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

Net-a-Porter Opens Flagship Store on Tmall Luxury Pavilion On September 30, Swiss luxury group Richemont’s e-commerce subsidiary Yoox Net-a-Porter opened a Net-a-Porter flagship store on Alibaba’s Tmall Luxury Pavilion, an exclusive platform dedicated to leading luxury and fashion brands. This launch marked the start of Feng Mao’s operations, a joint venture between Yoox Net-a-Porter Group and Alibaba that was announced last October. The online flagship store’s grand launch campaign commenced on October 11. The store offers the latest season collections curated by Net-a-Porter and its men’s fashion site, Mr Porter, to consumers in China. Beginning with curated selections of more than 130 luxury, designer brands for women and men—including Balmain, Brunello Cucinelli, Isabel Marant, Jimmy Choo, The Row and Tom Ford—the store’s offering will expand in the coming months to include exclusive capsule collections. [caption id="attachment_98276" align="aligncenter" width="408"] Net-a-Porter's Tmall store
Source: Tmall[/caption]   Coresight Research insight: Tmall is a preferred platform among luxury brands that are seeking to reach Chinese consumers, as it has demonstrated strong performance in this sector. This partnership underscores that appeal, given that Net-a-Porter and Tmall Luxury Pavilion may be considered rival multi-brand platforms. Total luxury sales on Tmall grew 46% in the 12 months ended June 2018 (latest disclosed), while the number of luxury shoppers grew 36% in the same period, according to Tmall. Chemist Warehouse Deepens Partnership with Tmall Global Australia’s largest pharmacy retailer Chemist Warehouse extended its partnership with Tmall Global by signing an updated agreement to operate on the platform for another two years. The new agreement sees a stronger involvement of Chemist Warehouse in Alibaba’s ecosystem. In addition to launching three new multi-brand stores on Tmall Global last month—My Chemist, My Beauty and Discount Vitamin Warehouse—Chemist Warehouse will also open a new store on Kaola, a major Chinese cross-border e-commerce platform that was acquired by Alibaba last month, and on Lazada, an Alibaba-owned Southeast Asian e-commerce platform. This is the second time that Chemist Warehouse has extended its partnership with Tmall Global. The company debuted on the site in 2015 and extended its operations for another two years in 2017. [caption id="attachment_98277" align="aligncenter" width="700"] Chemist Warehouse's Tmall Global store
Source: Tmal Global[/caption]   Coresight Research insight: Chemist Warehouse’s extension of its collaboration with Tmall Global came after the company’s strong performance on the platform. During Alibaba’s annual 11.11 Global Shopping Festival in 2018, the company reached ¥100 million (around US$14.2 million) in gross merchandise volume in seven hours. Alipay Expands to Russia with a Russian Joint Venture Mail.ru, the leading Internet company in Russia, said on October 9 that it has agreed a joint venture with Alipay, the payment arm of Alibaba, to promote digital payment services in Russia. The agreement also includes three other Russian partners: international holding company USM, mobile operator MegaFon and sovereign wealth fund Russian Direct Investment Fund (RDIF). The new endeavor follows a previous e-commerce partnership between RDIF, Megafon and Mail.Ru, through which the companies agreed to set up a joint venture with Alibaba called AliExpress Russia to build e-commerce services to serve consumers and businesses in Russia. The new joint venture in the payment space is the first attempt for Ant Financial, Alibaba’s fintech affiliate, to run Alipay outside Asia. Ant Financial’s existing collaborations to launch digital payment services are with local partners in neighbouring regions, including in Hong Kong, Indonesia and Malaysia. Appendix: New Retail Developments New Retail developments in China are listed in Figure 1. [caption id="attachment_98278" align="aligncenter" width="700"] 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: [caption id="attachment_98279" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   [caption id="attachment_98280" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   [caption id="attachment_98281" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]