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Home » The New Retail: Born in China, Going Global

The New Retail: Born in China, Going Global

February 6, 2019
Michael Zakkour, SCB Contributor

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 middle market retailers' relevance 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 was, “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 already in 2016.

That same summer, Walmart bought Jet.com 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. e-commerce was the realization that bricks and mortar not only still matter but are 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 e-commerce. 
  • 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 $350bn to $1.2tr in the next four to five years. Almost 35 percent of that traffic will be between the U.S. and China.
  • The key to success are the “Four C’s” of the consumer journey: customer centricity, convenience, customization and customer contribution. 
  • “Retail-tainment,” 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 to 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.

The Outlook

China’s consumer base grew from approximately 20 million in 1990 to 700 million in 2018. Most of that growth took place between 2006-2018, driven by the birth of e-commerce 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. 

Michael Zakkour is vice president of global digital practices, China and Asia-Pacific, at Tompkins International.

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KEYWORDS China E-Commerce/Omni-Channel Global Supply Chain Management Retail Supply Chain Analysis & Consulting
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