Internet retailing is changing the traditional way of shopping for many products

by HABHAJAN SINGH / pic by BLOOMBERG

In the extremely competitive China market, one relatively new player is shaking things up. And it is doing so with such gusto that the entire industry is waking up to take note.

Meet the peddlers of retailing innovation at Tao Café, a pop-up convenience store owned by Alibaba Group Holding Ltd.

When things were slowing down in the China retail market, the competing companies began devising various means to keep their share of the market.

The people at Tao Café went into stealth mode and began seeking ways to enhance the shopping experience. To improve convenience, an industry tracking service noted that the cafe began incorporating enhanced automation, making it a pioneer in the industry.

The cafe also began capturing and collecting data from transactions to get detailed behavioural analysis, which in turn allowed the outfit to develop offers in line with consumer demand. As a result, they were able to reduce staffing costs.

The concept aligned with Alibaba’s expansion strategy into physical stores, noted global market research company Euromonitor International. Alibaba went into partnership with Bailian Group Co Ltd and opened Mr Hema, a grocery store with emphasis on fresh seafood.

“This expansion means that Tao Café could be rolled out across other regions, providing a competitive advantage in places where demand for convenience is at an all-time high,” the market researcher said in an industry report.

The report, entitled “What’s New in Retail: Emerging Global Concepts”, highlights the evolution and reinvention of international retail, ranking the top three new retail concepts across grocery, non-grocery, non-store and digital channels.

Needless to say, Tao Café grabbed the top spot for the grocery category. In its report, Euromonitor International noted that Internet retailing was the fastest-growing global channel through 2022 at 73% to become a larger channel than traditional grocery retail. Within Internet retailing, it said the food and drink category was expected to see the fastest growth at 80%.

“While store-based modern and traditional grocery retailing combined will remain larger, Internet retailing is changing the traditional way of shopping for many products, especially groceries.

“It’s no surprise that now three of the top five largest retailers in the world are Internet retailers,” said Euromonitor International retailing head Michelle Grant in a statement.

JD.com Inc entered the top five in 2017, making it the third e-commerce player in the top five joining Amazon.com Inc and Alibaba, the statement added.

In the latest development, Indian online shopping site Paytm Mall is reported to be opening a New Delhi store, taking a page out of backer Alibaba’s playbook in exploring ways to use physical retail to boost its online business, according to a Bloomberg report.

The country’s newest online retailer, owned by Paytm E-commerce Pte Ltd and backed by Alibaba, is introducing a brick-and-mortar store co-branded with Red Tape shoes. Customers can walk in, scan product bar codes, browse and make purchases via its mobile app, the report said.

“India is too vast a country to be served by online-only retail and, given the rudimentary logistics infrastructure and customer preferences that vary from one district to the next, new retail will be the unique differentiator,” the report quoted Paytm E-Commerce COO Amit Sinha.

Mobile Internet

With mobile Internet retailing expected to reach 50% of total e-commerce sales in 2019, Euromonitor International said retailers are looking at the next wave of technology to create new ways for consumers to shop.

It saw Tao Café paving the way for cashier-free stores in China, noting that its use of facial recognition means customers need only their smartphone equipped with Alibaba’s Taobao app to enter and check out.

In the non-grocery category, the top spot went to Charlotte Tilbury Beauty Ltd.

The UK-based luxury cosmetic brand is best known for its strong glamour positioning, based on its eponymous founder’s background as a well-known makeup artist, the report noted.

“Beauty tutorials are central to the brand, which aims to sell beauty regimes rather than single products,” it said.

The report said Charlotte Tilbury has a strong digital presence, which was a key part of their development strategy since its launch in 2013.

The robust digital presence incentivised investment in new technologies such as augmented and virtual realities. At the end of 2016, Charlotte Tilbury launched an interactive virtual makeup tool in stores called Magic Mirror, according to the report.

“The Magic Mirror, designed to echo a professional makeup table, uses a touchscreen to let customers virtually try on the brand’s 10 signature makeup looks in less than a minute. It then takes a photo, and prints it with a golden ticket for a £15 (RM81) makeover for the customer’s favourite look.

“The makeover is bookable via the Magic Mirror’s custom-built look book. Using the Magic Mirror to virtually try on products before purchasing one has helped make the stores a destination outlet for many consumers,” it said.