In Part 1 of my visit to the JD-Qumei furniture store in Beijing, I laid out a bit of theory about furniture retail stores. They have some nice dynamics and some limitations. And that is mostly what is happening on the second floor of the store I visited.
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The First Floor: Where JD and QuMei Pioneer New Retail in Furniture.
Walking into the store, the first thing I noticed on the first floor was a nice café and bookstore. And that’s a strange thing to see in a furniture store (note: their coffee is really good).
And on the left there was a flower shop. Also weird. There was also a woodworking space where children can play with tools. There was an area with arts and crafts. And there were lots of other smaller stores filling out the first floor – with everything from electronics to candles and pillows and speakers.
It seemed weird at first. But it’s not. It’s really clever.
If the second floor is where you buy your furniture every 3-4 years, the first floor is where you buy everything else you might want for your home – week after week. This could be floral arrangements. It could be new candles, art and knickknacks. It could be speakers. And it’s not just the products in the stores on the first floor. As it’s done through your mobile, it’s also everything JD sells online.
The first floor is somewhere you can wander and explore. You can see what’s new. It’s also where you can come and hang out (hence the coffee shop, book store and woodworking areas). The second floor gets you the big purchase every couple of years. But the first floor gets you weekly visits and lots of smaller purchases (online and in person).
And when you combine all these products (in the store and online), the staff can design in everything you might want into your home. They can design not only the furniture in your new home, they can also put in the flowers, the books, the speakers, the paintings, the small rugs, the candles, the art and so on. The JD partnership means customers can buy literally everything they might want for their home.
I asked about all the smaller retail spaces on the first floor. From my understanding, JD works with Qumei to select the best brands for these mini stores. They obviously have huge amounts of data and can assess what people would likely buy in the store and online. They also select the specific inventory for each store, also based on the most likely purchases. And while JD doesn’t staff the smaller stores (the brands do that), JD manages the inventory and supply chain (as everything comes through JD).
The benefits of this to Qumei are pretty great.
- It brings people into the store on a more regular basis. Rugs, art, flowers and other smaller items are bought and changed frequently, especially with fashion trends. And visiting customers can access the entire JD inventory through their phones – and through the smart screens throughout the store. They are not limited to just what is physically in the store.
- It offers a superior consumer experience and complements Qumei’s core furniture business. Qumei doesn’t really want to be the business of stocking and selling a huge number of small dollar items (candles, flowers, art). But with the partnership, they can now offer everything a customer might want in their home. Qumei can stay focused on their core business of furniture and let JD manage the complementary items. Note: JD handles inventory for these sales.
- Qumei is digitizing their customer base. As mentioned, their traditional furniture business is almost entirely offline. So I’m assuming they don’t have a lot of ongoing data about their customers. More frequent purchases plus the smart screens and games throughout the store (see below) get customers to sign in digitally and provide data.
- The smaller and more frequently purchased home items are also sold online, which get Qumei out of the store and online. They can begin to attract traffic, digitize customers, and conduct transactions online with these smaller sales – with the goal of eventually drawing people into the store (and getting them to the second floor).
So JD is complementing Qumei’s core business in terms of products. But it is also enabling them to rapidly digitize their business. All around the store, new digital tools were being implemented.
For example, there are the screens that let you shop.
Others screens have cameras and can provide you with various functions (and get you identified). Computer vision in retail is evolving quickly.
There is a mirror for trying on make-up virtually. Although it didn’t know how to respond to my mask. It put the lipstick on top of it.
There are also games that generate photos and such.
These were some of the initial digital tools being deployed. They appear mostly focused on digitizing customers and getting them to engage (which gets you data). We see similar tech in other new retail projects. They are early-stage and are advancing quickly in their capabilities (computer vision, AI-assistants, etc.).
The Third Floor: Qumei Does Renovation. JD Does Supply Chain.
A final comment. Another of Qumei’s other initiatives in the past year was moving into renovation. And this is what is happening on the third floor.
The third floor is for families who buy homes and need to renovate them first. So Qumei staff work with them on lighting design, bathroom design, flooring, windows, etc. Basically everything surrounding the furniture (which is done on the second floor). They also offer Xiaomi smart home products so they have smart lights, smart windows, security systems, etc.
This is another complement. With the three floors, Qumei can basically design an entire home interior – from the floors to the flowers on the tables. Qumei (plus JD) will put it all together and have it all installed and delivered together.
Note: JD is handling the supply chain and inventory for renovation. Qumei staff do the various design specialties involved in renovation.
Conclusion: New Retail for Furniture Is Just Really Cool
As mentioned in Part 1, I like consumer purchases that are mostly not rational. I like when consumers are emotional (music makes you happy) or aspirational (buying an expensive meal once in a while). Or mindless (buying a Coke). Or worried (buying milk powder). Or just when there is a lot of psychology (friends selling to friends is particularly powerful) or social pressures (guys buying wedding rings).
It turns out software and digital tools are very good at both amplifying and enriching these types of non-rational behaviors.
- They are amplified. For example, online gaming is far more addictive than board games. Online video is more fun than traditional broadcast tv.
- They are enriched. For example, digital lets you add new use cases – such as buying movies and food on an impulse and having it all delivered in 15 minutes.
Generally, the more complexity and non-rationality in the consumer experience the more use cases you can start to address with digital tools. If you are just buying and picking up a cup of coffee, there is actually not that much digital can do. But when your whole family is at the Qumei on a Saturday planning your dream house, there are just lots of possibilities for digital.
What JD and Qumei are doing is really just the first step. They are combining the online and physical data. They are expanding the product offering. They are digitizing the customers and store operations. And, most importantly, they are starting to gather data.
From here, it’s easy to imagine where “new retail” in furniture might lead:
- Could we personalize chairs and other furniture to each individual person in the home?
- Could we design the kitchen and all the appliances in AR/VR and let customers virtually walk through it?
- Could children design their own bedrooms and pick out all their beds, colors and toys?
- Could a customer redesign a room for a visiting relative or guest?
- As more smart devices devices are deployed, how much will the home connect with online platforms? Note: Alexa, Tmall Genie and others are very focused on this.
- Could we connect the consumers with artists and florists online to customize artwork and flowers for the home?
- Could designers or online influencers get involved? Could the design process move online?
- Could you redo the design for your entire house every season? Could your home become a constantly changing thing?
There is just a lot of room for creativity in new retail for furniture and homes. This is just the beginning.
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Overall, it looks like a win-win for Qumei and JD.
- They are transforming the consumer experience in a major way.
- They are complementing each other with product categories and capabilities.
- And they have largely avoided the conflicts that can happen when e-commerce sites work with retailers (hello Amazon). JD runs the first floor and handles all the smaller SKUs that Qumei does not really want to do anyways. QuMei’s core furniture business is on the second floor business.
- Qumei gets digitized, extended online and gets increased consumer visits and engagement.
That’s my take after walking around for a couple hours. It seems pretty great. Thanks again to Ella Kidron and JD.
Cheers, jeff
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I write and speak about digital China and Asia’s latest tech trends.
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