China’s e-commerce behemoth Alibaba Group is reportedly set to open its first brick-and-mortar department store in its hometown Hangzhou next April. The space, called “More Mall,” symbolizes the “New Retail” concept, which has long been advocated by the company.
According to reports in the Chinese media, the new mall will occupy 40,000 square meters of space across five floors. It will curate brands that already have an established presence on Alibaba’s two major online platforms: Tmall and Taobao Marketplace.
To provide a seamless shopping experience for Chinese consumers, More Mall will also implement a number of AR and VR capabilities such as virtual fitting rooms and makeup mirrors.
Introduced by Alibaba in late 2015, the “New Retail” initiative is a pioneering experiment that attempts to connect online businesses with offline stores (aka O2O) by integrating e-commerce with the in-store shopping experience. As a veteran e-commerce player in China, Alibaba has acquired advanced knowledge, skills, and experience in the e-commerce and logistics sectors. The vision, thus, is to apply these advantageous points to offline shopping mall operations.
In recent years, many offline high-end shopping malls in China have begun incorporating online-to-offline (O2O) strategies in their daily operations. Alibaba, for example, partnered with Beijing InTime Group to help them with O2O development. That has proved to be effective in creating better customer experience and in increasing sales.
Based on discussions at Alibaba’s investor conference in June, the company’s own brick-and-mortar mall aims to be a place for digitally savvy Chinese consumers to purchase products but also to entertain themselves. The shopping experience that it hopes to create will be one of interesting and inspiring discovery.
This is not the company’s first foray into brick-and-mortar stores. Since the company announced its New Retail model, it has tested out several initiatives, and the most high-profile one is its experiment with Hema Supermarket.
The Hema app, launched in 2015, allows consumers to go grocery shopping on their mobile. To move that digital experience into an offline setting, Alibaba opened its first offline Hema Supermarket in July this year, hoping to direct their online buyers to use some of their online shopping habits (like using cashless payment options) in a physical space. While the Hema experiment was a little controversial when the physical store was launched, based on reports by local Chinese media, shoppers seem to like it.
Alibaba’s upcoming physical mall, like the supermarket did, is poised to set a milestone in China’s retail history. And considering that the O2O operation has become one of the key areas in the industry, the mall’s success is worth being closely monitored by luxury brands. It is also highly likely that luxury labels will partner with Alibaba’s new mall, as in recent quarters, the e-commerce giant has been more and more viewed as a trusted ally by brands looking to succeed the market in China.