Chinese mall takes digital route in the name of ‘new retail’, opens online store

Malls are starting their own digital stores as they hitch their bandwagon to the concept of “new retail” pioneered by the Alibaba Holding Group chairman, Jack Ma Yun. The “online-offline integrated experience” is increasingly being used by Chinese retail property operators, who see it as a critical way of gaining insight into consumers’ shopping patterns and responding to these quickly.

Some operators, such as Beijing Capital Grand, a Hong Kong-listed company that operates five strip malls on the mainland, are making real profits out of it. On the first day of the Singles’ Day online shopping extravaganza this year, its flagship mall Beijing Capital Outlets grossed 12 million yuan (US$1.82 million). Its previous single-day best performance was less than 1 million yuan.

A major reason for the spike in revenue was the heavy discounts offered by outlets during the festival – some sent out “buy 300 yuan, get 300 yuan” coupons – a routine practice among most malls.

Another reason, according to Bryan Feng Yujian, the chief executive of Beijing Capital Grand, was its newly launched digital store, Jumax, which operates on the WeChat platform used by most Chinese mobile phone users.

“Our outlets target middle-class consumers of ages between 25 and 35. In China, all of them use mobiles. So winning them over the phone is critically important,” he said.

Beijing Capital Grand was spun off from the state-owned property developer, Beijing Capital Land, and is backed by the Sino-Ocean Group and KKR. It plans to open 20 malls by 2020.

China has room for four times more outlet malls, says industry leader

Most of the new “club members” who registered through Jumax on Singles’ Day were first-time customers, he said, many of them from eastern Beijing who would otherwise not know about or come to Beijing Capital Outlets. The mall is located in the city’s southwest and mainly draws shoppers from western Beijing. Jumax encouraged these first-time customers to order online and then book a fitting room at the mall to try on their purchases.

The mobile platform also recommends more products on promotion to customers based on their previous shopping record. “For example, if one buys an expensive jacket, we could recommend to them a wristwatch or phone,” said Beijing Capital Grand’s Feng.

But drawing new customers in is just one side of having an online presence. The more important aspect, according to Feng, is knowing more about their shopping patterns in real time, and engaging them constantly, instead of through one-off deals.

“People visit strip malls less often than urban malls, so we have got to think of ways to encourage them to continue engaging with us after they leave. So next time they want to buy on discount, Beijing Capital Outlets is first to come to mind,” he said.

Beijing Capital Grand has also installed surveillance cameras all around the mall so it can get real-time information on how many customers are in the mall and where they are concentrated. Customers are also encouraged to connect to the mall’s Wi-fi, so the mall operator knows an individual’s route. Customers are also asked to apply for membership, which lets the operator know their age, gender and income information.

And through the point-of-sale system in each store, the mall operator knows instantly how much each customer has spent.

“The point is not the trove of data itself, but to identify problems and make changes accordingly,” said Feng. “For example, the route data shows some places are ‘dead corners’ with few visitors, and we have got to figure out why. Two stores stand door-to-door but their sale performance varies. Why? Is it because the poor performer has few new products, or is the pricing a problem? We can help them to analyse.”

The best of both worlds: how online and offline retail can work together

Sometimes, the data throws up surprises for operators. For example, during the Singles’ Day promotion the hottest sales items turned out to be towels and underwear. The reason, they realised, was that many customers who registered online got coupons worth 300 yuan and 500 yuan, and when they arrived they found these small items were all they could buy with the coupons.

Beijing Capital Grand also found that quite a lot of its customers were from outside Beijing. Traditionally, Beijing Capital Outlets does not offer a free delivery service outside the city. But it decided to do that for customers from neighbouring Hebei, despite it being unprofitable, because it wanted to drum up publicity.

“If you are in this industry, you’ll realise the infrastructure for online-offline seamless retail in China is quite developed. Customer tracking, customer relationship-management tools, the delivery system … in many ways, China leads the world,” said Feng.

American strip malls are coming to Beijing, as urban sprawl expands to outer suburbs