Retail properties

China’s malls trying to get smarter amid slowdown

AllDragon has launched consumer service platforms for more than 40 shopping malls

PUBLISHED : Tuesday, 02 February, 2016, 10:00am
UPDATED : Tuesday, 02 February, 2016, 10:00am

Imagine stepping into a mall and discovering it already knows which store you will go to and what you will buy.

Shopping malls in China are gearing up for a digital revolution to catch more customers amid rising competition.

Tom Gong Yitao, and his team at “smart mall” facilitator AllDragon International have an eye for the opportunities on offer.

“Ultimately, a shopping mall wants two things: more people coming to the mall and more sales. We can help them,” said Gong, AllDragon’s founder and chief executive.

China has led the world in building shopping malls, with CBRE saying Chinese cities comprised nine of the 10 cities that completed the most shopping mall space in 2014.

There are nearly 4,000 malls in mainland China, and Deloitte estimates the figure will reach 10,000 by 2025.

“There is a temporary oversupply, it’s no longer the time when anyone can make money by opening a shopping mall” Gong said. “A better way – an O2O (online-to-offline) platform to engage consumers and merchants – is needed.”

Ultimately, a shopping mall wants two things: more people coming to the mall and more sales
Tom Gong Yitao

Four years ago, Wanda, China’s largest commercial real estate developer, invited Gong, a former e-commerce department senior manager at Google and Alibaba, to establish the first O2O platform for its 100 shopping malls.

Gong left later and established AllDragon International in 2014 as a third party to help shopping malls covert into smart malls by building and operating O2O consumer platforms for them.

Gong said it was focusing on two things: turning anonymous visitors into registered users via free Wi-fi and the social-networking app WeChat; and realising connections between malls and merchants through smart point of sale (Smart Pos).

AllDragon has increased the number of registered members at one mall in Hangzhou to more than 200,000 from just a few thousand in five months.

“It represents about 20 per cent of all visitors, now we can target them one by one and redirect traffic to stores through things like point accumulation and digital coupons,” Gong said.

With Android-based Smart Pos, an innovative product created by AllDragon, mall operators can further master the sales of each store.

Gong said merchants lacked motivation to use Smart Pos at first, but since consumers could only use Smart Pos to get redemptions, that had pushed merchants to install Smart Pos.

“Once malls have the data on each store’s sales, they can pick tenants and decide which to move out,” Gong said.

AllDragon has launched consumer service platforms for more than 40 shopping malls and has signed contracts with more than 100.

Gong said Chinese consumers were very active and open to new things, which had stimulated malls to integrate O2O platforms.

He said he was optimistic about the shopping mall’s potential in China, as they now only accounted for roughly 10 per cent of total consumer expenditure, compared with more than 50 per cent in the United States.

Yew Hong Koh, Accenture’s managing director of greater China retail, said China’s digitisation of shopping malls was growing even faster than in the US, resulting in a great improvement in customer experience.

But data collection was not the ultimate goal, Yew said, and China’s malls still had a long way to go to know how to use the data to do correct analysis and follow it up with the correct action to really drive traffic and sales.