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 coined 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 Opens Its Largest Offline Electronics Store JD.com opened JD E-Space, a 538,200-square-foot electronics store in Chongqing, China on November 11. The store provides customers with an immersive experience, with products from more than 1,000 of the world’s leading brands ranging from electronics and home appliances to digital health and fitness accessories and beauty tools. At JD E-Space, shoppers are able to test and experience these products. The store also showcases several brand-experience zones, including Microsoft’s first future smart home experience area in China and Ninebot’s first offline experience store in China. JD E-Space goes beyond a traditional electronics store--with restaurants and coffee shops, it serves as a social destination. Customers can even book an appointment for baking classes, and families can bring children to experience the latest video games. JD.com plans to use the store as a space to host events such as new product launches, according to Zisheng Yang, Head of Offline Business at JD Home Appliances. The company continues to push its “boundaryless retail” strategy, allowing consumers to buy products whenever and wherever they want. All items in JD E-Space have dynamic price tags to ensure consistent prices across all channels, as well as QR codes that consumers can scan to access product information and place orders for delivery, which is fulfilled by JD Logistics. Other in-store technologies include facial recognition, robots and smart shelves. Furthermore, according to JD.com, the new store is “the world’s first retail space to be completely covered by 5G.” [caption id="attachment_100544" align="aligncenter" width="700"] Source: Jdcorporateblog.com[/caption]   Alibaba Forms a Strategic Partnership with Hospitality Group Accor Alibaba has partnered with French hospitality group Accor to develop digital applications and a loyalty programs that are designed to facilitate overseas travel for Alibaba’s700 million Chinese customers. Accor will be able to leverage the e-commerce giant’s comprehensive ecosystem to strengthen its market presence in China. Fliggy, Alibaba’s travel arm, will enable consumers to book hotels, order catering services and access entertainment offerings and other lifestyle services through Accor using the Alipay payment service. Accor has 4,900 hotels and residences across 110 countries. The chain launched its flagship store on Fliggy in 2016. Its collaboration with Alibaba will help the rollout of the company’s new loyalty program, called Accor Live Limitless (ALL). Alibaba will utilize its ecosystem and huge consumer base to provide digital marketing capabilities and consumer insights and accelerate the launch of ALL in China and worldwide. Accor has also developed a certification program targeted specifically at Chinese consumers called Haoke, which means “welcome” in Chinese. It requires participating Accor hotels to incorporate the Chinese language in its signage and menus, hire Chinese-speaking staff and serve Chinese cuisines, in order to better welcome and accommodate Chinese overseas travelers. [caption id="attachment_100545" align="aligncenter" width="700"] Source: Accor[/caption]   Coresight Research insight: Travelers from China’s mainland made about 150 million trips overseas in 2018, up 14.7% year over year, according to China’s Ministry of Culture and Tourism, making it a lucrative market for international travel operators. A recent Coresight Research survey also found that more Chinese travelers make their own travel arrangements instead of using a tour guide, meaning they are likely purchase independent travel packages (flights plus hotel) through online travel agencies such as Fliggy or Trip.com Group (formerly Ctrip). To capture this business, foreign brands are partnering with Chinese companies such as Alibaba, which has an expansive user base—for example, Alibaba has established a joint venture with US-based hotel chain Marriott International. Similarly, American travel platform TripAdvisor recently announced a strategic partnership with Chinese online travel agency Trip.com Group to expand its global reach. ByteDance Unveils a Consumer Lending App on Android ByteDance, the parent company of short-video apps Douyin and Tiktok, has launched a loan-granting app called Manfen on Android marketplaces. Manfen, a Chinese word meaning “full marks,” provides loans for up to ¥200,000 ($28,000) at a daily interest rate as low as 0.03% depending on the lender’s credit history. Manfen also works with major Chinese banks—such as China Merchants Bank and China Everbright Bank—to release credit cards. Users only need to submit identification and bank card details to borrow on the platform. Jinri Toutiao, a news content platform owned by ByteDance, also has a consumer lending feature, called Fangxinjie. Loans from Manfen will appear on Fangxinjie if users have registered accounts on both platforms under the same phone number. The two platforms have a combined registered user base of more than 23 million. ByteDance continues to expand to new services in addition to social media, education, games and productivity tools to drive traffic and growth. Furthermore, companies such as Alibaba, Baidu, Didi, Meituan and Tencent are now entering the financing sector. Appendix: New Retail Developments New Retail developments in China are listed in Figure 1. Figure 1. New Retail Developments in China: Last 12 Months [wpdatatable id=40]

Source: Company reports/Coresight Research

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: Figure 2. Alibaba New Retail Investments and Acquisitions: Last 12 Months [wpdatatable id=41]

Source: Company reports/Coresight Research

Figure 3. Tencent New Retail Investments and Acquisitions: Last 12 Months [wpdatatable id=42]

Source: Source: Company reports/Coresight Research

Figure 4. JD.com New Retail Investments and Acquisitions: Last 12 Months [wpdatatable id=43]

Source: Source: Company reports/Coresight Research