For the past few weeks, reports that Amazon is planning to open mini-department stores in the US have been making headlines and capturing industry attention, despite the lack of details and comment from the e-commerce giant. And yet, the plan pales in comparison to the recent announcement that China’s second biggest e-commerce company JD.com is opening a five-storey physical store in Xi’an, China, on September 30. Known as JD Mall, the 42,000sqm space will be 15 times the siz
he size of the department stores that Amazon is supposed to be opening, and will stock 200,000 items from over 150 domestic and international brands.
It aims to provide an immersive omnichannel experience, with 11 themed experience zones and 29 product interaction zones, including a beauty salon, audio experience area, drone testing area and massage space.
The mall will also be full of cutting-edge technology, including holographic projections, VR equipment, intelligent robots, a virtual livestream room and transparent computer room.
David Thomas, an expert on China and CEO of Think Global Consulting, sees JD Mall as further proof that Chinese retailers are ahead of the curve.
“China is leading the world in retail, and there are a few reasons for that,” Thomas told Inside Retail.
“Consumers have only come on to the market recently, so they’re all learning to shop at the same time, and that’s creating a frenzy of activity. And, of course, they all have 5G, so they’ve got this amazing bandwidth capability, which is why you’re seeing live streaming and holographic technology that [people in other countries] can only dream of.”
Replicating the online experience in-store
One reason Thomas believes technology plays such a big role in bricks-and-mortar stores in China is that consumers seek out product information and reviews to a far greater extent during their shopping journey than those in other countries.
“In the Western world, we’ve all grown up shopping from a young age. We’ve already formed a lot of preferences and we’re more in tune with the whole retail experience. In China, it’s all quite new. It’s maybe 10 or 15 years old,” he explained.
“[Chinese consumers] need affirmation, reviews, and people to explain how products work, how to buy and compare products and pricing and features. At the moment, that’s all happening online: KOLs, live streaming, reviews, [social media platform] Little Red Book, they’ve been around for a while, but it looks to me like they’re trying to replicate the online experience in-store.”
Interestingly, this is the opposite of what many retailers in Australia, the US and Europe are trying to do, which is bring the experience of the physical store online.
“To some extent, over the last 30 years, they’ve borrowed American ideas and applied them to China, and now they’ve taken it way ahead of where [American retailers] are,” Thomas said.
He believes the trends in China will eventually make their way to other markets when they have the technological capabilities to execute them.
Competing with Alibaba
JD.com’s push into bricks-and-mortar goes beyond the upcoming opening of JD Mall. The online retailer has been launching various physical retail formats in recent months as it looks to increase its omnichannel offer.
Thomas sees this as an attempt to take market share off the top e-commerce player in the country, Alibaba, which has faced intense regulatory pressure from the government over the past year, including a record US$2.8 billion fine in April.
“Alibaba is under pressure from the government and may be constrained now, so I would say JD.com is taking the opportunity to put their hand up and get noticed and start growing, and maybe potentially compete with Alibaba,” he said.Department StoreJD.Com