While online sales penetration in China is the highest in the world, brick-and-mortar businesses still make up more than 80% of their total retail sales. This is due in part to Jack Ma’s “New Retail” concept which he unveiled two years ago, melding the best of both the in-shop and online experiences together. Ma is the founder of Alibaba which operates the country’s largest e-commerce platforms and has more than half a billion consumers shopping on its marketplaces.
According to Jeffrey Towson, a Peking University professor and private equity investor who closely follows the development of China’s retail sector, “‘New Retail’ is a bold extension of Alibaba’s strategy of pure digital competition into the physical world. And It hinges on the strange ‘economics of participation’…’New Retail’ means a massive expansion in their brands and merchants and in the participation and activities of their consumers.”
- Alibaba Changes Grocery Shopping
While Alibaba’s Hema supermarkets look like most other grocery stores, they are instead a smartphone-powered experience. Patrons use phones to scan barcodes to get product information and make cashless payments via the Alipay platform embedded in the Hema app.
- Alibaba Simplifies Car Buying
Rather than several visits to countless dealer locations facing aggressive sales tactics, Alibaba has rolled out its first “auto vending machine” with Ford in the southern city of Guangzhou. The Ford auto vending machine provides a no-pressure experience where customers browse vehicles, select and pick up models to test drive for three days, then make a dealer appointment when ready to buy.
- Alibaba Increases Patronage in Malls
The New Retail concept has also upped the game for China’s malls. “Virtual shelves” allow customers to choose the merchandise they want, and if the color and size isn’t in stock, they can scan with an app to have the exact product delivered directly to their homes. Further, powder rooms are equipped with “magic mirrors” that allow customers to virtually apply makeup then make purchases from vending machines.
Other Retailers Bitten by Digital Interactive Technology Bug
- Cosmetics brand Charlotte Tilbury is another brand that put the “magic mirror” on the wall. When customers sit in front of the AR mirror it scans an image of their face, which then virtually applies ten of the brand’s iconic looks in under a minute.
- Lacoste’s LCST AR mobile app allows customers to virtually try on shoes and create AR experiences with window displays, in-store signage, and promotional postcards.
- American Apparel’s mobile app-driven experiences also encourage engagement with in-store signage and displays, and their product scans provide details, reviews, color options, and pricing.
- Timberland drives more foot traffic with their virtual fitting room that becomes one of the store’s main window displays.
- Toys “R” Us created a “digital playground” targeted towards kids. With the downloaded mobile app, children can unlock AR-enabled activities and bring mascot Geoffrey to life.
Digital signage campaigns that simply stream video loops or product image slideshows are becoming more and more passé. To be successful, retail digital signage must embrace cutting-edge interactive technology and the “Era of Experience” to stand out from other screens and keep customers coming back. Digital interactive technology has the collaborative power to extend shopper dwell times that can strengthen product sales while bringing the brand back in to the shopping experience.