How to Leverage New Retail

Although the past two years have not been kind to brick-and-mortar establishments worldwide, retail has taken on a life of its own in China through the merging of online and offline approaches. The rise of e-commerce has resulted in “New Retail” which has led to higher national consumption rates. Coined by Jack Ma in 2016, New Retail defines the trend of merging online and offline channels to foster a seamless customer journey. New Retail is forcing brands to get creative with their business models and integrate big data, marketing, logistics and supply chain processes. It’s basically an opportunity for brands to get closer to their consumers while increasing operational efficiency and cutting costs.

It’s also made the online aspect more than just a sales channel, offering virtually infinite opportunities to interact with consumers in all aspects of their daily lives. Take Alibaba’s Hema cashless supermarket for example. While its physical locations have the look of a normal supermarket, the shopping experience is anything but. Not only can you order online for delivery within 30 minutes, it’s pretty much an Amazon-infused Whole Foods on steroids where you have a selection of fresh foods like meat, seafood, vegetables with chefs on hand to cook your groceries on demand. The only thing missing is the endless search through the aisles for goods which may or may not be in stock and the heavy lifting of grocery bags.

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Alibaba and fellow online giant JD are investing heavily in New Retail with the former set to open 30 more Hema supermarkets in Beijing by the end of the year. Concepts like Hema are a big reason why mobile payments in China are 60 times higher than in the US according to the China Internet Retail Center. New retail is therefore not just a trend. It’s a rapidly evolving new normal which brands must grapple with, requiring digital organizational restructuring and data-driven consumer interactions.

Go Digital or Go Home

First of all, your brand must optimize its organizational and operational model digitally according to your business needs to leverage New Retail’s potential. Forward thinking brands know that it’s no longer enough to have a lot of data on hand; it must be organized and actionable in real time. Your data should be able to function smoothly across online and offline platforms, across marketing, sales and consumer engagement departments.

Beware though, achieving this is a grind and your brand probably won’t get it right the first time. A lot of experimentation, data analysis and refining is required when setting up a suitable infrastructure to achieve the necessary flexibility and can take up to three years according to a study by Bain & Company.

Treat Every Consumer as a Potential Influencer

As well as having your digital house in order, your brand should no longer look at consumers through a mass market lens, but rather as active brand ambassadors. It used to be enough for brands to identify a broad target market and their needs to turn a profit. This isn’t the case anymore. You need to look at every consumer as a “segment of one”, giving them more personalized products that form just a part of the shopping experience. Consumers today want a holistic experience where they can shop, enjoy stimulating content and talk about it on social media like WeChat Moments.

Seamless online to offline marketing gives your brand continuous engagement with consumers at different touchpoints, letting you collect data and insights enabling you to deliver the right message at the right time to the right customer. The constant influx of data from AI-driven technologies can help you predict the interest of your consumers and refine your marketing campaigns in real time. Below are a few case studies of recent examples.

Case Study: Estée Lauder China

Cosmetics brand Estée Lauder has achieved this masterfully in China with a campaign of blended advertising across different media. Leveraging its customer database, it used precise consumer profiling to engage 10 million users and gained 100,000 followers. They weren’t done though. They assessed each customer interaction to understand user behavior, made real-time changes and gained a further 500,000 followers; all within a two-week period with an 80% higher sales than previous campaigns. Such strong data-driven engagement has resulted in 40% sales growth in China in 2017, sales figures which are climbing fast than its other markets. Not bad for an agile team of 50 nationwide.

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Case Study: Nike Air Max Sneaker Release

Over in Seoul last week, Nike tapped into the streetwear ritual of creating a buzz by attracting long lines of sneakerheads. Ahead of the release of a limited edition Air Max sneaker, Nike sought to leverage buzz digitally and create social media engagement. With a dedicated event website, customers were able to create personalized avatar characters inspired by local street culture. The #AIRMAXLINE on Instagram would give users a view of all the avatar characters waiting in line to get their hands on the treasured sneaker. Over the course of the two-week campaign, 80,000 sneakerheads lined up with the same number posting on social media gaining exposure to 15,000,000 people.

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Case Study: Starbucks Shanghai Roastery

The largest Starbucks in the world, Starbucks Reserve Roastery in Shanghai leverages Alibaba’s augmented reality technology to provide an integrated in-store and online experience. Once you enter the store, a specialized page opens upon entering the store giving you an explanation of the roasting process. The Starbucks-Taobao app lets you scan items for a product description. The app also follows you around the Roastery, presenting you a bespoke menu for the coffee bar you’re in currently. All this data obviously gives Starbucks a better understanding of their consumers with the Roastery having shattered “every sales record in the history of the company” according to Chairman Howard Schulz.

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