New Retail and How It Is Transforming the Retail Business and Consumer Experience

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Despite the popularity of online shopping, many retail businesses are embracing new models to enhance their customers’ offline shopping experience. Since most consumers shop using mobile devices, retailers are ensuring that digital is part of the buyer’s offline experience as well.

The concept of New Retail, which was first introduced two years ago by Jack Ma, the founder and chairman of China’s e-commerce giant Alibaba, refers to new consumer experiences based on the integration of online with offline services and big data with related technologies. Basically, it combines the best of online and offline shopping experiences to increase sales beyond just offline retail through the use of technology. By digitizing the retail industry and putting the right projects in front of the right consumers, it improves the consumer experience by highlighting quality and convenience and enriches brick and mortar stores, which still account for more than three-quarters of China’s retail market.

Types of New Retail

There are currently three major types of New Retail: unmanned convenience stores, unmanned vending machines, and unmanned shelves. Each provides a different shopping experience for consumers, yet all focus on quality and ease of access.

Unmanned convenience stores, which are commonly near residential communities, provide instant access to food and snacks at any time of the day or night. While satisfying consumers’ demand for products immediately, it helps retailers overcome the problem of finding staff to work the undesirable night shift.

Unmanned vending machines are popping up in crowded public areas, such as shopping centers, subways, railway stations, and shops selling drinks and snacks. They are growing in popularity, because they are easily accessible and simple for consumers to use. One original example is the “Magic Mirror” on the wall in ladies’ rooms at malls. While waiting, women can experiment virtually with new makeup colors and then purchase it from the vending machine.

Unmanned shelves cater to consumers’ needs in a different way. For those spending more of their time at the office, snacks and drinks can be easily available for purchase via smartphones. Stores in malls are incorporating “Virtual Shelves” for consumers to select products that are unavailable in their size, style, or color. Once the ideal product is selected, consumers can scan it with their app and it is delivered to them.

Many traditional brick and mortar stores are integrating New Retail models since it enhances business. They are able to offer popular products based on data analysis, provide faster delivery services, and satisfy consumers’ desire for the convenience of being able to access food instantly anytime and anywhere.

Opportunities for New Retail

The seamless combination of offline, online, and logistics with New Retail is influencing how commerce evolves and how it accommodates its customers. Consumers receive personalized feeds that match their preferences based on previous purchases as well as on ads clicked, terms searched, links shared with friends, and visits to brick and mortar stores. Those retailers that effectively leverage digital technologies and big data will be most successful.

Both China’s e-commerce giant Alibaba and internet giant Tencent have been making significant investments in New Retail. Founded in 1999, Alibaba started with an e-commerce platform for businesses, added more websites for consumers, and emerged as the largest online shopping platform in China. Now they are focusing on the digital economy and using data and technology to transform offline retail.

As New Retail takes hold, it will continue to change the behavior of consumers and address expectations for better quality and convenience, whether consumers are shopping online or offline. For many businesses in China, the future of retail involves a blending of online and offline channels focused on technology, service, and consumer experience. New Retail is likely to take the retail industry to a new level.

Grocery shopping

Most shoppers do not enjoy pushing a shopping cart up and down the aisles, searching the shelves, standing in line to pay, and carrying heavy bags home. Alibaba’s Hema supermarkets eliminate these aggravations. While it seems like other supermarkets, it is not a typical grocery store. With Hema, shoppers get an easy, convenient, and cashless experience. For starters, they choose their fresh seafood and decide whether they want to take it home, either raw or cooked, or have it prepared to eat it in the store. All shopping is via a smartphone, either in or out of the store. In the store, shoppers scan a bar code with their phone for product information. Payment is done through the Hema app. Moreover, for those who live within three kilometers of the market, Hema delivers in approximately 30 minutes. It is able to do this because each store serves as its own warehouse and logistics center, collecting, fulfilling, and delivering consumer orders as they come in, whether online or offline.

Car shopping

New Retail is also digitizing the car shopping experience in China. Rather than visiting one dealer at a time, spending hours scrutinizing large lots, and dealing with pressure from a salesperson, Alibaba is implementing Auto Vending Machines. This shopping model enables consumers to browse a variety of makes and models of cars directly on their app, choose the specific car they want to test drive, and pick it up from an unmanned vending machine. They are able to drive the car for up to three days before returning it. After experiencing the car in a no-pressure situation, they can make an appointment to visit a dealer once they are ready to make a purchase.

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