Over the last year, we’ve seen some of the world’s biggest investments in retail poured into the Chinese market as retailers experiment with new physical and digital customer experiences. Some of these attempts at turning clicks to bricks will fail and be quickly forgotten, but others have the opportunity to evolve and develop into successful market-wide standards. It’s too early to tell what has legs when it comes to integrating digital experiences into brick and mortar retail, but the following three trends from Shanghai are ones that retailers around the world should be tracking.
The concept of omnichannel retail is nothing new, but all that’s really amounted to so far is having online and mobile apps and services as well as in physical retail. This approach has not yet been particularly customer-centric, and often fails to share data across platforms, leading to disjointed experiences. The Hema grocery store from internet giant Alibaba shows what omni-channel retail could look like at scale. Shoppers work their way through the store scanning products with their mobile app to get greater detail about the food on the shelves—including where it was produced and recommendations for companion products. Consumers can be quite distrustful of the provenance of their food in China, so this level of transparency and detail reassures buyers that they are getting the highest quality food. Shopping history is captured through the payment tool Alipay, which allows Alibaba to track each customer’s spending patterns, purchase triggers, geo location, spend times and purchase frequency. This data collected in turn allows them to make more personalized recommendations for their customers. This enormous trove of customer intelligence allowed most of the 30 new Hema stores to break even in an astonishing six months. Alibaba also drove footfall to their brick and mortar stores with a mobile AR game in which consumers earned coupons and prizes every time they caught the Tmall mascot cat in Alibaba’s Taobao and Tmall app.
Facial recognition technology is rapidly moving beyond being experimental. Several frog clients have developed variations of the “magic mirror” concept over the years, but in Sephora’s Shanghai store, customers have been virtually testing eye shadow, lipstick and blush effects for over a year. Leveraging ModiFace’stechnology, customers see a split screen with a “before” and “after” view of their face. The looks—including a hard to do bold red lipstick—are for the most part detailed and convincing, even more so than a snapchat filter. According to the Sephora make-up artists in the store, the mirror has been popular with working professionals in a hurry, because buyers can rapidly flip between a wide variety of items and colors, and then text themselves the list of products required to create their desired look. This efficiency will likely keep customers engaged even after the novelty of AR mirrors wears off.
In another interesting move, Alibaba opened its first snack driven store in China in the past year. Called OnMine, the 3,000 square foot store carries around 800 SKUs of imported snacks that are selected entirely by Alibaba’s data analysis of 200,000 customers within a 5km radius of the store. By analyzing the historical purchase patterns and taste preferences of those customers, Alibaba can stock appropriate snack products, and also update those as new trends emerge. Because it can track both online and offline purchase data of key consumers, Alibaba can place itself at the center of a virtuous cycle of using data to inform optimal SKU mix, and to spot new consumption trends as they emerge. Cameras in the store detect hot spots and hot shelves, which informs subsequent store designs. A key component to making this technology invisible and intuitive for consumers is that Alibaba achieved over 90% digital payment in OnMine, simplifying purchases for consumers while allowing Alibaba to gather data.
All three trends have one important factor in common: they harmonize digital and physical tools into one seamless experience. In order to maintain momentum for the rapidly changing retail landscape of the future, companies must meet both the functional and emotional needs of shoppers. All touchpoints need to be orchestrated such that low involvement purchase experiences become seamless and invisible, while high involvement purchases are made more memorable and enticing. As consumer expectations continue to rise, retailers need to focus not just on what people buy, but also how they buy it. There will always be a delicate balance between creating ease and inciting joy—the trick is utilizing the right tools and data to bring these experiences to customers at the right times.