Will Next Retail supersede New Retail?
New Retail is expected to account for nearly one quarter of Chinese retail sales this year as it becomes the driving force of the nation’s consumer market. But ‘Next Retail’ is looming fast…
According to research from Mintel, New Retail accounted for just 8 per cent of the market in 2013, but will take 22.4 per cent this year, 25 per cent next year and 33 per cent by the end of 2023.
New Retail combines online C2C (consumer to consumer), b2C (small business to consumer), B2C (business to consumer) and OTS (online takeaway services). The phrase was coined by Alibaba founder Jack Ma and has become the focus of every large Chinese retailer in recent years.
Matthew Crabbe, regional trends director, Asia-Pacific, at Mintel, says even though the industry is expected to surpass the RMB 9 trillion mark by the end of this year, there is still significant room for growth with the market forecast to double in value by 2023.
“New Retail is developing a convergence not just of online and offline shopping, but also other consumer services such as food delivery, entertainment and car hailing, among others.
“This merging of online and offline retail and services is now becoming what Mintel dubs as ‘Next Retail’.”
Mintel research shows four in five urban Chinese online shopping consumers say they use online food delivery services; while 74 per cent watch video streaming content, 72 per cent use car hailing apps and 70 per cent use social media.
“For today’s modern Chinese consumer, shopping is increasingly about having an enjoyable experience that they can share with others. On top of just price and convenience, the ‘fun factor’ in shopping is also becoming important. Even online shopping is not a standalone activity anymore; it is now often combined with watching movies or playing online games. “The proximity between retail and entertainment is growing into what we see today as ‘retailtainment’. As online and offline increasingly converge into an overall shopping experience, so will the respective aspects of retailtainment. In all these, it is important that retailers and brands make shopping an enjoyable experience for consumers,” said Crabbe.
Technology in retail
Meanwhile, China’s rapid economic development and leapfrogging e-commerce development in the past few decades have led to Chinese consumers’ willingness to adapt to and adopt new technologies and innovations in retail, says Mintel.
Three in five urban Chinese online shoppers prefer to use self-checkout terminals, 58 per cent are open to the idea of using smart fridges to order replacement grocery and 41 per cent are willing to shop at an unmanned store.
Chinese are embracing payment technologies as well, with 62 per cent happy with the idea of using biometric data to pay for their shopping purchases. But half of China’s online shoppers are concerned about how retail companies use their personal data.
“Mintel research shows Chinese consumers are anticipating many of the new technologies that are only just emerging, and show a high degree of interest in, and potential uptake of, many of these new innovations,” says Crabbe.
Consumer attitudes towards the shopping experience confirm that they want time-saving convenience coupled with an enjoyable experience. The majority (83 per cent) of urban Chinese online shoppers agree it is time-saving to buy products online, while 77 per cent say that both online and offline shopping should be more entertaining.
It seems Chinese consumers are also looking for friendlier and more helpful retail staff to help improve the shopping experience; 85 per cent of online shoppers say customer service quality is as important to them as product quality, while 82 per cent say that both in-store and home-delivery staff need to be more attentive to customers.
“‘Next retail’ is becoming the keystone of a new type of consumer market, one that blurs the lines between shopping and all other consumer spending and activity, integrating lifestyles, and creating even deeper socialisation and personalisation of the relationship between retailers, brands and consumers,” says Crabbe. “This integration is also blurring the boundaries between online and offline businesses. As competition for consumer attention increases, retailers and brands can find new, innovative ways to serve shoppers, either in-store or online, both within China and overseas. China is undoubtedly at the leading edge of deployment of new technologies in the pursuit of new retail integration,” he concluded.
- The survey was based on 2768 internet users aged 20-49 who shopped online in the six months to May 2018.