-commerce - cifnews


China is a mobile-driven society, therefore, digital commerce is already well established. Chinese consumers use their smartphones for almost everything, including payment.  You see a product, you scan it, you leave, and it arrives at your home. Or even more convenient, while watching a showcase of products, you can directly choose to have one on your plate or shopping cart.

To meet the need of immediacy, the whole supply chain has been transformed excessively. It means that New Retail turned shopping into an immediate purchasing experience. It was the “See Now, Buy Now” fashion show that has allowed consumers to immediately buy the clothes they were seeing during the show for the first time. Alibaba tested this technique during the annual Global Shopping Festival event in 2016, but it is now implementing immediate shopping in stores as well.


3. Better Quality


New Retail let the production cycle is faster, reducing the risk of excess inventory, therefore, optimizing margins. It meets the immediate needs of Chinese consumers and would, therefore, lead to better customer satisfaction. Nevertheless, in addition to speed, Chinese consumers also ask for quality today. Healthier products, higher food safety, and more precise tracking are now part of consumers’ demand. Therefore, New Retail stores have introduced product tracking. For example, at Hema, customers can scan a QR code to watch short reports on the origins of items, including, pictures of the distributor’s operating permits and food safety certificates.


4. In-store strategy 


New Retail is also based on a solid merchandising strategy that arranges the products to generate a strong desire to buy. Moreover, given that retail is consumer-centric, in-store technology has now become part of the strategy to attract customers and help them make purchasing decisions quickly. New Retail in China has made static stores obsolete. The in-store experience is lively now and leverages “sensory marketing” to influence the behavior of customers. China’s mobile-driven society and mobile payments are two crucial factors in the spread of New Retail across the country. Chinese consumers rely on apps for both online shopping and payments at physical stores. About 81% of smartphone users in the Middle Kingdom will use mobile payments this year, compared to just 27% in the US. Here is what differentiates Alibaba’s model from the others tried so far: integration. Integrating data is a crucial evolution to understand everything about the consumer buying process. This means being an open book so that the system could know what the consumer needs before he actually needs it.