You thought offline shopping was dead? Think again–good old-fashioned brick and mortar stores have been attracting investment, the latest coming from Meituan-Dianping. The Tencent-backed on-demand services provider is planning to invest into so called “new retail”, Reuters is reporting.
The term, coined by Jack Ma, refers to a new format where internet technology connects and optimizes offline outlets, online stores, and the overall supply chain. Some of the goals for new retail include intelligent self-service, anytime anywhere access, and high efficiency.
Brick and mortar stores still make up over 80 percent of total retail sales in China. Alibaba and JD have both been investing in the offline retail market, with many projects covering un-tapped rural areas.
Since 2015, Alibaba has invested $9.3 million in offline stores. It has collaborated with Lianhua supermarket chain owner Bailian Group to optimize offline stores, online payments and supply chain logistics. In March, the company announced that it will invest approximately $692 million in Intime Retail, one of China’s leading department store operators.
JD announced plans in April to open more than 1 million JD convenience stores across the country in the next five years. This is its third offline cooperation project after launching 10,000 JD home appliance stores. JD’s main partners are Wal-Mart and supermarket chain Yonghui. Its latest strategic investment was in fresh produce chain store Qiandama.
By opening its first offline concept store this week Meituan-Dianping has challenged the two e-commerce giants in their own playing field. VP of strategy Chen Shaohui said to Reuters that new retail is actually closer to Meituan-Dianping than traditional e-commerce. According to him, offline stores view them as a partner while they are scared that traditional e-commerce companies will replace them.
“We foresee we will be the most aggressive investor in the offline retail space…traditional software players do not have the competence in China because this is new infrastructure,” said Chen.
He also added that Meituan-Dianping has more than $3 billion remaining from a $3.3 billion funding round in early 2016 and plans to use that money to set up an infrastructure for services including offline retail.