China's new retail revolution

China's maturing ecommerce market is driving its online giants to leverage big data, AI, and advanced analytics to expand their offline ecosystems. Traditional offline retailers are digitising to counter the disruption and to improve operational efficiency in an ever-competitive market. Against this backdrop, China's retail landscape is migrating towards a 'new retail' model—an omnichannel approach consisting of an online ordering platform and an offline platform that delivers a superior user experience and acts as a distribution hub. COVID-19 has accelerated the pace at which this transition occurs.

Consumers are receptive

The COVID-19 pandemic has reshaped consumer behaviour, triggering a surge in new retail app downloads and usage. We believe it is possible many of these new users, including older consumers, will continue to embrace new retail for its convenience, delivery and value. Our analysis of UBS Evidence Lab's focus group in Huizhou, a tier-3 city, suggests that lower-tier city consumers are also receptive to new retail. We believe further upside could also come from China's smaller cities and rural areas via B2B digital solutions.

Key companies are gearing up

As the new retail landscape shapes up, key companies are leveraging their respective strengths to capture a bigger share of the consumer wallet or to fuel their core businesses. We expect competition among various models to lead to better products, content and experiences that could ultimately drive higher spending.

Other articles you may find interesting

See more about China 360