There is a misconception that in recent years we have been experiencing a retail ‘apocalypse’ in the U.S.  Nothing could be further from the truth.  The last five years have seen the start of a new ‘retail renaissance’.  More people, in more places, are buying more things, in more ways.  The perception of a retail apocalypse is fueled by headlines documenting the number of brick and mortar store closings and that middle market retailers’ relevance is decaying.

For years the question was, “who will win, the bricks or the clicks?”  The winner is ‘The New Retail’.  Retail is everywhere and everything.  Stop using the words ‘retail’ and ‘stores’ interchangeably and look to China for a view of their present and our future.

The New Retail was born in China and is now going global.  In the Summer of 2016, Alibaba founder Jack Ma declared the company’s intention to develop The New Retail model that would dovetail with the company’s mission statement of, “making it easy to do business everywhere.”  

The Alibaba definition of The New Retail is, the complete integration of online, offline, logistics, and technology for a single value chain.  Alibaba had spent years building an entire ecosystem of online, offline, logistics, and technology habitats that were all integrated prior to the announcement.  The New Retail was a reality for Alibaba and Chinese consumers in 2016.

That same summer, Walmart bought and Amazon bought Whole Foods.  These landmark events, along with the B&M plays by digital natives such as Warby Parker and Casper, heralded the birth of The New Retail.  The difference between old retail vs. new retail vs. eCommerce was the realization that brick and mortar not only still matter, but is vital to the health of brands, retailers, marketplaces, consumers, and global consumption. 

The following are key trends and stories to follow for China consumption and The New Retail in 2019. 

  • China now has 700 million consumers who are served by ecosystems and habitats for commerce rather than channels and eCommerce.
  • Logistics and supply chain, driven by digital transformation and digital deployment, drive ‘The New Retail’ and are key to growth and margins. 
  • Alibaba and the Tencent/JD/Walmart/Google/Carrefour alliance are rapidly building global logistics and supply chain technology, structures, and reach, to compete with Amazon on a global basis.
  • Cross-border digital commerce will grow from $350 billion to $1.2 trillion in the next four-five years.  Almost 35 percent of that traffic will be between the U.S. and China.
  • The key to success is the ‘Four C’s’ of the consumer journey including customer centricity, convenience, customization, and customer contribution. 
  • Retailtainment, which goes beyond content marketing, is key to success.
  • The time for brands, retailers, service providers, and technology companies to study profit from Chinese consumption has never been better.  There are multiple options for entry and growth at the ‘crawl’, ‘walk’, and ‘run’ stages that did not exist three years ago.
  • China is a solid two-four years ahead of the West and the rest of the world on The New Retail.

The New Retail in China and globally, provides major opportunities for brand, retail, supply chain, logistics, transportation, and technology growth in the next five years.

China’s consumer base has grown from approximately 20 million in 1990 to 700 million in 2018.  Most of that growth has taken place between 2006-2018, driven by the birth of eCommerce and the birth of The New Retail between 2014-2018.

China is the birthplace of The New Retail, placing logistics and supply chain at the forefront of innovation and growth.  China is central to determining your ‘Make-It, Move-It, Sell-It’ strategies, tactics, technologies, and operations going forward.  

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Tompkins Solutions Staff
Tompkins Solutions Staff

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