At the start, it used to be the consumers who go to the product. Soon after that, it is the product who goes to the consumer. In the world, there will always be 3 insatiable demands of consumers: they want it z. This has definitely influenced the shift of consumerism towards an online-orientated model. This, however, has led to what people call the “demise of traditional retail”. However, is that necessarily true?
“New Retail” was a term coined by Jack Ma, the founder and Chairman of China’s e-commerce giant, Alibaba. New retail refers to an integration of offline and online models, with the support and usage of advanced technology like big data, AI etc to achieve new forms of customer experiences. The current trend in China is mainly in 3 major forms: unmanned convenience stores, unmanned vending machines and unmanned shelves, each with its own set of characteristics.
The O2O strategy is not new, being first espoused as the future in 2011. However, technology at that time was still in its infancy and the infrastructure needed to support such transition was elementary at best. Take for example Tencent’s wechat, which when launched, was only touted to be a messaging app and not the all-encompassing, all-useful application that it is now. The increasingly maturing trend of the retail horizon in China can be due to a few factors, such as the increase in mobile phone penetration rate (52.69% of the population in China owns a smartphone), coupled with the pervasiveness of users using mobile phones to go online (95% of mobile phone users)
Secondly, apart from the increasing digital adaptation from the Chinese population, the advancement of technology such as Cloud Computing, Artificial Intelligence, Big Data and Virtual Reality/Augmented Reality allows a wholly different experience with regards to the user interface. There is a sharp increase in the amalgamation of online-offline concepts, from the usage of augmented reality to show pre-purchased clothes on customers to predictive technologies for consumer packaged groups to increase customer response rate.
Here are 5 examples of how the retail market is changing in China, by both startups and corporates:
Instead of focusing solely on the online marketplace, Alibaba has injected massive investments into brick and mortar stores as part of its new retail strategy. It is an O2O ecosystem that allows customers to experience high quality and convenience both on its online platform and its offline stores. Customers will be able to do everything from purchasing groceries to ordering cooked food ala carte right to their doorsteps. Watch this video for a more comprehensive explanation
A social e-commerce shopping app to help users discover and buy luxury, fashion, beauty overseas, share shopping tips and swap fashion ideas. XiaoHongshu forms a large group of females who clearly enjoy such shopping and sharing, which brings lots of trust, the feeling of being embraced and safety. This is a clever use of the social sphere to enable a brand new customer experience on a cross-border platform.
Pop-up stalls that integrated RFID (radio frequency identification) and AR technology to allow customers to access product information, “try on” products using a virtual mirror. Although it was it was done as a trial to experiment to monitor customer interactions and sales results, there was great interest in the application of advanced technology to enhance consumer experience.
YI Tunnel brings technology and commerce together by leveraging on Artificial Intelligence, through the use of image recognition technologies, semantic action recognition, and facial recognition. By combining the knowledge and analysing the data, the company comes out with multiple solutions such as the unmanned check out stores and the Yi Tunnel AI Smart Vending Machine which aims to provide seamless convenience to the untapped vending machine market in China.
Using a mobile device or PC, a user can recreate a 3D space of a home, freely select furniture units of the catalogue and arrange the furniture merchandise within it. The user can then purchase the furniture with a single click, all in one integrated platform.
We are at the cusp of a paradigm shift of the retail sector, where technology and market forces shift towards a new age of consumerism. AI technologies such as speech recognition, video intelligence, and deep learning will continue to play a vital role in this new retail model. Startups and Corporates alike both have a part in the pie in this shift; collaboration is inevitable. The next wave of globalisation is arriving, and with greater integration comes greater prosperity for humanity.
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