Scaling up “New Retail” for malls

September 10, 2018 / By  

“New Retail (NR)” – first introduced in 2016 by Jack Ma, the founder of Alibaba – envisions the fusion of online and offline retailing. It entails the seamless integration of online, offline, logistics and data across a single value chain, with the consumers at its core.

NR is most prominently showcased in Hema – Jack Ma’s futuristic fresh-food-focused supermarket that also doubles-up as a fulfilment centre. Key features of Hema include the ability for customers to shop in-store or on an app, access details of the products, pay with facial-recognition technology, and have their orders delivered within 30 minutes or their food prepared for consumption in-store.

While an increasing number of retailers are embracing NR, could this be scaled upwards to the mall level?

Imagine a mall where prime level retail space is used solely for experiential/showroom retailing catering to shoppers’ needs to touch and feel a product prior to committing to a purchase. Instead of holding inventory in-store, retailers will now place inventory in a centralised fulfilment centre on non-prime levels where “shoppers” or robots pick, pack and package for delivery or collection at designated locations.

How will consumers shop? They will do so by browsing through retail offerings on a proprietary mall app on their mobile devices or in-store, make instantaneous purchases online or bookmark them online for physical inspection in the mall, and completing the purchase online or in-store. They can opt to pick-up their purchases instantaneously, or have them delivered, or a combination of the two.

Besides catering to new-age shopping, NR malls offer benefits to retailers. Among others, cutting off in-store inventory and storage management can result in rent savings while, at the same time, allowing more bandwidth for product display and customer engagement, thereby boosting customer loyalty. NR malls also open the door for smaller retailers who lack expertise as well as the economy of scale to invest in technology to embark on omnichannel retailing.

The smaller retailing footprint resulting from the shift from in-store to centralised inventory keeping allows landlords to accommodate more tenants on the prime levels. This can inject vibrancy and potentially increase footfall, benefiting both landlords and retailers.

Concurrently, the usage of a proprietary app allows for the collection of information about consumer habits and behaviour that can be used to fine-tune retailing strategies and customise the shopping experience by furnishing personalised promotions/product information.

However, the realisation of a NR mall will not be without its challenges. For one, given the sensitivity of financial information, it could be a tall-order to persuade all retailers to go on board a common shopping app, especially one that is proprietary to the mall’s landlord. Secondly, the need to update mobile applications and inventories in the fulfilment centre with each tenant move, and traffic management are potential operational challenges. Regulatory compliance such as those concerning land use and building specifications (e.g. sufficient floor loading to support a fulfilment centre) are also potential obstacles.

Ultimately, for NR to work at the mall level, all stakeholders, including regulators, will need to take bold steps to embrace change.

Notify of

Inline Feedbacks
View all comments

Talk to us 
about real estate markets.