New Retail Briefings “New Retail” is a model for integrating online retail, offline retail and logistics across a single value chain powered by data and technology. The term was introduced by the Alibaba Group, although many companies in China and globally are implementing various elements of the model. In this biweekly series, we review the latest trends in New Retail, with a focus on major digital platforms and multichannel retail companies in China. What’s New in New Retail? Suning.com Acquires All Wanda Department Stores Suning.com, one of China’s major e-commerce platforms, acquired all of Wanda Group’s 37 department stores. Wanda is one of the largest real estate and commercial property developers in China, but has been rapidly closing department since 2015 due to competition from online retailers and upgraded shopping malls featuring a better experience that are taking away foot traffic. Suning.com will convert all the department stores into “smart retail” formats featuring digitalized operations for payments, customer service and inventory management. The acquisition will bolster Suning.com’s strength in offline stores, adding department stores to its portfolio of shopping malls, supermarkets, convenience stores and specialty stores. Suning started out as one of China’s biggest electric appliance retailers, grew rapidly into online, and now is further expanding its physical footprint with the addition of Wanda department stores. [caption id="attachment_77994" align="aligncenter" width="620"] Wanda department store
Source: Wanda Group[/caption]   Alipay Available in US Pharmacy Chain Walgreens Shoppers with an Alibaba digital payment account on Alipay can now use it at 3,000 of Walgreens’ over 9,000 stores, seeking to make it easier for travelers from China to pay. This follows another recent deal between Alibaba and Walgreens Boots Alliance, Walgreens’ parent company, to launch an online store on Alibaba’s cross-border e-commerce platform Tmall Global. Alibaba has been teaming up with overseas merchants to promote Alipay beyond China. Alipay is currently available in over 40 countries and regions, and this is significant for Chinese consumers as they increasingly travel overseas. According to China’s Ministry of Tourism, the country’s outbound tourism market recorded around 149.7 million trips in 2018, up 14.7% year over year. [caption id="attachment_77995" align="aligncenter" width="620"] Walgreens pharmacy chain
Source: Wikimedia Commons[/caption]   Alibaba Invests in Online Video Platform Bilibili Alibaba’s e-commerce subsidiary Taobao acquired 24 million shares (an 8% stake) in Chinese online video platform Bilibili, which is famous for its content in anime, comics and games.  This follows Taobao’s strategic partnership with Bilibili in December 2018 under which content creators on Bilibili will be able to enhance the visibility of their work and sell peripheral anime products through Taobao. The investment is part of Alibaba’s efforts to tap into the emerging market of consumers born after 1990s and 2000s since Bilibili has a large user base of young adults and teenagers: Around 82% of its 92.7 million monthly active users were born between 1990 and 2009, according to the company’s latest earnings release covering the third quarter of 2018. [caption id="attachment_77996" align="aligncenter" width="620"] Source: Company reports/Coresight Research[/caption]   Investments and Acquisitions in New Retail To expand New Retail abilities, Alibaba, Tencent and JD.com have invested in logistics firms, online marketplaces, content creation companies and even brick-and-mortar stores. These are some highlights: [caption id="attachment_77997" align="aligncenter" width="620"] Source: Company reports/Coresight Research[/caption]   [caption id="attachment_77999" align="aligncenter" width="620"] Source: Company reports/Coresight Research[/caption]   [caption id="attachment_78000" align="aligncenter" width="620"] Source: Company reports/Coresight Research[/caption]