In Part 1 and Part 2, I gave some background on sports apparel in China and detailed my visit to the new Tmall – Intersport store in Beijing. It was pretty great. With lots of new digital initiatives like the magic mirrors. Note: the above picture is what happens when you change the gender setting on the magic mirror.
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Here are my take-aways on what is happening in new retail in sports apparel:
Step one, like always, is digitizing the customers.
A lot of what is going in the store right now is about getting customers to log-in or scan a QR code (or get facial recognition). You want to identify people and, if possible, tie them to their Tmall accounts. That starts to get the data moving.
Step two is upgrading and personalizing the consumer experience.
Intersport is already beginning to improve how you shop – and specifically search – within the store.
- The mobile app and various screens mean that the number of available SKUs (in-store plus online) has already dramatically increased.
- They are starting to improve the shopping and discovery experience with new tools like magic mirrors.
- They are starting to provide fast and convenient delivery or pick-up.
One of the most powerful aspects of new retail is you can personalize the items and experience person-by-person. We are used to this online. But it is something new in the physical world.
Step three is to increase the number users and their engagement with the platform.
This is really important. New retail, like all platform businesses, runs on users, engagement and data. It’s not enough to get people into the store. You need people to participate and to do things. This is why Facebook and Twitter are always encouraging you to post. The more engagement there is, the more data there is. The more data there is, the better the service usually becomes individually and in the aggregate.
Step four is to begin to re-imagine operations and to merge online and offline.
Once the customers and store operations are digitized, things can really start to change. The digital tools are improving rapidly. Computer vision, natural language processing, virtual assistants and other tools are on the way. You can also integrate the operations into parts of the Alibaba ecosystem.
This is all fascinating and moving fast. I think it mostly comes down to new “use cases”. In some businesses (i.e., retail coffee), new retail doesn’t generate that many new use cases. In others (i.e., supermarkets), it creates tons of possibilities.
So my primary question at Intersport was “how many use cases are there for new retail in sports apparel?”
New retail can be truly transformative or just an operational upgrade.
Here’s the problem with new retail in a lot of sectors. There just isn’t that much to do.
I use Luckin Coffee to order coffee on my phone. The app tells me when it’s ready. I walk to the outlet and my coffee is sitting on the counter waiting for me. I scan my phone, pick it up and go. Ok. That’s nice. But it really isn’t that different from just doing it normally. At best, it’s an upgrade in convenience.
In my article on The 4 Superpowers of Digital China (here), I argued that there are four particularly big changes (at least) you can make with digital tools. And if one of these happens, you become a dramatically better business. It gives you a superpower. The rest tends to just be regular upgrades. Luckin Coffee is a good upgrade but doesn’t have a superpower.
One of my four superpowers is a dramatically improved customer experience. Something that makes the previous non-digitized customer experience obsolete and unacceptable. Mobile payment did this to credit cards in China. Bike-sharing did this traditional bike-rental businesses. And Alibaba’s Hema is really doing this to traditional supermarkets. Last year, I asked Alibaba President Michael Evans which of the new retail business models he was most excited about and he said it was grocery and supermarkets.
My conclusion from my visit to Intersport is that new retail for sports apparel really has lots of interesting possibilities. I think there are potential superpowers here. As mentioned, there is digitization and delivery. And there is combing the online inventory with the in-store inventory (via magic mirrors and smartphone ordering). There are god but they are not transformative.
I think the transformative / superpower areas in sports apparel are the two things that supermarkets don’t have.
1) Sports retail has a community that really cares about the products.
Runners really do care about running. They are passionate about it. They do it for years and often decades. And so they really care about the quality of the shoes and apparel. You don’t see this sort of enthusiasm in a supermarket.
There are active communities and events around these sports. There are marathons. People track their runs and share their routes and times in real-time. People run in groups. There are local clubs. And there are online communities where people talk about running, hiking, bicycling, basketball, climbing and such.
All this is great for digital. Digital tools are particularly good at creating and engaging communities (hello Wechat and Facebook). This creates lots of possibilities for new use cases in social media, social networking, communications, group activities, sharing activities, KOLs, virtual gifting, advertising and sponsorships.
Sports retail (once digitized) can expand in lots of interesting ways because of the community, communication and emotional aspect that are not present in supermarkets and retail coffee.
2) Sports apparel is tied with entertainment.
People who buy running and basketball shoes also watch a lot of running and basketball. They know who the famous runners and players are. And much of the appeal and perceived value of the products comes from the entertainment aspects.
In a traditional physical store, there are not too many ways to tap into this. You can put up pictures and play videos but that is about it. But when you merge online and physical, you can really start to tie in media and entertainment (which is really just digital products). That offers lots of interesting opportunities for a fully digitized sports retail store.
- Could the Intersport store experience be combined with Youku sports content? Could you combine what customers see in the store and on their phones with live entertainment and information?
- Could you combine viewership and viewership information with product sales?
- Could you do “See now, buy now”? This was Alibaba’s big push at the Singles’ Day Gala (you can buy anything you can see on the screen).
More and more in China we are seeing how content can drive e-commerce. And there is a lot of content in sports. Alibaba is very clear about their belief that their future growth will come from e-commerce and entertainment (and local services).
New retail for sports apparel = retail + community + entertainment
This is my main take-away and my working thesis. A lot of new retail is about being more efficient and productive. And about upgrading the customer experience. Fine.
But every now and then, it is about dramatically improving the customer experience, such that it makes the traditional stores obsolete. Hema is doing that for supermarkets. I think this will probably happen in fashion. And I think this may be possible in sports apparel.
Anyways, that’s my take. Thanks for reading. Any thoughts on this would be greatly appreciated.
And thanks to Robin for the invitation.
Cheers from Beijing, Jeff
- What’s Next in New Retail: My Visit to the Tmall – Intersport Store in China (Pt 1 of 3)
- How Intersport and Alibaba Are Digitizing Sports Apparel Retail in China (Pt 2 of 3)
- Alibaba and Intersport: Why New Retail Is a Big Deal in Sports Apparel in China (Pt 3 of 3)
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