In January 2018, the Yayuncun store of Beichen Shopping Center closed. Beichen Shopping Center was once the largest shopping center in northern Beijing and also the most profitable, with annual revenue reaching as high as 1.2 billion yuan. But starting in 2012, Beichen's performance began to decline. By 2017, the huge shopping center had half-year revenue of only over 80 million yuan. In 2018, after 17 years, Beichen officially closed.
In March 2020, Scitech Shopping Center on Chang'an Avenue in Beijing announced closure for renovation. In the 1990s, Scitech's 'grand opening rush' is still praised by people. Scitech's goods were just one word: expensive. Many people carried several months' salary but couldn't afford a piece of clothing. So they'd buy something small. Because buying something at Scitech was a symbol. Hearing about the closure, people came to reminisce. 'Grand opening rush', 27 years later, became 'grand closing rush'.
In November 2021, Wangfujing Department Store in Guangzhou, which had operated for 25 years, closed; in December 2021, Modern Department Store (formerly Haizhu Shopping Center), which had operated for 15 years, closed; in February 2022, New World Department Store Chengdu, which had operated for 16 years, closed...
In many people's eyes, offline retail seems bleak. Especially since e-commerce rose.
But is that really the case?
In 2021, Chengdu Fusenmei's profit grew 18.74% year-on-year; Shenzhen MixC's revenue grew 30% year-on-year; Beijing SKP's revenue exceeded 20 billion yuan for the first time. In 2022, nearly 1,000 commercial projects are queuing to open nationwide, and they're getting bigger, with an average building area of 88,000 square meters. It's booming.
Truly: half is flame, half is sea.
I happen to know Liu Yunhua, co-founder of Chengdu Fusenmei. So I humbly asked her: What did Beichen, Scitech, and Modern do wrong, and what did Fusenmei, MixC, and SKP do right, that facing the same environment, they got completely different results?
She said, actually, they didn't do anything wrong; the positioning of offline retail has changed. How did it change? From what to what? She said: From a gas station to a destination.
Oh? Sounds interesting. Tell me more. So she shared her thinking as a leader in offline retail. The more I listened, the more interesting it got. It all made sense.
Where is the future of offline retail? I'll relay Ms. Liu's views to you, and see if it inspires you if you're also in offline retail.
What kind of destination?
First, I need to make one thing clear: Don't fight the internet.
2021 seemed to be an unlucky year for the internet. Giants like Alibaba and Meituan faced antitrust investigations; startups just short of IPO were blocked; community group buying was questioned; the tutoring industry was wiped out. Internet companies have never been so eager to prove: I'm not actually an internet company; I'm a physical enterprise. I really am.
But does this mean the internet is declining?
Of course not.
Meeting online has indeed reduced a lot of unnecessary business trips and meetings; ordering takeout online has indeed allowed me to arrange a hotpot feast without leaving home; shopping online takes just a few finger movements, so why would I take a shuttle to a big supermarket and stand in a long checkout line?
Whether you like it or not, the internet has genuinely improved most demand-side work and life. It's never been more convenient. As long as this value exists, onlineization is an unstoppable trend. Although its side effect is making some supply-side players uncomfortable.
Restaurants are certainly not easy. Retail is certainly not easy. But no matter how hard it is, you can't force young people, out of sympathy, to go offline to buy something they can buy online for the same or cheaper, or force them to skip takeout and dress up to go to a restaurant, sit down, order, wait, eat, and walk home.
Recently, the pandemic has made a comeback. Many residential areas and office buildings in Shanghai are under lockdown. Going to work, you don't know if you can come back today. Coming home, you don't know if you can go out the next day. You can only work online, shop online, and order takeout online.
The pandemic will end. But youth lasts only a few years, and the pandemic has taken three. The online survival skills cultivated with grit during these three years will never be forgotten or changed in this lifetime.
The pandemic has accelerated onlineization. All offline retail enterprises must realize this and accept it from the bottom of their hearts, rather than burning incense and praying for e-commerce to fall, hoping for their former glory. That makes sense. But then what?
Ms. Liu said, then, seriously think about what unique advantages offline has that can complement online. What complements rather than fights is the advantage of offline. This advantage might be: offline's unique 'destination' attribute.
What does that mean? Let me give you an example.
Mr. Run, you like traveling. You've been to Antarctica and many places. When you travel to these places, do you also buy some souvenirs?
Yes, I've been to many places. I have a very personal hobby: buying refrigerator magnets from every place I've visited.
(My refrigerator magnet wall)
This wall of magnets. Behind each one hides at least tens of thousands, or even more, in travel costs. Together, they're certainly worth millions.
Now I say, Mr. Run, I'll sell you all the magnets on this wall for 1,000 yuan. Then you don't have to waste those millions on travel. Would you agree?
Of course not.
I didn't travel to buy souvenirs. I decided to travel first, and brought back souvenirs along the way. The places I went are all 'destinations' I long for daily.
That's right, offline retail is the same.
In the past, people went to a mall to buy the goods in that mall. People liked the goods, not the mall. The mall wasn't a 'destination' in consumers' minds. At most, it was a 'gas station'. When the tank was empty, you'd search for the nearest one. If this mall had it, you'd go to this mall. If that mall had it, you'd go to that one. Consumers saw the mall, but their hearts were on the goods. At this point, if consumers find the same goods cheaper online, they'll go online.
So what to do?
You must make consumers come for Antarctica, not for the Antarctica magnet. The real core of offline retail transformation is to make yourself a destination, not a place to buy something they've already decided to buy.
Interesting. But how can you become a destination?
Produce content. Unique, scarce content.
Because destination equals content.
Destination = Content
What is content?
Let me ask a question. Do you know the essential difference between 'buying' and 'shopping'?
I want to 'buy' a pair of pants. I have my favorite brand and my usual style. At the mall, I look at the directory, the brand is on the 3rd floor. I take the elevator directly to the 3rd floor, buy, and leave. Done. 15 minutes. Even if it's the 30th floor, I'd still do it in 15 minutes.
That's 'buying'. There's a definite purchase target. I just need a channel to grab and go. Like when my gas is almost out, I just need a gas station. Fill up and go.
So what is 'shopping'?
A woman goes shopping with her husband. The husband goes to the 3rd floor to buy pants. The woman starts 'shopping' from the 1st floor. It's a new season, and the family needs a dress. So for that dress, she goes from the 1st to the 5th floor, and from the 5th back to the 1st. She meets her husband on the 1st floor. He asks, what are all these bags? Oh, it's a coat, a handbag, exquisite plates, foundation, shampoo... Oh, I forgot to buy the dress. Wait for me a bit more.
That's 'shopping'. Shopping seems to have a clear purchase target, but actually doesn't. You browse and look, look and browse. What do you look at? Content. Styles, trends, fashion are all content. Suddenly, a piece of 'content' moves you, and you buy. The essence of shopping is consuming content.
Have you noticed that Taobao's slogan has changed recently? It's now 'Too good to shop'. Why? Because in the past, people treated Taobao as a 'gas station', opening it only when they wanted to 'buy' something. Then they'd buy and leave. But Taobao wants to make itself a 'destination', where people have content to consume and shop. While shopping, they buy.
So, what is a destination? A destination is a place with irresistible content. Like museums, art exhibitions, zoos, Antarctica. These are all destinations, places with irresistible content. Only by attracting people with irresistible content can you make them 'shop and buy'.
So how can offline retail make itself a destination? E-commerce platforms are also making themselves destinations. Where will offline retail differ?
It lies in offline's rich sensory experience.
Mr. Run, you've been to Antarctica. Now the internet is developed, and there are many videos of Antarctica online. Do you think because of these videos, Antarctica isn't worth visiting? Of course not. The rich sensory experience you get on-site can never be matched by mere videos.
All content is based on senses. The sensory experiences the internet can transmit are only hearing and sight. Now people talk about the metaverse. Zuckerberg made a glove that supposedly adds touch to the metaverse. But humans have five senses; most touch, and all smell and taste, cannot be obtained online. Even for sight, the offline visual experience is never contained in a 4K screen.
Don't fight online. Offline retail should complement online. Complement what? Complement with 'full-sensory content'. The richer the sensory experience, the more offline becomes an irresistible, must-go place.
Interesting. So how do you create 'full-sensory content'?
Texture, immersion, and participation.
Full-sensory content = Texture, Immersion, Participation
First, texture.
Why are photos of the Mona Lisa everywhere online, but people still go to the Louvre to see it? Because the texture of the real painting is different from a photo.
Fusenmei might be the first to put an art museum in a home furnishing mall. Here, we permanently exhibit original works by artists. People can view the exhibition or choose to buy and hang them in their homes.
(Fusen Art Museum)
Mr. Run, you've been to so many art museums globally, including the Van Gogh Museum in Amsterdam. What's the difference between seeing Van Gogh's paintings on-site and online?
More shocking.
Yes. Why more shocking? Because of texture. From afar, it's no different from a high-definition photo online. Closer, it's 4K. Closer, it's 14K. Brushstrokes, grain, layers all emerge. Closer, it's 40K, and you realize the painting isn't flat. It's three-dimensional. The information and emotion these details and textures give you are something the internet can't provide.
Just as once you've seen high-definition TV, you can never go back to VCD; once you've enjoyed the emotion of real art, you can't go back to JPG. This is what only offline can give you.
Second, immersion.
Look at this photo. Do you know what place this is?
This is a store in Fusenmei called 'Oceano Tiles'.
Yes, you wouldn't think it's for tiles. When you buy tiles, the salesperson shows you rows of samples, but you can't imagine what those tiles would look like on your floor or wall. You need 'full-sensory experience'. That is, wrap yourself in real tiles. Walk in immersively, touch, step on, knock, and get all sensory experiences.
Then you can decide: Honey, let's knock out all our tiles and replace them with these!
Tiles are like this, and sofas especially. Sofas are hard to judge by photos whether they're comfortable to sit on. Look at this photo.
It's bright, beautiful, and matches well with the surrounding decorations and plants. But seeing the photo, would you order it home directly? Hard. Because you haven't sat on it. 'Sitting' is immersion. You need to perceive the sofa with sight, hearing, touch, even smell.
This is a store in Fusenmei called 'Cassina'. Cassina started in 1927 and is internationally renowned for modernist avant-garde design. This experience store in Fusenmei displays sofas from various brands in a setting that builds immersion. You can't help but sit. With all senses activated, you can't help but exclaim: Wow, so comfortable.
Then you can decide: Honey, let's replace our sofa too, with this one!
Third, participation.
To make offline retail a destination and create 'full-sensory content', you must rely on users' 'participation'.
Only when users participate can they come for the content and then buy the products they like along the way. One of the most important ways to attract their 'participation' is to hold offline events.
What kind of offline events? Those that cannot be held online. For example, art exhibitions, fan meetings, parent-child activities, brand face-to-face, expert lectures, and so on.
(Fusenmei offline exhibition)
Since Fusenmei's founding, we've held over 4,000 offline events of various types (e.g., experiential, curatorial, design, art, sales), attracting many participants. So gradually, our offline entities have become 'destinations' for many users pursuing quality of life.
Texture, immersion, participation. These are our methods for creating 'full-sensory content'.
With such irresistible content, users always want to come and see before deciding to buy home furnishing products. Gradually, we developed a slogan: Before coming to Fusenmei, don't make a decision.
Final words:
Before coming to Fusenmei, don't make a decision.
Well said. A powerful slogan. Fusenmei's confidence is supported by its profit margin. And its profit margin is supported by its philosophy of 'making itself a destination'.
Thank you, Ms. Liu, for sharing. I'm deeply inspired.
It's not that the environment is bad; it's that the way of getting along with the environment has changed. For offline retail to thrive, it must complement the internet, not fight it; it must become a destination, not a gas station; it must make users come for shopping, and then buy because they like it.
Ms. Liu said that after Fusenmei had this awareness, it's still upgrading and intensifying, collaborating with well-known domestic and international designers, artists, home aesthetics experts, and lifestyle curators to make its new project in Chengdu a destination for people to realize a better life. Best wishes to Ms. Liu.
Also best wishes to all entrepreneurs exploring offline retail.
May you become destinations.
Source: Liu Run (ID: runliu-pub), Author: Liu Run
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