New Retail in Furniture: My Visit to the JD-Qumei in China (2 of 2)

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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 but also some limitations. And that is mostly what is happening on the second floor of the store I visited.

The 1st Floor: Where JD and Qumei Are Pioneering 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 entire first floor – with everything from electronics to candles and pillows and speakers. It looked nothing like a furniture store.

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. This is where you visit every 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 physical spaces on the first floor. It’s also done through your mobile. You can browse everything JD sells online for your home.

The first floor is for wandering and exploring. For seeing what’s new. It’s also where you can come and just hang out (hence the coffee shop, book store and woodworking areas). There is something for the parents, the kids, the grandparents, etc. 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 and provide everything you might want in 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 a lot about all the smaller retail spaces on the first floor.

From my understanding, JD works with Qumei to select the best brands for the mini stores that fill the first floor. Unlike Qumei, JD has huge amounts of data and can assess what people would likely buy in the store and online. JD also selects the specific inventory for each store, also based on the most likely purchases. But JD doesn’t staff the smaller stores. Neither does Qumei. The brands do that. And JD manages the inventory and supply chain for this floor (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 smart screens throughout the store. Although the inventory in the physical store is constantly changing, customers are not limited to 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, the 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. You digitize customers. And you get more engagement and ongoing data.
  • The smaller and more frequently purchased home items are also sold online, which gets Qumei out of the store and online for the first time. 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 really digitizing and complementing Qumei’s core business in both products and customer engagement. And it is also enabling them to rapidly digitize their business operations. 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 in the system and starts to get 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 3rd Floor: Where Qumei Does Renovation and JD Does Supply Chain

Another of Qumei’s other initiatives is to move into renovation. And this is what was happening on the third floor. There are three floors total in the store.

The third floor was 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 to the core furniture business. 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 a Dramatic Improvement in the Customer Experience

As mentioned in Part 1, I like consumer purchases that are mostly not rational. I like when consumers are more emotional (music makes you happy) or aspirational (buying an expensive meal once in a while).

Or when they are more mindless (buying a Coke without much thought).

Or when they are worried (buying milk powder).

Or just when there is a lot of psychology, such as friends selling to friends and other types of social pressure (guys buying wedding rings).

It turns out software and digital tools are very good at both amplifying and enriching these types of non-rational customer behaviors.

  • They are more powerful psychologically. Online gaming is far more addictive than board games. Online video is more fun and addictive than traditional broadcast tv.
  • They can be enriched and expanded. Digitization 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 constantly improving 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.

I call this Digital Superpower #1: A 10X Dramatically Improved User Experience. My digital superpowers list is my cheat sheet for determining when a new digital tool or business model is going to be important. And #1 on the list is a dramatic improvement in the customer experience. That is definitely happening in new retail in furniture. No question.

What JD and Qumei are doing is really just the first step.

  • They are digitizing the customers and getting them online.
  • They are combining the online and physical data.
  • They are expanding their product offering.
  • They are digitizing 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 while designing?
  • 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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From my visit, it looked like a win-win for Qumei and JD.

  • They were transforming the consumer experience in a major way.
  • They were complementing each other with product categories and capabilities.
  • And they had 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, which 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 seemed pretty great.

Cheers, jeff

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Related articles:

From the Concept Library, concepts for this article are:

  • New Retail
  • Digital Superpower: Dramatically Improved User Experience

From the Company Library, companies for this article are:

  • JD
  • Qumei

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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.

Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.

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