The Top Retail Trends in China You Should Pay Attention To
By Tricia McKinnon
China’s retail sector is expected to grow at 7.5% in 2019. At this rate China is expected to surpass the US to become the largest retail market in the world by the end of this year. Driving this growth is an expanding middle class that not only has increasing spending power but is also very technologically savvy. The level of innovation in China’s retail sector makes it a country to watch. Here are some of the innovations in the Chinese market that have consumers coming back for more.
1. eCommerce meets bricks and mortar. Even before Amazon went into bricks and mortar retail by purchasing Whole Foods, Chinese eCommerce giant Alibaba opened Hema supermarkets in 2015. The shopping experience at Hema supermarkets begins by downloading the store’s shopping app. Using the app customers scan a product’s QR code to receive nutritional information, recommendations for complimentary items as well as product reviews.
Following this trend, last year Chinese eCommerce giant, and Alibaba rival, JD.com launched 7FRESH, a chain of supermarkets. Similar to Hema grocery stores the shopping experience is heavily dependent on mobile. Customers scan product barcodes using their mobile phone to receive nutritional information, details on how to cook the item as well as the percentage of customers that recommend the item. Within the produce section, sensors detect when a customer has picked up an item and product information also automatically appears on a “magic mirror” screen above the produce section.
In an attempt to change the way consumers shop for groceries in the future, 7FRESH supermarkets provide customers with smart shopping carts. These shopping carts follow the customer around the store so that the customer can shop hands free. Self-checkout, which is offered at both retailers allow customers to pay via mobile and in some cases using facial recognition. Taking a page from the eCommerce space, both Hema and 7FRESH offer customers super fast delivery of their purchases. Customers living within three km of either of these stores can have their purchases shipped to their homes within 30 min. JD’s vision is to have “boundaryless retail” – a scenario where customers can buy whatever they want, wherever and whenever they want it – online or offline.
2. Unmanned stores. Another trend in China is completely staff-free stores. One of the leaders in this area is BingoBox, which opened its first unmanned convenience store in 2016. The 24-hour store sells convenience items such as chips, noodles and dairy products. To enter the store customers scan a QR code located at the store’s entrance which then opens a door to enter the store. Each item in the store is fitted with an RFID tag. To checkout, customers scan items at a self-checkout station then pay using WeChat or Alipay. There are over 300 BingoBox stores in China.
3. Mobile proliferation. Underpinning many of the retail trends in China is mobile. China is the only market in the world where digital payments dominate. More than 90% of Chinese consumers have adopted WeChat (an online payment platform) for offline purchases. In comparison, the adoption rate in China for credit and debit cards is only 32%. With such a high mobile payment adoption rate, the value of money spent on mobile payment platforms by Chinese consumers is 50 times that of American consumers.
Even a struggling artist playing music outside on the street in China looking for donations takes digital payments. The two main mobile payment platforms, WeChat and Alipay have 900 million and 500 million monthly active users respectively. In contrast, Apple Pay which comes pre-installed on the iPhone has 127 million users globally. The widespread use of mobile payments in the Chinese market makes it easier for new retail concepts such as unmanned stores to take off. Chinese consumers are already comfortable using their mobile phones for a wider range of activities and can easily make the leap to new technology driven retail formats.
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