How Alibaba is Using Tech to Disrupt the Home Sector
China’s retail sector continues to grow at a healthy rate and it is expected that China’s retail sector will grow by 3.5% in 2019 (vs. 3.0% in the US). It is expected that China will have the largest retail sector in the world by 2021, ahead of the US, driven by a growing middle class. According to Monica Peart, Senior Forecasting Director at eMarketer: “in recent years, consumers in China have experienced rising incomes, catapulting millions into the new middle class” driving growth within the retail sector.
One of the retailers that is on the forefront of a wave of innovation in China’s retail sector is Alibaba. The eCommerce market leader, with a 53% market share devised a strategy in 2015 called “new retail”. New Retail according to Alibaba’s Founder and Executive Chairman Jack Ma is: “the integration of online, offline, logistics and data across a single value chain.” It is an initiative aimed at connecting online and offline retail and digitizing stores in order to provide a better customer experience.
Aligned with this strategy Alibaba opened a bricks and mortar home furnishing store in 2017 called Home Times. Home Times has a similar look and feel to an IKEA store but with several interesting and unique features that Alibaba considers will be part of the store of the future:
1. To ensure that Home Times has the best assortment shopper behaviour on Alibaba’s Tmall eCommerce site are analyzed. Top selling merchandise and categories are identified based on the online shopping patterns of Tmall users within a five mile radius of a Home Times store. This practice ensures that Home Times’ assortment is highly catered to local customer needs. To ensure that the assortment is also extremely responsive to local needs Home Times’ assortment changes every 10 to 15 days. The frequent inventory turns are also an effective way of training customers to return to Home Times often to see what’s new and exciting.
2. QR codes are placed on each product in the store so that customers can scan the codes with their mobile phone. Once they have done this they can then receive more product information and then buy the product using their phone if they wish. How many times have you looked up a product online while shopping in-store only to spend even more time scrolling through the retailer’s website to locate the product? This functionality provides a quick fix to that problem. Customers can also elect to have the product delivered directly to their homes while using the mobile app or they can check out in the store if they like. Since price tags are digital staff can easily and quickly change prices if required.
3. Another great feature of the Home Times store is the ability for a customer to see an item they are considering in a virtual home displayed on a digital screen located in one of several locations throughout the store. This feature takes away some of the guess work involved in purchasing home furnishing items. An added benefit of this feature is that the store requires markedly less space to display merchandise since customers can see an extended aisle digitally while in the store.
Sources
https://www.emarketer.com/content/china-to-surpass-us-in-total-retail-sales
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