For Hao Xufeng, a 25-year-old woman living in Beijing, shopping for clothes online has become a habit.

"It's a lot cheaper, but it also creates new problems," she said, adding that she often has to browse online shops for many hours before finding things that she likes. More often than not, she said, the clothes she finds do not fit her.

Hao is not the only one. In the current era of e-commerce, many customers spend a lot of time online selecting commodities that they eventually return to vendors. Moreover, Hao said she never buys fresh food products online. "When it reaches me, it's already musty. I prefer to see meat and vegetables in front of me in the store when I buy them," she explained.

It is precisely to solve these consumer headaches that New Retail was born, a concept first proposed in October 2016 by Jack Ma, founder and CEO of Chinese e-commerce giant Alibaba Group. "In 10 or 20 years, e-commerce will have made way for New Retail," he said.

Role models

According to AliResearch, the research arm of Alibaba Group, New Retail revolves around building a sales ecosystem merging online and offline channels by leveraging big data, cloud computing and artificial intelligence, with a focus on consumers. Rather than trying to convert online users into offline customers, or vice versa, Alibaba wants to use data and technology to enhance the retail experience, including offline.

Alibaba is not alone in wanting to "revolutionize" the retail trade industry. Tencent, China's largest Internet company by revenue, JD.com, the second biggest e-commerce platform in China, and Baidu, the largest Chinese language search engine, have all become dynamic players on this new front. In 2017 alone, Alibaba and Tencent invested at least 100 billion yuan ($15.9 billion) in brick-and-mortar businesses.

The big players are shifting to offline businesses because of the bottleneck that is currently building up in the virtual domain, according to industry observers. "According to available data, the number of online consumers active on a daily basis was around 500 million in 2017. The market is saturated, and it is no longer easy to maintain growth. We must, therefore, turn our attention to offline," said Wang Youwei, an associate professor at Fudan University in Shanghai.

Among the new initiatives, Hema, Alibaba's only offline brand, has been a big success so far. Its first outlet opened in Shanghai in January 2016, and encompasses three functions: supermarket, restaurant and vegetable store. According to Hou Yi, Hema's CEO, all Hema outlets have turned a profit after six months in business, even though they offer low prices.

"Our low prices are due to the fact that we buy directly from the producers, which eliminates intermediaries," Hou said. This procurement method also guarantees the freshness of the supplies, which benefits both consumers and farmers.

Fresh vegetables for sale in one of Hema’s stores in Beijing (GE LIJUN)

Emerging opportunities

New Retail was high on the agenda of lawmakers at the 13th National People's Congress (NPC) and political advisors at the 13th National Committee of the Chinese People's Political Consultative Conference during their annual sessions in Beijing in March. Li Jun, an NPC deputy from a village in Sichuan Province in southwest China, visited a Hema store in Beijing. He was very interested in how New Retail could grant city dwellers access to better agricultural products at a lower price.

Indeed, New Retail goes hand in hand with agricultural industrialization. With its field-to-shelf direct supply chain, it enables operational standardization, brand building and traceability of commodity origin.

"This innovative mode offers new opportunities to agricultural businesses and villages," said Li, who hopes that New Retail can engage with more farmers in a new way to vitalize the countryside.

According to a report from the Labor and Human Resources Department of Renmin University of China in Beijing, Alibaba created 36.81 million jobs in 2017, an increase of 6 million compared to 2015. Such growth is due in large part to New Retail, according to experts.

In addition, brick-and-mortar stores opened by Internet companies have also contributed to job creation. For example, to date Hema has opened 40 outlets in 10 cities across China, which has also given rise to a demand for more professionals in training, sales, logistics and data analysis. According to Premier Li Keqiang's Report on the Work of the Government to this year's NPC session, China will seek to develop new types of jobs by leveraging Internet Plus. To this end, New Retail has the potential to play a major role.

As early as November 2016, the Chinese Government published a document on offline business innovation that mentioned the emergence of New Retail. Later, in September 2017, the Ministry of Commerce conducted a survey on New Retail and recommended Hema's innovative practices in this area.

"When a new business format emerges, the government can play an important supportive role. As New Retail advances, it must not miss out on the government's guidance and support," said Zhang Jian, a researcher at the China Electronic Commerce Association.

Major Features of New Retail Stores

A connection to an online payment system is established when you enter the store.

Price tags are electronic, and prices vary in real time based on certain factors.

Facial recognition technology is used to track customers. Discounts are offered on items they smile at or that they have searched for online.

Items can be purchased for later delivery. The system already has the purchaser's home address on record. Delivery in major cities in China takes from 15 minutes to three hours.

Customers can receive location-based store recommendations and discount notifications on their mobile devices, as well as driving traffic to offline stores.

Customers can "try on" apparel and makeup items virtually, with the help of RFID (radio-frequency identification) and AR (augmented reality) technologies.

Customers can scan images using AR technology to visit product listing page and collect coupons.

There are also innovative technologies like a cloud shelf that stores purchasing behavior data, facial recognition information, etc.

(Source : Technode.com)

Copyedited by Francisco Little

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