Shilpa Ahuja is always pressed for time. There’s work and then there’s home! And when she’s home, she wishes she had some help sourcing fresh fish and cooking it for dinner. But then, no supermarket in Bengaluru, the city she lives in, offers her convenience to source fresh fish, let alone cook it to her specifications, her particular tastes. And this isn’t true for just Bengaluru. Across India, we cannot think of such luxury. So, although Shilpa wishes for a miracle in retail to help satiate her cravings, wishes don’t really come true – or do they?
There is a chance that Shilpa’s silent prayer and that of scores of other individuals could be answered and her dreams become a reality with the advent of New Retail. It already has in China, so why can’t India follow suit? So, what is the concept of New Retail?
First it is much more than simply about facilitating supermarket shopping and having someone prepare your meal with fresh sea food. For instance, New Retail would really serve a car fanatic well – he could have the convenience of booking a car for test driving without having a salesman pursue him to buy something he isn’t really sure of. All a customer needs to do is take a selfie for face recognition, select a car he wishes to test drive and voila! He’s all set. He then reaches a car vending machine where the face recognition software will give him the car he has chosen and allow him to simply test drive it for three days, upon which he will return the car to the vending machine with a decision taken on buying it. New Retail is a boon for such customers.
Understanding New Retail
A brainchild of Jack Ma, Co-Founder & Executive Chair of the Alibaba Group (China’s multinational technology conglomerate), ‘New Retail ’is all set to transform retail beyond imagination. Ye Guohui, General Manager of Tmall New Retail Products Business Unit explains, “New Retail is best described as the trend where boundaries between offline and online commerce disappear and focus is purely on improving customer experience and fulfilling personalised needs of each customer. The concept is an intersection between the ‘consumer value proposition’ and‘merchant value proposition’, which becomes intrinsic when online and offline commerce are properly integrated.
For the consumer, it simply is a more seamless experience, which makes it easier to shop, as the brand works better to cater to their individual needs. On the other hand for the merchant it ensures everything is connected and consumer insights are observable which increases efficiency and productivity.”
Today, New Retail is one of the core strategies at Alibaba, which stems from the company’s efforts to constantly innovate in the field of machine learning, deep learning and neural networks. From an AI chatbot to smart investments led by AI-enabled learning, it wouldn’t be an understatement to say that Alibaba’s innovations are currently unmatched. The New Retail idea is changing the face of retail in China. Apart from being implemented at the very stores that Alibaba has created that are based on this concept, it is also driving a massive transformation of the traditional retail industry by digitising the entire retail operation, with a focus on instore technology, digitised inventory and supply chain systems, consumer insights and mobile payments, a thing that perhaps India too can avail off and benefit from considering every street in India has a mom and pop store.
Guohui states that the concept of New Retail, enables retailers to be ready for the future using consumer insights generated on different platforms to develop informative and entertaining content for Omnichannel delivery.
How’s New Retail Different from Omnichannel Retail?
To understand New Retail, it is imperative we do not confuse it with Omnichannel retail, a concept that Indian retailers have somewhat mastered. Guohui explains the difference between both the concepts.
“If you look at Omnichannel Retail, it is about multiple checkout options for a consumer through one brand. Omnichannel retail became popular in the West where it was a mesh of what large physical retail stores could offer online and make the shopping experience a little bit better and through that make it more targeted for each user. But if you take New Retail, what it does is enhance the experience, whether it is offline or online. And looking at what we have done with our stores – Freshippo, it ends up happening within the store itself. You can buy fresh food, eat in or order home delivery. So the level of experience an average consumer will get from New Retail is far ahead of what exists in Omnichannel retail,” he says.
Transforming Mom & Pop Stores the Alibaba Way!
India is a land of millions of mom and pop stores spread across the length and breadth of the country. Strong hand holding can lead these local stores to transform themselves and come at par with the changing dynamics of modern retail.
Citing the solutions in place for the Chinese mom and stores, Guohui says, “LST (Ling Shou Tong) is Alibaba’s one-stop solution designed to help mom-and-pop stores by providing a platform where operators can crunch sales and operations data, analyse it and turn it into insights. The LST platform effectively erases the friction and layers between FMCG (fast-moving consumer goods) brands, distributors and shop owners.” What makes LST even more desirable is the fact that it is equipped with Alibaba’s Big Data.
Guohui elaborates: “LST is capable of advising store owners on customer preferences, pricing strategies and inventory levels. As a component of the Alibaba ecosystem, LST also allows shop owners connected to the platform to bring their business online, enabling these stores to be found on the Taobao app, Tmall, AutoNavi Map, Alipay and Ele.me, greatly expanding their reach. Shop owners can also lease unmanned vending machines from LST to generate more revenue during non-operating hours.”
So far, 1.3 million convenience stores in China are now using LST as their onestop solution for digital transformation, embracing New Retail and offering better services to their local neighborhoods.
What makes New Retail have this universal acceptance is the fact that the concept is not sector dependent. Guohui says, “We have already seen examples across industries like Automobile, F&B, Publishing, Fashion and Beauty, Home Furniture and others. Enabled by leading-edge technology, New Retail has created an imperative for brands. For any market, we see that the consumers prefer a convenient, customised end-to-end shopping experience across offline to online. For brands to win in such a scenario, New Retail is the solution.”
Why Should Modern Retail Stores be Left Behind?
One may think that ‘New Retail’ is only for traditional retailers but then the benefits of New Retail are equally relevant for modern retailers as well. A case in point here is what Alibaba and Starbucks have done together in China. Guohui shares: “In August 2018, Alibaba and Starbucks formed a deep, strategic ‘New Retail’ partnership that enabled a seamless Starbucks experience and transformed the coffee industry in China. Starbucks collaborated across key businesses within the Alibaba ecosystem, including Ele.me, Hema, Tmall, Taobao and Alipay, to significantly elevate the Starbucks experience for Chinese customers.”
The partnership announced plans to leverage Ele.me’s on-demand platform to pilot delivery services in Beijing and Shanghai; delivery program to expand across 30 cities to more than 2,000 stores by end of 2018. Starbucks also partnered with Hema supermarket to create ‘Starbucks Delivery Kitchens’ specifically designed for Starbucks delivery order fulfillment, further expanding delivery capabilities while ensuring the highest levels of the third-place in-store customer experience.
“The two companies will also co-create an unprecedented virtual Starbucks store that will integrate multiple platforms across Starbucks and the Alibaba eco-systems, to enable a seamless and even more personalised experience for members to register, redeem benefits and enjoy an extensive range of services,” Guohui adds.
New Retail in India & Beyond
On why New Retail needs to be considered by retailers in India, Guohui explains, “India is also following the same path that China took for its digital evolution although it is still at a nascent phase.
It is about creating the right impetus within the ecosystem, which includes bringing together payments, malls, brick-and-mortar retail and delivery as well. Once you have all these nuggets together, it becomes easier to see how a user has a seamless experience when it comes to engaging with an ecosystem.
For example, currently in India, if a user wants to pick up something from the local market, he or she has to rely on the market having a delivery service which has to be integrated with the payment service and then depending on the stock availability, he or she gets the item. But in the New Retail world, on one platform users have access to all of these services at one point in time. That is where India can benefit from New Retail. Essentially, for anybody who’s a Millennial, it becomes easier because their habits are engrained on the smartphone, on which the concept of New Retail is based.”
Though New Retail is yet to be adopted by retailers in India, we have DLF Shopping Malls touching upon it.
“Alibaba Cloud partnered with DLF Shopping Malls as the technology enabler in their journey to transform new retail in India. On September 05, 2018, DLF Shopping Malls launched their first ever Phygital app ‘Lukout’, which offers features such as one touch parking payment, valet and concierge services by presenting engaging content around latest looks, trends etc. which are personalized and based on real time location. Alibaba Cloud with its leadership in big data, artificial intelligence and high-powered computing capabilities, helped DLF Shopping Malls with newage cutting edge technologies and retail solution stacks to enhance their digital transformation journey,” says Guohui.
Apart from India, the concept is also being tried in Singapore. Elaborating on this, Guohui shares, “At a leading shopping center in Singapore, we have piloted the program by launching an offline home and living store called Taobao Home. We believe that it was an excellent opportunity for us to take our concept of New Retail outside of China for the first time for a longer period of time and have shoppers be able to experience this vision with a fresh perspective on the retail landscape in Singapore. Also, via the store, we wanted to give homeowners inspirations for new interior design ideas and styles.”
Technicalities of Implementation
Considering the concept is relatively new for all, (except for that it has been tried and tested in China), it isn’t wrong to doubt its implementation. Though, the very fact that 1.3 convenience stores in China have benefited from it, gives us reasons to believe in its success.
On the implantation technicalities, Guohui shares, “It varies on different projects. For example, the first Freshippo store was open in Shanghai in January 2016. As at the end of 2018, there were 109 Freshippo stores in China, located in 18 cities including Shanghai, Beijing, Ningbo, Shenzhen, Hangzhou and Guiyang and that number continues to grow.”
He further adds, “To give you an example: In January 2018, Alipay teamed up with Wu Fang Zhai Smart Restaurant, a 100-year-old traditional Chinese food brand, to offer a self-service restaurant model and a 24-hour operating schedule with its vending machines. Today the restaurant operates pre-order, pre-pay and pick up order options, allowing customers to open smart lockers used to store orders with a smartphone. The RFID-enabled vending machines, opened through a smartphone, automatically detect items removed from the fridge and are charged through Alipay. In just four months the restaurant increased its business by 40 percent.”
The adage ‘nothing is permanent, but change’ is apt to justify the revolution being initiated by New Retail in the word of retail. From traditional retail to modern to online retail and then Omnichannel retail, the journey of ‘retail’ has seen it all. But then New Retail supersedes all of this to offer a completely new face of retail and India is a country that can benefit leaps and bounds from it.