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 Alibaba Group, although many other companies in China and elsewhere 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? JD.com launches group buy service in Hong Kong  In March 2018, JD.com launched its own version of group buying service in China to enable Chinese consumers to buy in groups at discounted prices. JD.com extended its group buying service to Hong Kong between May 24 and 31 (pre-sales period for 6.18 shopping festival) in advance of the 6.18 shopping festival from June 1-20. Between May 24 and 31, using JD.com’s group buying service, Hong Kong customers could enjoy free delivery service and discounts of up to 50% off certain products.  To use JD.com’s group buying service, Hong Kong customers first search for JD.com’s group buying mini-program in WeChat, browse for products, then form groups of two or more by inviting or joining other individuals. [caption id="attachment_89789" align="aligncenter" width="694"] Source: JD.com/Coresight Research[/caption]   Ikea launches new mobile app to help with product visualization Ikea announced in late May plans to launch a new app that allows users to visualize how their homes will look if furnished with Ikea products. Customers input room dimensions and other information, and then see how the product would look. Shoppers can also order products through the app. According to Ikea’s Chief Digital Officer Barbara Martin Coppola, the new app is a combination of the store experience with the online experience. The app will launch in France first, followed by the Netherlands and eventually rolled out in Ikea’s top eight markets— including Germany, the US and China - by the end of 2019.  [caption id="attachment_89790" align="aligncenter" width="346"] Ikea Place app
Source: Ikea[/caption]   Coresight Research Insight: This move represents an improvement over Ikea’s previously launched AR app Ikea Place, launched in 2017, which allowed users to see how products could fit their homes but not shop from the app. The move also reflects Ikea’s objective to integrate its stores into a broader e-commerce ecosystem, alleviating customers’ need to travel to city outskirts to shop for products. This can help Ikea to better compete against other home furniture companies such as Made.com and Swoon.  L’Oréal Partners with Alibaba to Introduce New AI Skin-Testing for Acne L’Oréal and Alibaba Group jointly announced launch of the La Roche-Posay’s Effaclar Spotscan app in mid-May, a mobile acne analysis app on Alibaba’s Tmall and Taobao platforms, making the technology available to consumers in China. The app combines L’Oréal’s expertise in dermatology with Alibaba’s AI technology, enabling individuals without access to a dermatologist to receive personalized advice and skin care recommendations for acne. [caption id="attachment_89791" align="aligncenter" width="263"] La Roche-Posay’s Effaclar Spotscan app
Source: L’Oréal[/caption]

Coresight Research Insight: L’Oréal views China as an important digital innovation hub, and has visions of disrupting the beauty industry with digital technologies. The launch of this app represents a step forward in L’Oréal’s digital roadmap, and illustrates the company’s vision of beauty that is diversified, accessible and tailored to local needs.  McDonald’s China links loyalty program to Ele.me app Starting May 20, McDonald’s consumers in China can earn loyalty points when they order through Ele.me, Alibaba Group’s on-demand delivery platform. Users can activate a McDonald’s membership card on the Ele.me app to earn loyalty points for purchases and receive vouchers worth up to RMB 88.5 ($12.80). On the day the service was launched, McDonald’s China attracted nearly 20,000 new members, while single-day orders increased about 20% week-over-week, according to McDonald’s China. [caption id="attachment_89792" align="aligncenter" width="291"] McDonald China’s page on Ele.me app
Source: Alizila[/caption]   Integrating the loyalty program with Ele.me helped McDonald’s China reach more customers, but Hu Xiaoyu, Vice President of Ele.me, acknowledged McDonald’s as an important strategic partner and announced plans to roll out more features in the Ele.me app to bring more value to customer purchases, including birthday perks and member-only sales campaigns. Appendix: New Retail Developments New Retail developments in China are listed in Figure 1. [caption id="attachment_89793" align="aligncenter" width="670"] 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. See selected transactions in the following tables: