Coresight Research Labs

albert Chan

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?

Oreo Launches Six Unique Flavors Inspired by Forbidden City

Oreo launched six new imperial-inspired flavors created in collaboration with the palace museum at the Forbidden City in Beijing.

The new products are meant to be reminiscent of traditional snacks once consumed by China’s royalty, including red bean cake, lychee-rose cake, green tea cake, spicy pepper pastry, Cantonese barbequed pork pastry and vintage hawthorn berry.

The new products also come in Chinese-style packing, using imagery from a famous painting in the Forbidden City called Twelve Beauties of Emperor Yongzheng.

[caption id="attachment_92949" align="aligncenter" width="700"]

Oreo’s new imperial-inspired biscuits
Source: Alizila[/caption]

The new series was hugely successful: Oreo reported it sold more than 760,000 boxes on its first day on Tmall, and that the new series also attracted over 260,000 new followers to its Tmall store.

Coresight Research Insight: Oreo’s success came in the midst of the trend of Chinese Goods (国货潮), which is seeing a resurgence in popularity of products featuring innovative cultural aesthetics. In December 2018, Forbidden City reported it sold more than 100,000 units of its heritage lipstick, inspired by the costumes of the imperial concubines, in just four days.

Tmall Gives Retailers New Tools to Revamp Storefronts

Tmall has rolled out “Flagship Store 2.0” – powered by data analytics and technology such as augmented reality (AR) – to help retailers and brands revamp existing online storefronts. The new initiative will enable retailers to offer consumers a personalized page based on their individual shopping patterns: When customers enter a store page, they will see a product list that reflects their shopping preferences.

With the new feature, retailers can also show content powered by AR and 3D technologies to give customers a more fun and convenient shopping experience. For instance, customers can see how a piece of furniture would look in their living room or can “try on” lipstick in a virtual mirror before ordering it.

[caption id="attachment_92950" align="aligncenter" width="700"]

Furniture showcased in AR technology
Source: Alizila[/caption]

Another feature of the Flagship Store 2.0 initiative is allowing retailers to connect their Tmall online storefronts to their offline stores. This means online customers can browse and shop from a similar product assortment as offered at the retailers’ physical stores. This seamless integration will likely increase store traffic, both online and offline.

Chanel Will Launch a Flagship Store on Tmall Luxury Pavilion

French luxury brand Chanel will launch a flagship store on Tmall Luxury Pavilion in August with the pre-sales starting on July 5. The brand sells fragrance, skin care and cosmetics products on the platform, including its new Rouge Coco Flash lip stick and fragrances, such as Bleu de Chanel.

[caption id="attachment_92951" align="aligncenter" width="700"]

Chanel’s flagship store on Tmall Luxury Pavilion
Source: Alizila[/caption] This will be the first time Chanel works with a third-party e-commerce operator in China. Chanel runs its own online store for fragrance and beauty lines in China, and the only other official way to buy Chanel products is at its offline stores. Selling on Tmall will allow Chanel to tap into the platform’s over 500 million users (as of August 2018). With Chanel’s recent entry, Tmall Luxury Pavilion now offers 114 brands, ranging from apparel, beauty products and watches to luxury cars, including Bottega Veneta, Valentino, Burberry, Tod’s, Versace and Stella McCartney.

Appendix: New Retail Developments

New Retail developments in China are listed in Figure 1.

[caption id="attachment_92955" 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: