By Tang Rongrong Recently, the concept of "new retail" has been frequently in the spotlight. Jack Ma said, "In the next ten years, there will be no e-commerce; only by combining online, offline, and logistics can true new retail be born." But what exactly is new retail? This article will select typical innovative brands under the new retail model to see how they operate in terms of retail and marketing models, and what trends new retail will show in the future.

The "New Retail" Behind Double 11 in 2016 The most recent "screening" of the concept of "new retail" was Jack Ma's speech at the 2016 Hangzhou Yunqi Conference: "In the next ten to twenty years, there will no longer be e-commerce; online, offline, and logistics must be combined to give birth to true 'new retail'."

What is "new retail"? It is the combination of online, offline, and modern logistics, mainly through three paths: online-offline integration, retail + experiential consumption, and retail + industrial ecosystem chain. Pure e-commerce or physical stores will face elimination, and combining the two while improving logistics is the trend of the future.

01 China's Consumption is Changing and Upgrading During the 2016 "Double 11," Tmall's final transaction volume reached 120.7 billion yuan; JD.com's transaction volume increased 59% year-on-year; Suning Tesco's omni-channel growth reached 193%, with online growth of 210%; Gome Online's transaction volume increased 268%, with mobile transactions accounting for 72%.

These figures witness the gradual integration and win-win situation between traditional retail and e-commerce enterprises, reflecting the change and upgrade of Chinese consumption. China has entered a new retail era where online, offline, logistics, technology, and data are perfectly combined.

02 Chinese Brands Are Rising With the opening of the new retail era, more and more local brands have found their spring in the "winter," seizing the first wave of omni-channel dividends.

During the 2016 "Double 11," domestic brands gained increasing advantages in many categories, with brand sales growth higher than international brands. With internet technology innovation, diversified marketing methods, and service advantages, Chinese brands are rising.

Disruptive Innovation in New Retail: These Brands Are Typical

2016 New Retail

Suxing Life: Alibaba's First Offline Collection Store 1 Suxing Life's Chengdu Jinniu Kaide Plaza store, as Alibaba's first offline collection store for new retail business, officially opened on September 10, 2016, covering an area of over 1,700 square meters.

Image source / Winshang.com / Suxing Life This Suxing Life store, as a model of new retail promoted by Alibaba, presents the new retail scenarios mentioned by Jack Ma, such as the environment, and "product connectivity, member connectivity, and service connectivity." On Double 11, Suxing Life's sales reached 3.37 million yuan, with a completion rate of 225%.

  • Clothing from Designer Brands Suxing Life focuses on women's clothing, sourced from Tmall designer brands and Suxing's own brand, emphasizing original concepts while also focusing on literary and comfortable styles. To reflect the concept of a "cross-border O+O composite store," the products include tea, coffee, home furnishings, beauty, fragrance, books, VR smart products, and other categories.

Products Incorporate Slow Living Elements Image source / Winshang.com / Suxing Life

  • Same Products, Same Prices Online and Offline Suxing Life's products are the same style and price online and offline. Consumers can try on, feel, and touch products offline. Due to the large number of brands involved, its online and offline flagship stores will be presented in the form of main stores.

Image source / Winshang.com / Suxing Life

  • Online Consumers Can Enjoy Offline Shopping Environment Suxing Life's online and offline cooperation is no longer limited to relying on the internet; the offline experience also gives online a sense of reality and warmth, transforming cold data and images into visual, auditory, tactile, gustatory, and olfactory experiences, as well as warm services.

Suxing Life Shopping Guide Providing Online Services Image source / Winshang.com / Suxing Life For example, offline store shopping guides are no longer limited to sales and service work in physical stores; they also serve as e-commerce customer service. Online consumers can also enjoy the entire offline physical store shopping environment through live broadcasts by physical store guides, or ask guides to try on clothes for them on site.

Guide Serving Offline Consumers Image source / Winshang.com / Suxing Life Consumers in physical stores who cannot find the desired brand can directly place orders online in the store. This approach not only drives online consumption but also allows Suxing Life to break through the traditional physical store boundary of only doing in-store sales, forming a 24-hour non-stop concept.

  • Lifetime Value-Added Services With the nationwide expansion of Suxing Life's offline stores and the implementation of a membership system, consumers can enjoy more value-added services, such as VIP members enjoying free coffee, tea, and books for life.

  • "5+1" Store Expansion Model Suxing Life expands with a "5+1" model, that is, 5 directly-operated stores paired with 1 outlet store. For example, in Chengdu, Suxing Life will open 15 directly-operated stores and 3 outlet stores.

  • Store Scale Will Expand to 5,000-30,000 Square Meters Currently, Suxing Life has 23 stores nationwide, distributed in Sichuan, Beijing, Zhejiang, Shenyang, and Anhui. These stores will all be upgraded in the future, with new store scales expanding to 5,000-30,000 square meters, and each store's experience area still using coffee, tea, and light meals as the basic template. At the same time, Suxing Life will also go deeper into other second-tier cities in Sichuan, such as Yibin, Guangyuan, and Nanchong, with at least 60 stores in Sichuan.

Jiushi Fitting Room: New Retail Concept Store in Cooperation with Alibaba 2 In November 2016, Jiushi Fitting Room's first experience store in Hangzhou officially opened. This is a new retail concept store in cooperation with Alibaba, mainly targeting female consumers born between 1985 and 1995. The entire store covers nearly 2,000 square meters, including clothing, shoes, bags, cosmetics, and other brands. Alibaba provides system development services for Jiushi Fitting Room to solve supply chain issues. In addition to showcasing brand images for Tmall brands, Jiushi Fitting Room also provides venues for fan activities and new traffic channels for e-commerce. Both parties ultimately achieve a win-win situation.

  • Gathering Tmall Top 100 Original Design Brands Jiushi Fitting Room's products all come from Tmall's top 100 original design brands, and buyers select the most representative trendy styles: brands like Yaoguai de Koudui, Mizhen, Mishan, and Tangli are among them. The average price of clothing is around 300 yuan, and the same style and price are available online and offline.

  • Customers Need a "Key" to Enter the Fitting Room Jiushi Fitting Room has set up turnstiles at the entrance. Customers must scan a QR code and download an app to enter the store. Although this method causes a 30% loss of foot traffic, the remaining customers are absolutely precise.

Entering Requires a Key Image source / Winshang.com / Jiushi Fitting Room

Women lined up outside the turnstile, waiting to scan the code to download the app and enter the store Image source / Winshang.com / Jiushi Fitting Room

  • Clothing Area Divided into 5 Themed Zones The entire clothing area is divided into 5 themed zones: Forest Girl Zone, Socialite Zone, OL Zone, Trendy Girl Zone, and European Town Zone. Each zone has a different design, with spatial design based on the attributes of each style.

Don't Basket Image source / China Fashion Brand Network Each clothing zone is equipped with at least 12 fitting rooms and one return bin. After trying on clothes, customers do not need to tidy up; they can directly put them in the "Don't Basket." The clothing is updated very quickly, every Tuesday, and there is no inventory.

Forest Girl Zone Image source / Winshang.com / Jiushi Fitting Room Forest Girl Zone: The clothing presents a simple, temperamental style, like a primeval forest with a strong Nordic flavor. The clothing racks are supported by bamboo poles, connected with hemp ropes, and the dressing mirrors are hidden on the corner facades of the two bamboo poles, giving an overall primitive and elegant feel that naturally matches the clothing.

Socialite Zone Image source / Winshang.com / Jiushi Fitting Room Socialite Zone: Uses a gold wire birdcage design, with clothing racks placed on both sides of the gold wire cage, and undulating curved platforms adding more charm.

OL Zone Image source / Winshang.com / Jiushi Fitting Room OL Zone: Dark gray floors, concrete art paint walls, and frame track lighting make the space concise and steady, but not lacking in liveliness and personality, meeting the aesthetic requirements of post-90s for OL.

Trendy Girl Zone Image source / Winshang.com / Jiushi Fitting Room Trendy Girl Zone: Composed of large color blocks, boldly using color matching, with clothing racks made of iron wire bent into three-dimensional colorful shelves.

European Town Zone Image source / Winshang.com / Jiushi Fitting Room European Town Zone: To provide consumers with a more diverse consumption space and create a more pleasant, quality environment, the store has a separate European Town Zone.

  • Small Market and DIY Zone The store has a small market covering flower arrangement art courses, handmade soap, hand-painted tattoos, etc. In addition, this area also has a DIY space where customers can create anything for only 29 yuan and take it away for free.

DIY Creation Space Image source / Winshang.com / Jiushi Fitting Room

  • Weekly Salon Activity: Recommended Person Jiushi Fitting Room has prepared stylized selfie areas for customers, equipped with beauty lights, background curtains, large screens, phone holders, shooting props, cosmetics, and other selfie tools, encouraging customers to take selfies freely and even project their photos onto the store's central screen, then participate in the "Recommended Person" activity.

Image source / Dazhe Fashion After uploading "selfie + styling suggestions" to the store's central screen, customers can participate in the monthly "Girls I Most Recommend" selection contest. Then, 7 members will be selected as the recommended persons of the month, becoming the spokespersons for Jiushi that month.

Girls I Most Recommend Selection Activity Image source / Dazhe Fashion These "recommended persons" are important members of the weekly salon, and learning about dressing, makeup, and flower arrangement will appear in the salon. The store holds parties every month, including DJ spinning, cocktails, and other activities. This is also the way of internet communities and social groups.

  • Store Will Expand to 3,000-5,000 Square Meters Jiushi Fitting Room is still in the exploratory stage, focusing on perfecting the system and experience in the first store. It is initially estimated that the second store will be prepared from April to June 2017, and the store area will continue to expand to 3,000-5,000 square meters.

Three Squirrels: Learning from Disney to Turn the Brand into IP 3 Three Squirrels' first offline physical store opened during the National Day holiday in 2016, named "Three Squirrels Feeding Store," located in Wuhu Golden Eagle New City Plaza. Its cash register is called "reward place," the packaging bags are called "feeding bags," and the price tags are called "feeding prices."

On "Double 11," the Three Squirrels Feeding Store had over 8,000 visitors and sales of 180,000 yuan that day.

  • Same Products, Same Prices Online and Offline Three Squirrels' physical store includes brand snacks and related derivatives, with nut retail adopting the principle of same products and same prices online and offline.

Image source / Ebang Power Network Image source / Tianxia Net Merchant All store employees wear feeding bags on their waists filled with toys and trial packs. Every Saturday, there are concerts, Cosplay dance parties, and other activities for offline consumers.

  • Learning from Disney to Turn the Brand into IP Three Squirrels learned from Disney and Line, two brands extremely skilled at operating IP, and launched over 80 peripheral products offline, fully leveraging the IP advantages of Three Squirrels. Examples include squirrel-shaped snack cans, ceramic cups, paper and pens, notebooks, pillows, dolls, pendants, etc.

Image source / Tianxia Net Merchant

  • Using 1/3 of the Space for "Water + Light Food" Dining Area Another major feature of the Three Squirrels Feeding Store is the unique "water + light food" dining area. Next to the dining area, there are bulk dispensing machines like coffee machines, with 10 three-meter-long pipes filled with nuts. Consumers can open the valve and catch them with paper cups.

Image source / Tianxia Net Merchant To create the "water + light food" dining area, Three Squirrels Feeding Store gave up one-third of the display area, hoping to make the physical store more down-to-earth, and by telling stories, make the originally simple and crude shopping experience more refined.

Image source / Tianxia Net Merchant

  • Expansion with "One City, One Store" Model Using "one city, one store" for expansion, although a retail store covers an area of about 3.5 kilometers, "one city, one store" cannot fully cover the city. However, Three Squirrels' business district coverage is a combination of virtual and physical business districts, bringing traffic focus: By aggregating these two types of traffic, Three Squirrels can amortize the cost of opening stores while achieving relatively high sales. For example, a 300-square-meter store is expected to have annual sales exceeding 10 million yuan, higher than Starbucks' average of 7 million per store. But this is not the key point; the key is that it can drive online sales and play a significant role in customer relations, attracting new customers and maintaining stickiness.

  • Opening Offline Stores Can Reduce Logistics Costs Three Squirrels has many DC warehouses, city warehouses, and regional distribution centers nationwide. Initial logistics transportation costs are relatively high, but after stores are opened, costs can be effectively reduced. Internet brands expanding to offline channels can have a better product structure than traditional brands, relying on low costs to provide more competitive prices; at the same time, one city, one store, community promotion, and home delivery can also bring consumers a shopping experience superior to pure online models.

  • 100 Offline Stores by the End of 2017 In the future, offline stores will cover third- and fourth-tier cities across China, with a cumulative store scale of 300-500. By the end of 2016, about 3-4 stores will be opened, and by the end of 2017, the plan is to reach 100 stores. Currently, Three Squirrels has reached cooperation with Golden Eagle Group and Intime Department Store. In addition to Wuhu, physical stores will also be opened in Suzhou and Nantong.

Inman: A Network Women's Clothing Brand Grown on Taobao 4 Inman, founded in 2008, is a cotton and linen lifestyle brand, focusing on cotton and linen women's clothing. It is a network women's clothing brand that grew up on Taobao. Starting in July 2015, Inman opened its first directly-operated store, developing both online and offline models.

Image source / Hongshang Network In 2016, Inman faced "Double 11" online and offline simultaneously for the first time. From November 1 to 9, during the "Double 11" warm-up period, the cumulative sales of "Inman + Thousand Cities, Ten Thousand Stores" offline stores exceeded 10 million yuan. So far, offline stores have covered 144 cities in 23 provinces across the country.

  • Relying on Fans, Launching the Thousand Cities, Ten Thousand Stores Plan In mid-2015, Inman launched the strategy of online and offline omni-channel integration before Alibaba, starting the "Thousand Cities, Ten Thousand Stores" plan. Within 5 years, it aims to open 10,000 stores in 1,000 cities. Among them, first-tier cities will use direct operation, mainly cooperating with large department stores.

Image source / Hongshang Network These 10,000 Inman fan stores deployed nationwide will leverage a 10 billion yuan offline market.

  • Online and Offline Synchronized Updates, Same Products, Same Prices Offline store products include not only women's clothing but also children's clothing, home furnishings, accessories, etc. The clothing tags only have QR codes; scanning the code reveals prices and other information. Product styles are updated synchronously online and offline, and prices are also synchronized in real time.

Image source / Hongshang Network If consumers try on clothes in offline stores and need to purchase products that are out of stock, store owners can directly log into the online store ordering system, quickly replenish through express delivery, and the brand can ship within 48 hours.

  • Focus on Community Marketing: Developing Fan Activities Inman places great emphasis on community operations. For example, the owners of "Inman + Thousand Cities, Ten Thousand Stores" are selected from fans. During the 2016 "Double 11," Inman used the theme of "beauty" to customize services for fans to become beauties. It invited fans nationwide to customize beauty photo shoots, customized styling courses for different styles of beauties, and on "Double 11" day invited fans to participate in a beauty carnival party, celebrating a different carnival with fans from entertainment and interaction perspectives.

Summary of New Retail Trends From the development characteristics and commonalities of the above cases, the future new retail development model has the following trends:

01 Online Brands Gradually Develop Offline Now, Taobao brands have achieved complete integration of goods, prices, warehousing, logistics, and settlement online and offline. The "descent" of Taobao brands is a future trend, and offline experience stores will be a powerful supplement to the consumption experience of online shopping platforms. Taking Inman, a successful Taobao brand that has gone offline, as an example, its "Inman+" offline experience store is committed to creating a new consumption scenario for its fans, as a powerful supplement to the consumption experience of online shopping platforms.

02 Intelligence and Big Data Integration Are Inevitable In the new retail era, with the popularity of intelligent shopping devices, stores will incorporate more technological elements, achieve digitalization and intelligent transformation of terminals, extend store space, and build more diverse consumption scenarios. For example, Jiushi Fitting Room uses QR code scanning to enter the store, and the backend can immediately start analyzing customers, then push targeted store products, promotions, and membership information to customers' phones, enabling customers to quickly obtain effective and valuable information, greatly reducing the complexity and cost of shopping, and ultimately establishing stable customer relationships.

03 Experience First, Import Offline Traffic Online New retail places more emphasis on customer experience, focusing on improving user stickiness and reputation, and importing offline traffic online. For example, Three Squirrels' offline positioning is "not emphasizing transaction volume, but more on experience and interactivity." The founder of Three Squirrels once said: "I hope that 70% of brand transactions come from online and 30% from offline, so that cost relationships can be balanced."

04 Following the Principle of Same Products and Same Prices Online and Offline Suxing Life, Jiushi Fitting Room, Intime Taobao Collection Store, and Inman clothing all have the same products and prices as online products, and Three Squirrels' nut retail also adopts the principle of same products and same prices online and offline. This highlights that future new retail development will follow the principle of same products and same prices online and offline, meeting the consumption needs and values of consumers in the new era.

05 More Open, Sharing, United, and Integrated New retail must completely break the previous retail model. Whether for consumers, brand owners, or equipment providers, it is necessary to establish a more open, sharing, united, and integrated new retail model, and thus must establish a retail model with the highest efficiency and lowest cost for the entire industry. In general, new retail will inevitably promote the emergence of retail products different from current formats. It is not department stores, shopping centers, or chain convenience stores, hypermarkets, or supermarkets, but a new generation of retail products, products transformed through change.

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