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

Tencent Develops New Credit Payment Product Chinese social media and gaming conglomerate Tencent is developing a credit payment product, named Fenfu, which means “pay by installments” in Chinese. It may go live within WeChat Pay in the fourth quarter of 2019, according to a report by Chinese media outlet Xinliu Caijing. WeChat Pay users, a major mobile wallet in China, will be able to buy products first and pay later or pay by installment through Fenfu. Fenfu will also grant small loans and provide financial services to its users. Chinese e-commerce companies Alibaba and JD.com have already launched similar credit payment products — Huabei and Baitiao, respectively — to encourage spending on their platforms. Given WeChat and WeChat Pay’s huge user bases, the addition of Fenfu will intensify competition in the mobile credit payment space. According to China-based consultancy iResearch, Tencent-owned payment tools accounted for around 40% of third-party mobile payment transactions in China as of the first quarter of this year. Coresight Research insight: Micro-financing tools offered by e-commerce platforms have helped boost online spending in China, particularly among Gen Zers, who are more likely to buy now and pay later. In a survey conducted by Chinese media Southern Metropolis Daily in April, around 56% of respondents aged 22-25 said they would use installment services to pay for purchases. While WeChat is already a super app in China and consumers use WeChat Pay heavily, the new installment offering will likely drive more consumers to shop via WeChat for a wider scope of goods and services. Coach and Kate Spade to Launch Stores on Tmall Luxury Pavilion New York-based luxury lifestyle group Tapestry bring its Coach and Kate Spade brands to Tmall Luxury Pavilion, an Alibaba platform dedicated to luxury and premium goods. Coach will debut on the platform this December, and Kate Spade will launch a store there early next year. After adding its footwear label Stuart Weitzman to Tmall Luxury Pavilion last October, Tapestry will bring all its labels to the platform. The group’s brands will also adopt Tmall’s new Flagship Store 2.0 format to offer an elevated shopping experience to customers. Launched in July by Tmall, Flagship Store 2.0 is a new tool powered by data analytics and new technology such as augmented reality to help retailers and brands revamp their online storefronts. Flagship Store 2.0 will allow retailers to offer customers personalized pages based on shopping patterns. Tmall Brings Chinese Designers to New York Fashion Week Tmall held its third annual “China Cool” event at New York Fashion Week (NYFW), starting September 4, 2019. This year, five Chinese fashion brands — Peacebird, Threegun, Songta, i-am-chen and Rizhuo — joined NYFW under the banner of Tmall China Cool. They represent contemporary and emerging brands in China, and all showcased their spring-summer 2020 collections at Spring Studios, a venue traditionally used by top designers to showcase collections. Before the show, Tmall offered designers trend forecasts based on its platform data to help them prepare their collections for the next three to six months. China Cool is Tmall’s future vision for global fashion, which aims to focus more on heritage and authenticity among increasingly experimental and individualistic consumers, according to Jessica Liu, General Manager of Tmall Fashion and Luxury. Apart from the fashion shows, Tmall also held a three-day pop-up exhibition featuring cross-category collaborations between designers and consumer goods brands such as a co-branded qipao (a traditional one-piece dress of Manchu origin) by Chinese snack company Hsu Fu Chi and clothing brand Tyakasha. [caption id="attachment_96977" align="aligncenter" width="700"] Rizhuo debuts spring-summer 2020 collection at Spring Studios
Source: Alizila [/caption]   [caption id="attachment_96978" align="aligncenter" width="700"] Tmall China Cool pop-up exhibit
Source: Coresight Research [/caption]   Appendix: New Retail Developments New Retail developments in China are listed in Figure 1. [caption id="attachment_96979" 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_96980" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   [caption id="attachment_96981" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   [caption id="attachment_96982" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]