Is China becoming the world’s testbed for new retail?

Having seen revenue plummet at brick-and-mortar stores this year, global brands are using China to experiment with more innovative retail strategies.

Having seen revenue plummet at brick-and-mortar stores in North America and Europe this year, global brands are increasingly using China to experiment with more innovative retail strategies that can be rolled out worldwide once consumers are able to safely settle into a new (shopping) normal.

Of these strategies, perhaps the most important for Western brands has been the concept of a digitally native or “smart” store—one that closes the loop between online experiences and offline retail. As physical stores shut their doors at the beginning of the year in China in response to the Covid-19 outbreak, Nike moved quickly to retool marketing efforts and reach housebound consumers via content that included a smooth path to (online) purchase. The thinking behind this pivot went beyond just trying to keep consumers from forgetting about Nike while still spending online—ie, a hope that strong digital efforts would translate to consumers heading back to brick-and-mortar retail once stores reopened.

For Nike, following months of livestreamed workouts (among other digital offerings), this meant a deep integration of online and offline in its revamped, 22,000-square-foot Guangzhou store, which included an inaugural “Nike Experience” that gives members who use its app access to workshops and workouts offered within the store and around the city, and Nike Fit, a technology that scans consumers’ feet and maps data points in their member profiles, helping them ensure a perfect fit when making future purchases via the Nike website.

This type of digital experimentation has also been adopted by luxury brands such as Burberry, which unveiled its Open Spaces store in Shenzhen this summer in collaboration with Tencent. After stepping through its doors, customers are guided by a digital point system called “social currency” (not to be confused with “social credit”), which tallies an in-store activity and engagement with the brand through a customized WeChat mini-program, which also gives consumers the ability to view and share content, reserve a themed fitting room within the store, and unlock items that are available at purchase at Thomas’s Café (named after the brand’s founder).

Another premium brand that is using China as a testing ground is Arc’teryx, which recently opened its first global flagship (and largest store) in Shanghai, an immersive 8,000-square-foot space that is the first to stock the brand’s entire range of collections under one roof. While less digitally integrated than Nike’s Guangzhou store, the new Arc’teryx flagship (like Burberry’s Shenzhen concept) shows the influence of Tencent, a key investor in the consortium that acquired Amer Sports, the Finland-based parent of Arc’teryx, in 2019.

Keen to take advantage of a growing interest in outdoor and winter sports ahead of the 2022 Beijing Winter Olympics, we can expect that Tencent will use all of its content-commerce avenues—of which it has many, from WeChat to Tencent Video to Bilibili—to make Arc’teryx and its top-tier Veilance line a household name among affluent Chinese.

Starbucks, which now has more than 4,400 stores throughout China, tested out its first Starbucks Now store in Beijing last year, a retail space combining online and offline customer touchpoints. The small store, located in the city’s financial district, prioritises mobile ordering and payments, with a streamlined store design that includes a dedicated pickup area for delivery couriers and very limited seating to keep the coffee (and its customers) moving. It’s a model that appears to have been inspired by domestic rival Luckin Coffee’s much-hyped efforts, minus the unsustainable business practices and accounting fraud. Starbucks has announced plans to continue expanding this store format throughout the country, though no word yet on whether we will soon see Starbucks Now outlets popping up in London, Tokyo, or Los Angeles.

This article first appeared on campaignasia.com.

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