The term “New Retail”, first coined by Alibaba’s founder Jack Ma, refers to a new format where technology and data merge online and offline shopping, offering consumers a better shopping experience. With the official opening of fully automated convenience store BingoBox in Shanghai in June, the spotlight on Alibaba’s fresh food connected supermarket Hema, the showcase of the automated pop-up Tao Café by Taobao in July, and the face recognition payment launched in KFC in August, China has been taking New Retail to a whole new level this summer. Taking a closer look at these tech powered customer journeys and how they improve the customer experience provides the rest of the world with inspiration about what the future of offline retail can be.
Why is the future of retail happening in China?
- Importance of retail in China: In June 2017, the total retail sales of consumer goods in China reached RMB 3.9 trillion ($440 billion), up by 11% year-on-year (China Internet Watch). TechNode compared the amount Chinese consumer spend on consumer goods for one month to what Greece spent in 5 years. Brick and mortar stores still make up over 80% of total retail sales in China.
- Universal adoption of mobile payment: A total of $3 trillion in transactions using AliPay and WeChat Pay was recorded in 2016.
- Tech savvy society: Chinese people embrace change and love trying new technologies.
- Less privacy concerns: Western companies and consumers are much more cautious about privacy concerns compared to Chinese tech firms.
- AI advance: Baidu opened a deep learning institute in Silicon Valley in 2013 and invested $300 million in 2014, making it one of the premier AI research centers in the world. China surpassed the US with the number of published journals related to deep learning in 2015.
- Change of work landscape: Chinese aging society and the impending shortage of workers, and the young Chinese don’t accept anymore low skilled manual work.
This content has been published first in IEV Premium Retail (September 2017), our magazine for digital transformation in the retail industry across Asia & Africa for business leaders.