Rethinking the Physical Space – Insights from China’s Evolving Retail Industry

Alison Choe
Alison Choe

For those willing to look, China’s thriving retail scene provides meaningful insights to draw upon in creatively redesigning physical spaces to deliver better shopping experiences.

We’ve heard about the rapid growth of retail in China. Behemoths such as Alibaba and dominate the online space and are increasingly moving offline. Similar to what we’ve observed in the US retail industry, there is much experimentation to integrate the online and offline.

The Chinese retail market is very unique in that it is heavily mobile driven, with more smartphones in China than there are people in America. It is also becoming increasingly centralized, with data becoming more integrated and platforms becoming more consolidated. By exploring some of their efforts, we can glean relevant insights to apply in other retail environments.

Build for seamlessness, on a fundamental level

From ‘omnichannel’ to the ‘shopper experience,’ retail buzzwords have evolved over the years. Ultimately, it centers around creating a seamless and value-added experience for shoppers.

One such example we can draw inspiration from is Alibaba’s fresh food concept called the Hema supermarket. In 13 locations, the supermarket’s fresh produce and seafood is prepared by chefs and delivered to the customer’s doorstep in 30 minutes. Alternatively, for those who prefer to hand-pick their ingredients, they can visit the store and have it cooked on the spot while they finish the rest of their shopping. Data enhances the shopper experience further as every product has a code that can be scanned with their mobile app, providing its origin and details. Customer preferences are recorded, and in turn, shoppers are then pushed personalized offers. The payment system is also integrated through the same app, powered by Alipay and the ubiquitous QR codes.

By offering various channels the customer can take, Hema supermarkets have revolutionized the traditional seafood markets. Shoppers no longer have to tolerate the fishy smells or crowds to get their fix of fresh food. More importantly, every touchpoint with the shopper is recorded and used to customize their experience. Learn more about how to create a connected store in our webinar IoT and the Connected Store.

Get close to your customer by finding new opportunities in the offline world

Gone are the days where people lament that physical retail spaces are dead. While Amazon is moving into the grocery space, the Chinese e-commerce giants, such as Alibaba and are now collaborating with mom-and-pop shops. Last month, Alibaba revealed their ambitious plan to transform 10,000 mom-and-pop convenience stores across China. They plan to turn them into smart service centers, equipped with Alibaba’s logistics and financial infrastructure and capabilities. Taking a franchisee model, these stores are still run by the original owners and are co-branded with Tmall, Alibaba’s e-commerce platform.

The photos below show the transition, where they still keep their original store name. This shows that established brand loyalty in the offline space is still extremely valuable and should be capitalized on.

On top of brand loyalty, the existing infrastructure of stores can be very valuable. Logistical support is another consideration for online retailers setting up physical stores. One possibility is to locate the store close to headquarters for local support. Read more about this in Top 10 Tips for Online Retailers Opening Physical Stores.

Speaking of getting closer to your customer, a futuristic and literal example is a robo-grocery store that will drive to your doorstep. While it is still in the testing phase, this emphasizes the importance of location to reach your customers, and helps to increase brand awareness. A current way to achieve this can be through pop up locations.

While many of these initiatives in China are thriving in its specific ecosystem, there are meaningful insights we can draw from on how to creatively approach redesigning physical spaces for the shopper experience.

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