Offline stores in China are all but not dead…

As rightly written in China daily recently, not only Alibaba but also its main competitor, JD.com are going full steam in opening physical stores in China. Both of them do not just open stores like classic / old fashion offline retailers… they leverage on the online data they have accumulated and turn their physical stores into retail labs. Not only they want the shopping experience between off and online to be seamless, they want it to be of the same fabric…

 

JD goes for:”retail experience shops” while Alibaba develops its vision of “new retail”. To expand faster in the physical world, JD is pushing the franchise model… Pragmatism is key for this new future.

 

Extract from FAN FEIFEI (China Daily), Updated:August 2017 :

 

JDJD.com Inc, China’s second-biggest e-commerce player, plans to open 200 more bricks-and-mortar stores-mainly offering consumer electronics products-by the end of this year. In doing so, it will be in direct competition with Suning Commerce Group and Gome Electrical Appliances Holding Ltd, two of the biggest electronic offline retailers in China.

 

Using a franchise model, the shops will be powered by the company’s cutting-edge technology. Upon entering a JD store, a camera recognizes customer faces and tracks the duration of their stay and where they spend the most time.

 

JD will make use of big data analytics technology to keep offline stores stocked with recommended categories and suggested amounts of products, while localizing the selection depending on consumer-buying preferences in each location.

 

“By expanding our offline business, we believe we can make shopping both online and offline better for service partners and consumers,” said Hu Shengli, president of JD Electronics.

 

So far, there are 92 JD retail experience shops, and the number will increase to 300 by the end of this year, according to JD. The stores are mainly located in key business districts, shopping malls and supermarkets, such as Walmart and Wanda Plaza.

 

“At present, offline sales still make up … 70 percent of the total sales. JD has an upper hand in supply chain management, from procurement, transportation to quality control, and hopes to expand its offline reach across the nation, depending on its current advantages,” said Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy.

 

However, JD doesn’t pose a threat to Suning and Gome as the number of its offline retail shops is limited, Lu said. “The company will face some difficulties to open stores in fourth-and fifth-tier cities.”

 

China’s online shopping is seeing robust growth, with total online retail sales hitting 2.47 trillion yuan ($370 billion) in the first five months this year, up 32.5 percent year-on-year.

 

However, physical goods sold online accounted for only 13.2 percent of total retail sales in the same period, according to the National Bureau of Statistics.

 

Back to square 1: Offline is far from dead but need to be enriched by the data collected and analyzed from Online transactions to better serve customers.”

 

By Stéphane Joly, Executive Vice President, Altavia Asia