Retail Evolution and Emerging Trends
Retail has come a long way since its emergence on the internet, transforming from conventional e-commerce to live social commerce. As the Chinese e-commerce market matures, retailers are exploring offline channels to sustain growth, with livestreaming giants at the forefront of this change.
Challenges in Physical Retail
The COVID-19 pandemic has significantly impacted physical retail, with half of the top 20 supermarkets experiencing declines in both sales and store numbers. Over half of the top 100 retailers reported revenue reductions in 2023.
JD.COM Expands Offline Presence
JD.COM is reinforcing its offline presence with the launch of new stores, including 7Fresh and Huaguan Discount Supermarket. These stores aim to combine the efficiency of e-commerce with traditional in-store experiences and fast delivery alternatives.
JD.COM’s strategy is based on an omnichannel approach that integrates online and offline, focusing on immediate delivery. This approach combines the convenience of e-commerce with the experience of shopping in a physical store.
Livestreamers Driving Offline Channel Expansion
The slowdown in e-commerce, particularly in social commerce led by livestreams, has caused changes in the industry. High-profile controversies involving prominent streamers have led some to diversify their businesses.
Xinba’s X-Market and Pangdonglai’s Transformation
Xinba, a prominent streamer, opened its first supermarket, X-Market, in Guangzhou in 2022 as a membership-based online initiative. Recently, Xinba visited Pangdonglai in Xuchang, Henan, to learn about the supermarket industry. Pangdonglai has been expanding in the supermarket sector, with its founder, Yu Donglai, announcing the group’s decision to stop helping in the transformation of other businesses after the sale of almost 30% of Yonghui Superstore shares to MINISO.
JD.COM’s Omnichannel Model and Competition
JD.COM, after selling its Yonghui shares to MINISO, opened its first store in Wuxi and is promoting its online-offline omnichannel model, focused on "instant" delivery. With increasing competition from players like Costco and Sam’s Club, it will be interesting to see how competitors like Freshippo (Hema) react.