E-COMMERCE REPLACE BRICK AND MORTAR STORE. IN CHINA IS ALREADY ON

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Since 2020 began, most brick-and-mortar stores have spent more time closed than open. Now, China is set to hit a milestone as the first country in history to carry out most of its retail sales online instead of through physical retail stores. So now, the question retailers need to ask is: What is the point of a store post-pandemic?

It’s being predicted that one in every four purchases will be made online by 2024, when e-commerce sales will hit $3.9 trillion

One out of four purchases are made online

One out of four purchases are made online

Although three of four sales will still be in person, COVID-19 has shown us that a retail store isn’t necessary. During 2020 — but even before — many companies were forced to recalibrate their business models, reduce footprints, and rethink the roles of their stores in today’s omnichannel landscape. Many companies are now moving away from physical retail to digital-first or digital-only platforms, incorporating automated offerings and we have even seen the advent of augmented-reality stores.

But China is still the anomaly. Countless brands have opened stores in China during the pandemic. So the question is:"How is possible that in a country so digitalized, many brands are still opening new brick-and-mortar stores?

New retail in China

New retail in China

Bain & Company has suggested that more stores will start operating as “showrooms or hubs for order pick-ups or click-and-collect services, with increasing levels of automation.”

The goal is to create “highly experiential stores, fully-shoppable digital media, and excellent technology that connects every customer touchpoint.”

With consumer purchasing power on the rise and attention spans getting shorter, the pressure is on brands to keep customers coming back for more — especially in China, where consumers are spoiled by a bevy of online choices. That can play out in two ways, says Gregory Cole, the director of CDGL Strategic Communications.

The first choice

is to immerse consumers in the brand’s lifestyle proposition. It creates a positive way to “refresh” consumers’ understanding and appreciation of the brand but makes more sense in cities with mature consumer bases. “Traditionally, we’ve seen this approach from shopping malls, using their architecture as part of the experience, like their atriums as community spaces for hosting events such as fashion shows, talks, etc.”

Starbucks’ flagship in Tianjin reimagines the third place by rejuvenating a centuries-old heritage building and adding new features like the Starbucks Bar Mixato. Photo: Courtesy of Starbucks

Starbucks’ flagship in Tianjin reimagines the third place by rejuvenating a centuries-old heritage building and adding new features like the Starbucks Bar Mixato. Photo: Courtesy of Starbucks

Much like the Starbucks “third-space” flagship in Shanghai, Cole expects to see more luxury brands enhancing their boutiques to become “fully-realized independent lifestyle destinations as a way to strengthen their differentiation.”

 

The second

twist is immersing the brand in its consumers’ lifestyles via nomadic retail, pop-ups, or mini shopping mall stores across the country.

“An interesting aspect of this nomadic retail is that cities across China have strong local cultures and traditions,” he added. “Instead of replicating the same store concept around the country, brands will stand a better chance of resonating with consumers by reflecting local culture, and more importantly by transforming regularly to match the accelerating consumer journey that we are seeing.”

 

In China, the need for physical stores remains. But the in-store experience has always been sacrificed by the proliferation of digital innovation.

However this change can be seen as an opportunity to rethink stores for a future that doesn’t seem to be so far.

GO BEYOND THE WALL


Matteo Buchta