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Welcome to Jack Ma’s ‘New Retail’.
We’ve set out to understand the four
fundamental principles of this retail paradigm
shift and what it means for brands everywhere.
“New Retail - the integration
of online, offline, logistics and
data across a single value chain”
-Jack Ma, Chairman, Alibaba Group
Those at the forefront of the future of retail are defining it this way:
Alibaba’s Singles Day, the world’s largest retail event,
was a tangible showcase of “New Retail” at work…
Photo credit: TBD
• Grossed $25bn in 24 hours
• Hit $6bn in the first three minutes to put that in context, that’s roughly equal to the total annual sales for Amazon UK in 2016, at 6 billion GBP
• Alibaba Cloud handled the infrastructure and managed 325,000 orders at peak
• Alipay processed 1.5 billion payment transactions, up 41 percent
• Over 140,000 brands - incl. 60,000 international - took part on Tmall where they offered 15 mn product
• 167 merchants generated over 100 million RMB ($15.1 million) in sales each
• 17 merchants surpassed 500 million RMB ($75.4 million) each
• Six merchants surpassed 1 billion RMB ($150.9 million) each
Through the rest of this presentation, we’ll take a look at China’s complex retail
landscape, the principles driving it, and best practices from brands thriving in it.
Then, we’ll take a look at how to apply it any retail context. All this in an effort to
arm you with key insights and tools to help you navigate and better utilize current
digital & ecommerce solutions, while future-proofing your approach to retail.
Get ready, because New Retail is here and it’s made in China.
1. What is New Retail?
2. The Four Principles of New Retail
3. Best Practices: Starbucks, Adidas, JD.com
1. What is New Retail?
“A new unichannel “O2O” experience
where the notion of e-commerce versus
brick-and-mortar seems quaint,
if not wholly irrelevant.”
- Fortune Magazine
New Retail, more than anything,
recognizes that humans are the common
overlap between online and offline and
places them at the center of everything,
with near seamless
New Retail brings customer-centricity
to a completely new level.
Offline People Online
The online world has fundamentally
altered our expectations as consumers.
All aspects of online discovery, from AI suggestions
based on past preferences and purchase history,
to keyword or visual searches that let us find things
instantly, offer personalization, convenience,
recognition, and efficiency.
We navigate the world with a digital lens now, and
thus our expectations of offline reality are the same.
New Retail puts customers new
expectations at the center
by applying online
the offline world.
It’s not about online vs offline.
This is pervasive in China,
but examples of this are popping up
elsewhere, such as the Amazon Go concept
launched in the US.
Even in China, eCommerce was just 16.6% of total retail sales
The real threat is the increasing likelihood that e-commerce
giants will turn their attention to doing bricks and mortar
better than traditional players can.
Traditional offline retail isn’t dead.
*Source: China E-Commerce Research Center
So what’s driving it?
2.The Four Principles
of New Retail
of New Retail
With the rise of mobile, we’ve transferred
our online expectations to the offline
world. Here are the four secrets to
success in that context.
A.k.a Experience-driven Retail
Experiential activities as part of a marketing mix have
become ubiquitous, but the New Retail experience
means mixing immersive environments with culture,
courtesy of Key Opinion Leaders (KOLs)
– or influencers as they are known elsewhere.
For example, digital walls that amplify your
experience and interact with you the way you
would online, providing information about the
designer, product quality and who’s wearing
the piece you’ve just picked up.
Next page: The Beanpole Store in Seoul offering immersive digital
screens that put the buyer at the center with 3-second delay so
you can really see how those pants look from all angles!
KFC China allows
customers to pay
64% of consumers think customer
experience is more important than
- PSFK 2017
A.k.a Seamless path to purchase
Don’t look for scale, look for new ‘touch points’ and
integrate intelligent transactions and on-demand
buying into immersive retail experiences.
This isn’t simply consistency across channels - think
immersive experience overlaid with barrier-less
buying. Convenience is key.
Retailers are taking a new approach to convenience:
they’re leveraging always-on assistance, intelligent
transactions and on-demand delivery to inject even
more seamlessness into the purchase path.
Higher level surface offerings are the new secret
“Magic mirrors” at L’Oréal’s pop-up store during Singles Day
letting shoppers try on things like sunglasses, cosmetics and
apparel virtually. If they like a product, shoppers can make a
purchase through Alipay by scanning the QR code.
Singles Day featured “Cloud Shelves”, digital screens supported by
RFID that automatically track and identify tags attached to objects.
When a shopper places an item in front of the screen, it automatically
displays availability, customer reviews and more on Tmall. The
shopper can then scan the QR code to buy it on Tmall.
on top of
Service is the secret to
differentiation: inject seamlessness
into the path to purchase by
Don’t look for scale, look for new
‘touch points’ and integrate
intelligent transactions and on-
demand buying to immersive retail
“59% of smartphone users feel
more favorable toward companies
whose mobile sites or apps allow
them to make purchases quickly.”
- Google 2016
Alibaba-backed grocery store chain HEMA offers a curated selection of 3,000 products from 100 countries.
Consumers can order through an app for 30 minute delivery, or shop in-store, where digital price tags are
updated in real time, shoppers can scan bar codes, pay via the HEMA app and have purchases delivered for free.
Stores offer a dedicated “food booth” experience where shoppers can have their groceries cooked for them.
A.k.a Data-driven, disruptive tech
Platformization is the great synthesizer – unifying
online and offline data regarding customers, products
Data-driven, disruptive, intelligent tech: think, true
synthesis of online and offline data as it relates to the
Users on Line, WeChat and Weibo can converse with Microsoft’s
Xiaoice either by text or speech. The chatbot, used by 40mm people
across China and Japan, is able to engage in conversation, identify
photos and suggest new products to purchase.
“1 in 3 smartphone users has purchased
from a company or brand other than the
one they intended because of information
provided in the moment they needed it”
- Google 2016
With each interaction, sophisticated CRM systems provide a nuanced understanding of individual shoppers, and
a more personalized brand experience.
Platformization at work: The North Face x Watson platform, xps, uses Artificial Intelligence to allow for natural
language search and thus easier navigation through myriad product options.
A.k.a Total digital business transformation
Digitalization is a transformation of business through
new models and digitized operations.
A complete digitization of supply chain to creates
efficiencies within supply chains that are not reliant
on human capital.
Digitizing operations provides new revenue and
value-producing opportunities at a faster pace.
Next page: Wheelys mobile concept
“73% of consumers prefer to do business
with brands that use personal information
to make their shopping experiences more
- Google 2016
At Alibaba’s Tao café staffing, location, inventory management and delivery all improve drastically with a digital
3. Case studies
The most successful cases
are embracing new retail
principles in full force
But behind their
success lies a long-
time commitment to
and mastery of the
What’s clear across all of the success stories is
that they don’t just embrace
the Four New Retail principles with a strong
consciousness of customer
needs, they’ve shown a reverence for building a
Global brand, local
Seamless path to
• IntegratedtechtitansbyadoptingWeChat (Tencent)andAlipay
• Successbuiltonthebasicsof multi-brand
An adidas Originals “This is Me” pop-up store that travelled to 9 cities in china over 5-weeks, complete with
social sharing opportunities and interactive in-store tech. The campaign incorporated influencers, KOL, owned
social, Tmall, and DTC channels (an app, in this case) on top of integrated payment options like Wechat and
Alipay, and drove a 78% lift in shoe sales.
Now that individual performance sport has taken hold and attracted mass government investment,
adidas is well placed to capitalize on their already established cred.
Chinese eTail giant
who really gets 020
Brilliant Basics 1.Entertainmentization 2.Omnichannelization 3.Platformization 4.Digitalization
Embrace the New Retail
Principles from a solid
• Localization drives
ability to command a
• Use cultural rituals to
• Partners help you see
what you don’t know
• Take a portfolio
approach to build
local relevance by city
• Fail fast and often!
Experience-driven retail with a
twist: demonstrate what your
brand can add:
• Play in culture, fashion,
trends, music and have fun
• Think about how you can
shape culture vs brand first,
and bring something fresh
• Move with the market, don’t
try to lean on something un-
• Rethink service; how can
you anticipate not just
product wants, but
Inject seamlessness into the
path to purchase by removing
• Don’t look for scale, look
for new ‘touch points’ and
“fish where the fish are”
• Integrate intelligent
transactions and on-
demand buying to
• Don’t be afraid to
experiment in channels
you don’t “own” and aren’t
intelligent tech: think, true
synthesis of online and
offline data as it relates to
• Make your data work
harder: If you have 80%
of your customers’
story, someone else
A total transformation
of your business and
supply chain through
and digital systems:
• Partner to get there
• Borrow and test
infrastructure to see
if it works for you
The future is already here.
The future of retail
Made in china