For the Future of Retail, Look to Asia

The world has come a long way from the general store or even the mid-century department stores, innovative then, quaint now. E-commerce has continued to eat into traditional retail, and the future is a blend of both. Who’s doing it best? There’s no doubt that Asia seems to have the inside track on developing technologies and strategies that are creating a more resilient retail future. Companies with operations outside of Asia should take a page from the way these companies are leveraging technology and rapidly evolving the dynamic between stores and consumers.

Here are some of the most interesting innovations to watch:

C-Stores

In countries such as China and Singapore, convenience stores, or C-stores, have morphed into high-tech juggernauts equipped with banking, postal services, online-order pick-up, food, and even events or musical performances. Asian countries’ rapid urbanization and industrialization set the stage for this transformation, fostering a need for on-the-go, all-in-one services. One innovator in this space is 7-Eleven, which has partnered with e-commerce companies such as Zalora and Lazada to offer pick-ups in Singapore and Hong Kong. Turning convenience stores into “retailtainment” centers and restaurants allows for cross-selling and additional dwell time that fuels data collection and strengthens the relationship between retailers and their customers.

Super-App Ecosystems

When WeChat launched in 2011, it was a messaging app. It has since blossomed into a so-called “super app,” one that offers a breadth of services, to keep consumers on its platform and capture valuable data on their behavior. The platform boasts more than two million mini-programs, from  ride-hailing to banking and e-commerce stores. Super-apps like WeChat, which also include AliPay, Paytm, KakaoTalk, and Grab, have grown in Asia thanks to a more mobile-centric user base, the relative dearth of convenient incumbent payment options (think of the enduring popularity of credit cards in the US), and close relationships between local governments and conglomerates. Retailers and CPGs are sharing the rewards, capitalizing on the super-app’s frictionless transactions, rapid social sharing among users, and large, commerce-oriented user base.

Unattended commerce

China has led the world in unattended commerce, a range of technologies that bring the quickness of e-commerce in-store, allowing the customer to check out without a cashier. Several companies built hundreds of cashier-less stores in China while the technology remained a rare novelty elsewhere. Unattended commerce technologies include self-checkout stations, kiosks, and in-store screens, but the most developed form is take-and-go, automated retail that obviates the traditional checkout process altogether. Automated retailers include Hangzhou Wahaha Group, whose stores use deep learning, machine vision, and biometric identification to charge customers via Alipay when they exit stores, BingoBox, which has hundreds of stores across Taiwan, South Korea, and Malaysia, and Alibaba. Consumers get the benefits of e-commerce’s efficiency along with physical retail’s immediacy, and retailers benefit from customer satisfaction and the ability to divert labor to other needs.

Autonomous Shopping Carts

Autonomous shopping carts are pushing the innovations of cashier-less retail solutions such as Amazon Go one step further. These smart carts from the likes of New Zealand’s Imagr not only obviate traditional checkout but also guide customers through stores, offering them recommendations based on past purchase data and opening up marketing opportunities. Imagr is partnering with major Japanese retailer H2O, plotting a rollout at 152 of the latter’s stores. South Korean discount store chain E-mart similarly launched its own autonomous shopping cart, Eli, which also guides customers through stores and automates payments. JD.com, an Alibaba competitor, has offered autonomous carts that follow customers around and automatically record payments at its 7Fresh stores. The global market is expected to hit $2.9 billion by 2025.

A New Standard for Delivery

In China, the gold standard for delivery is 30 minutes, which Hema, Alibaba’s automated retail chain, offers within a radius of just under two miles. Alibaba leverages the stores’ vast physical footprint to ensure rapid delivery of online orders, which account for roughly 60% of Hema’s gross merchandise value. But even in-store, customers can log an order via their smartphones and have it delivered, sparing them the cart-full trek home. Alibaba has also outsourced these micro-fulfillment capabilities to other brands such as Starbucks, which developed its Star Kitchens in Hema stores, expanding its own delivery power. Rapid delivery has become the norm and appears set to dominate the future, as 40% of Chinese consumers under 25 say they rarely visit an offline supermarket, turning to online channels instead.