Alibaba’s vision of ‘new retail’ involves a multi-billion-dollar investment in stores that are ‘enhanced’ by data, technology and personalised services – and other retailers should take note.
“Physical stores serve an indispensable role during the consumer journey…”
Those weren’t the words of an old-school retailer desperately insisting Canute-like on the relevance of bricks and mortar as the tides of ecommerce rose all around.
The statement came from Daniel Zhang, chief executive of Chinese ecommerce giant Alibaba.
And Alibaba is putting its money where its mouth is with a $2.9bn (£2.2bn) investment in 446-strong hypermarket business Sun Art, alongside partners including French retailer Auchan.
While many retailers continue to seek an updated role and relevance for their shops, Alibaba sees them as fundamental to its vision of “new retail”.
“While some UK retailers’ data analytics capabilities are advanced, some are at a far more rudimentary stage. At the other end of the spectrum, others are drowning in data but may struggle to identify and exploit what could be most important”
It’s a vision in which, to finish Zhang’s sentence, stores are “enhanced by data-driven technology and personalised services in the digital economy”.
It also seems to be a vision that Amazon buys into as well, after its acquisition of Whole Foods Market.
There’s an interesting article on Alibaba’s website, undertaken with input from Boston Consulting Group, entitled ‘How companies in China blend digital and physical commerce’, which includes a section on what Western companies can learn from developments in China.
While some UK retailers’ data analytics capabilities are advanced, some are at a far more rudimentary stage. At the other end of the spectrum, others are drowning in data but may struggle to identify and exploit what could be most important.
Alibaba urges retailers to forge partnerships with other businesses to generate usable insight on consumer behaviour and digital consumption habits.
Of course Alibaba has an interest in making that case, but it is sound logic nevertheless.
As Alibaba observes, there are many potential partners – whether it’s social media businesses or syndicated research specialists such as AC Nielsen – who can offer richer information not only about current customers, but about potential customers as well.
Alibaba and Amazon’s increasing interest in the role of omnichannel in bricks and mortar is already changing the way shops work.
“Alibaba and Amazon’s increasing interest in the role of omnichannel in bricks and mortar is already changing the way shops work”
It will be fascinating to follow Alibaba’s fortunes with stores. Sun Art is its latest venture into the field.
It has already launched Hema, described as a “digitised physical supermarket chain” where customers use technology such as a mobile app and pay digitally or through facial recognition, and where deliveries are fulfilled by the store in as little as 30 minutes.
When Alibaba and Amazon are shaping bricks-and-mortar retail through their technological prowess, other retailers need to follow suit – through alliances if they can’t do so on their own.