What exactly is new retail? How to play? Alibaba's first systematic interpretation

　　The "Five New" strategy proposed by Jack Ma last year has always attracted much attention from the society. As the most representative "new retail" among the "Five New" ones, it has caused a lot of discussions. So what is new retail? What are its core characteristics? How should the entire industry adapt to the trend of new retail?

　　On March 9, 2017, at the "2017 China E-commerce and Retail Innovation International Summit" held in Shanghai, Alibaba Research Institute officially released the "New Retail Research Report" (hereinafter referred to as the "Report"), which systematically interpreted the new retail concepts and methodologies that the outside world is concerned about for the first time.

　　With the development of information technology and Internet technology, China's retail industry will face digital reconstruction and gradually form a more efficient retail format that seamlessly integrates physical retail and virtual retail - new retail. Internet technology is born with universal attributes. As a major manufacturing country, more small and medium-sized enterprises will use new technologies to directly embark on the new path of global retail in the near future.

　　The picture shows Yang Jian, vice president of Alibaba Research Institute, released the "New Retail Research Report"

　　The picture shows the 2017 China E-commerce and Retail Innovation International Summit

　　What is new retail?

　　In the report, Alibaba Research Institute gave a clear definition of the concept of new retail. Simply put, new retail is a "data-driven pan-retail form centered on consumer experience", and its core value is to improve the operational efficiency of the circulation and retail industry in the whole society to a high level.

　　Specifically, new retail is a consumer-centric, based on the digitalization of various links such as people, goods and services, and supply chains, connecting various consumption scenarios through data flow, including smartphones, mobile terminals, computers, physical stores and new channels that can be realized in the future, etc., and using digital technology to achieve a comprehensive integration of physical and virtual retail supply chains, transaction delivery chains, and service chains, providing consumers with seamless consumption experience covering all channels, and an efficient and inclusive pan-retail format characterized by partial replacement of physical delivery in logistics and distribution.

　　Different from any previous retail change, new retail will truly achieve reverse-driven production changes through the deep combination of data and business logic. It will give traditional retail formats the wings of data, optimize asset allocation, incubate new retail species, reshape the value chain, create efficient enterprises, lead consumption upgrades, give birth to new service providers and form a new retail ecosystem, which is a new opportunity for China's retail development.

　　"The core of new retail is to reconstruct and generate a brand new business format. It is not simply the addition of existing retail scenarios and business formats." Yang Jian, deputy director of Alibaba Research Institute, said.

　　The report pointed out that new retail has three major characteristics, namely "heart-oriented, retail species explosion and retail duality."

　　The so-called "heart-based" means mastering data means mastering consumer needs. The huge creativity brought by DT technology in the future will infinitely approach consumers' inner needs, reconstruct people and goods yards around consumer needs, and ultimately achieve "consumer experience-centered";

　　"Retail species explosion" refers to the incubation of new forms and new species of diversified retail. With the help of DT technology, diversified business formats such as logistics industry, large cultural and entertainment industry, and catering industry have all extended their retail formats, and more retail species will be incubated and produced soon, including natural person retail, which is expected to achieve "everyone retail" in the future;

　　?"Retail duality" refers to the ideal retail under two-dimensional thinking. Any retail entity, any consumer, or any product is both physical and DT-oriented, and new retail needs to be considered from a two-dimensional perspective. At the same time, based on mathematical logic, the circulation loss within the enterprise and between enterprises can ultimately reach an ideal state of infinitely approaching "zero", and ultimately achieve the reshaping of the value chain.

　　New retail knowledge framework released

　　The core value of this report is the first time that the knowledge framework for new retail has been released, which provides a clear methodology for the follow-up research of new retail. The report systematically explains the structure of the new retail knowledge framework from the front desk, middle desk and back desk.

　　Figure: New retail knowledge framework structure diagram

　　Taking the previous station as an example, the report analyzes it from the three perspectives of "scenario, consumers, and products".

　　In terms of scenarios, new retail will bring about "ubiquitous" consumption scenarios. Whether it is department stores, shopping malls, hypermarkets, convenience stores, online online stores, various cultural and entertainment activities, or live broadcast activities, it will become an excellent consumption scenario. Among them, various mobile devices, smart terminals, VR devices, etc. will play an important role.

　　On the consumer side, under traditional retail conditions in the past, it was very difficult to portray consumers. Various surveys could only complete vague portraits. Under DT conditions, consumers could be portrayed with clearer portraits, including their gender, age, income, and characteristics, until a holographic and clear portrait is completed. For brands, the image of consumers is vividly displayed on paper.

　　In terms of trading products, consumers' demands have also transitioned from simple "products + services" to "products + services + content". Consumers not only care about the price-performance ratio, functions, durability, retail services and other indicators of the product, but also the personalized professional functions of the product, as well as the social experience, value recognition and sense of participation behind the product. Even in terms of services, targeted discounts, personalized services, and seamless integration of DT technology will bring consumers a new experience.

　　In short, new retail will reconstruct the three elements of "people, goods, and places", from the past "goods-site-people" to "people-go places". Under traditional retail conditions, brands supply according to experience, split online and offline, and their portraits of consumers are also blurred. Under new retail, consumers realize digitalization and mesh interconnection, which can clearly identify and serve, optimize supply chain + intelligent manufacturing, realize intelligent supply on demand, and ubiquitous consumption scenarios, thus realizing the reconstruction of "people-goods-place".

　　New retail vs traditional retail

　　The report believes that the difference between new retail and traditional retail is mainly reflected in the following aspects:

　　First, digital technology connects all links of virtual and reality, and realizes the deep integration of entity and virtuality. The people, goods and places of traditional retail are well-known to be extended in the physical space and time dimensions. Consumers are not restricted by regions, time periods, and stores, products are not restricted by content form, type and quantity, and consumer experience and product delivery forms are not restricted by physical forms.

　　Secondly, consumers are "online" in real time, brands and retailers are consumer-centric, and use digital technology to capture comprehensive and all-area information at any time to perceive consumer demand, complete supply and demand assessment and instant interaction, stimulate consumers' potential consumer demand, and provide consumers with consumer experience and services that are seamlessly integrated through all channels and all-weather;

　　Third, returning to the essence of retail, the profits of retail companies will mainly come from the appreciation of goods and services, rather than the profits of information differences. In the process of development, the way China's traditional retail industry earns high profits through commercial real estate rent and joint venture deduction will be unsustainable. Reducing costs with the help of new technologies and new resources and providing consumers with differentiated goods and services that meet individual needs and user experiences as much as possible is the direction of retail development;

　　Fourth, the entire supply chain is digitized, the circulation path is transformed from complex to simple, the front end of the supply chain is more flexible and flexible, and data management provides fine decision-making support for realizing inventory optimization and even "zero inventory". The supply chain backend forms a fast, efficient and economical new warehouse distribution integration, and integrates the three chains of supply chain, transaction delivery chain, and service chain. The functions of some supply chain middlemen have changed and differentiated, becoming new ecological service providers.

　　Future imagination: China's retail will achieve leapfrog development

　　The report pointed out that new retail provides a new opportunity for China's retail industry to develop leapfrog. China's physical retail industry is in its initial stage of development and is developing relatively slowly. There has not yet been a "high-end" physical retail brand owner in the industry. In developed countries, taking the United States as an example, in the past 200 years since 1840, with the technological innovation of industrialization and informatization, the retail industry has successively experienced industrialization and informatization, forming a mature and efficient large circulation pattern. Since the 1990s, industrialization and informatization have been intertwined, and retail formats have emerged closely. It took more than 20 years to complete the retail format changes in the United States for more than a century and a half, and the industry as a whole is in its primary stage of development.

　　At present, China's retail, represented by the "real estate model", lags behind European and American retail represented by the "big chain model" in terms of efficiency and Japanese retail represented by the "convenience store model". In the future, China's retail will be expected to achieve leapfrog development with the help of DT technology and the Internet and enter a more advanced new retail stage.

　　The global retail development driven by China's new retail will be more imaginative. From the perspective of transaction subject, anyone can become a retailer, and even robots can become the main body of transactions. From the perspective of the transaction object, all items will become tradable commodities in the future. Spatially speaking, any corner of the earth may become a place of trading, and the currency forms are diversified. It is not difficult to imagine that with the deepening of digitalization and technological progress, transactions will develop towards automation and intelligence, and the global economic form will eventually be rewritten by a new type of transaction-centered economy.

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