New Retail Is Coming: Insights From Havas Media North America's Thought Leadership Trip to China

quotI had been reading and hearing from colleagues in the market about the rapid pace of change in China so I wanted my team to experience thatquot Kinsella said quotWe structured our trip all with the goal of bringing meaningful insights back to our clientsquotThe objective was to experience a diverse representative mix of forwardthinking Chinese companies catering to consumer preferencesChinese consumers like to shop at brickandmortar stores and prefer fresh food they can see and touch In fact China39s online retail activity makes up less than onefifth of total retail sales according to the Ministry of Commerce The success of retail in China is evidence that a future does exist for legacy brickandmortar establishments that are willing to embrace new digital technologies and experiencesThe Havas Media NA leadership team visited three distinct cities amp8212 Beijing Hangzhou and Shanghai amp8212 that together tell a story about a rapidly changing retail marketplaceBeijing amp8211 BusinessModel InnovationTheir first stop was the Beijingbased T11 Food Market which takes Jack Ma39s quotnew retailquot to new heights T11 founded by technologists and software developers integrates online offline logistics and data across the supply chain Imagine a supermarketasasoftware model and you have the T11 Food Market which opened in June quotSpeed to market is a tangible asset in China If something doesn39t exist they build it and build it very fastquot said AnkeneyThe T11 team created the software to manage and sync the supermarket39s backend retail operations such as supply chain stock replenishment and employee scheduling while building and designing the physical store quotWhen we think about the shopping experience as it currently exists in the US we now have a whole new vision of how we as marketers and innovators can guide our own retail clients into the futurequot Ankeney addedT11 has a multirevenue model building uniquely designed stateoftheart supermarkets and offering softwareasaservice to supermarket chains around the worldAccording to a study by Retail Store Tours winners in retail optimize performance in six areas employee selection and training store design and experience the use of technology business model customer and loyalty management and a unique and memorable brand story T11 leads the way in all six areas facilitated by connecting and optimizing the entire shopping process in one technology stackKinsella and team also visited 7Fresh launched by JDcom to leverage its existing digital technologies to gain share in the physical retail space where most Chinese consumers still shop Offline thus becomes the new online7Fresh39s most remarkable innovation is the RoboCart an earlystage shopper assistant that follows customers as they make their way through the store the retailer also delivers any food item in 30 minutes for customers who are within three kilometers of the store quotThe reduction of customer friction in the buying and checkout process gives China39s grocery giants a leg up on competitorsquot Sargent saidHangzhou amp8211 Technical Innovation and Massive ScaleAlibaba based in Hangzhou has gone allin on Hema its new retail play The idea behind the supermarket was to transfer the online shopping experience that Alibaba39s customers already enjoy to the physical world Hema39s chief executive officer Hou Yi recognizes there is no reason why his customers can39t have the same digitized shopping experience instore as they have online To that end shopping at a Hema store is similar to shopping online at Alibaba amp8212 except that instore customers can actually inspect the food they are buyingHema accomplishes this through bar code labels found on all of its products After installing the Hema app customers have the ability use their smartphones to scan the codes allowing access to the same information they would find on Alibaba39s website The code on a carton of eggs for example displays details of the supply chain that carried the eggs from farm to store nutritional information and reviews by customers who have purchased them The app even displays relevant government inspection certificatesHema stores also double as distribution facilities unlike American markets Any item that can be purchased instore is also available online Like 7Fresh Hema guarantees delivery in 30 minutes to customers within a threekilometer radius Commuters are incentivized to order groceries on their way home confident that their order will arrive before they do According to an Alibaba survey home prices within each Hema delivery radius have increased as a resultquotFrom an ecommerce perspective branded sites have less of an influence which make branding interesting and more complicatedquot Kanefsky saidHema stores make use of a new design concept that individualizes each department with separate counters similar to how some US groceries highlight their fish and meat departments These individual counters are designed so the Hema team member selecting the products for ecommerce orders keep the delivery organized and the process streamlined They have the ability to move the bag of product on the floating conveyor belt to the next section of the order This also seems to encourage customers to engage more with the products they are buyingquotHema connects the physical and digital worlds amp8212 from the earliest stages of the supply chain to the last milequot Evia added quotThe result is a retail experience unlike anything we39ve seen in the US Checking out with facial recognition for example is far beyond what is happening now or next in US grocery storesquotShanghai amp8211 The Immersive Retail Experience Kinsella Ankeney Evia Kanefsky and Sargent came across several immersive and highly imaginative retail experiences in Shanghai such as the Starbucks Reserve Roastery It39s retailed as theater in a multifaceted space that can flex from morning coffee to evening dinner to latenight cocktails and with queues wrapping around the block the company seems to be onto something quotWe look at the retail experience and where it is going versus where it is todayquot Evia said quotAutomation and payment culture is five to seven years ahead Much of what is dreamed of or tested elsewhere is already real and established in Chinaquot she addedFor retailers like Starbucks success is no longer about being a singleuse business for purchasing one type of item eg coffee customers want to visit a space with multiple experiences that can adapt to accommodate their shifting needs throughout the day An everincreasing number of retailers are including convertible spaces to host different instore events amp8212 from fashion shows to cooking classes amp8212 and expanding their service offerings so people are able to shop work relax socialize or be entertained at different points of the day quotThe idea of owning a customer for an entire day is especially compellingquot said KanefskyFueling the FutureNew retail is clearly the winning play ushering in the retail renaissance where technology innovative thinking and imagination are fueling the concept These changes are profound fastmoving and farreaching Keeping pace with this evolution requires seeing them firsthand whenever feasible to gain a deeper understanding of what39s possible and what it takes to achieve itThe Havas Media leadership team39s trip to China is a perfect example of this The purpose of the retail experience today is more and more about humanizing the brand and engaging people emotionally rather than just purveying productsquotAt Havas we believe that more meaningful media can help build more meaningful brandsquot Kinsella said quotThis trip helped us all understand new and creative ways that consumers are interacting with brands amp8212 and showed us what39s possible when brands connect in a way that is truly engaging trusted and meaningful to a consumerquotClick the social buttons to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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New Retail Is Coming: Insights From Havas Media North America's Thought Leadership Trip to China

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Daniel Hodges

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