We saw the future of consumption at Alibaba’s new retail megastore in Beijing

In Steven Spielberg’s 2002 film Minority Report, Tom Cruise played Precrime officer John Anderton who was in a mysterious murder conspiracy in the year 2054. John changed his eyeballs in the black market to get away from iris-recognition identity detection cameras. When he walked into a shop, AI windows and AR assistant intuitively recommended products by reading his new iris information and detecting body motions – that was the moment when John realized he finally had a clean identity to trace the real murderer. Now, in the year 2018, Alibaba’s Tmall is making part of the shopping technology true—and no, you don’t have to replace your eyes to experience it. 

On May 29, Alibaba’s Tmall opened its first co-branding New Retail Megastore in Beijing for its partner Intersport, one of the world largest sports retailers. Intersport opened its online flagship store on Tmall in 2016. The company hopes to expand offline landscape with Alibaba’s Megastore strategy, a crucial part of Tmall and Alibaba’s new retail blueprint aiming at digitally empowering brands by encouraging brick-and-mortar performance with data and AI support. The store is located in Qianmen, part of the traditional inner city of Beijing which is one block away from the Palace Museum.

Fully equipped with cutting-edge technology, the Megastore signals trends in the retail business. More than commercial benefits, in the near future, the cooperation and model may push third-party service providers including consulting firms in the retail segment to the corner and result in significant industry turmoil.

Technology facilitates the joy of buying and business management

Jessica Liu, President of Tmall Fashion and Luxury, stressed that Tmall’s goal of helping brands with brick-and-mortar stores is not money.  Tmall’s larger ambitions are strengthening ties with brands by providing them with Tmall-exclusive strategic resources and expanding offline landscape of Tmall and its partners.

According to her, Tmall is now in cooperation with over 400 brands and has helped with over 50,000 stores. By the end of the fiscal year (March 2019), Tmall plans to increase the numbers to 1,000 and 200,000 respectively, all with digital solutions.

The digitalisation of Tmall’s new retail at this stage leverages technology to support shopping experience and operation management with AR tech combined with big data and the integration of Alibaba’s offline and online ecosystems.

The motion sensor-powered main window display at the store entrance can identify gender and approximate age of a passerby and recommend products based on Alibaba’s mature algorithms. Scanning the QR code displayed on the interface, a customer can browse and order the recommended goods from the store’s Tmall e-shop.

A man scanning Tmall QR code to browse shoes recommended to him (Image credit: Alibaba)

Customers can also collect coupons by playing an AR game, a re-mastered interactive game of the legendary Japanese comic Slam Dunk, popular in China.

The AR game invites a customer to transfer personal images into part of a digital comic and allows online sharing. This will bring data traffic and market attention. The store will constantly find new solutions to engage with customers, and fun more than the AR game is on the way. Alibaba’s power in global intellectual property cooperation will back the ecosystem’s integration of entertainment for digital marketing.

During the early stage of the Tmall-Intersport mega store operation, customers’ curiosity is a natural catalyst for branding and marketing. The window display and AR will not only bring customers’ convenience but also increase a customer’s willingness to try on and purchase products.

Following guidance displayed on the screen, a customer can project her own images to the digital comic story by striking designated poses (Image credit: Alibaba Group)

AI assistant and smart mirrors

Mirrors with smart built-in cameras can detect a product the customers are trying or holding. The mirror will automatically display the product’s information including the name, in-store item code, price, available colors and sizes, and highlights and descpritions. Personalized fashion advice is also available.

A shoe mirror displaying product information, d fashion advice, and the item’s Tmall QR code (Image credit: Alibaba Group)
An interactive dressing mirror when detecting no products (Image credit: TechNode/Runhua Zhao)

The AI assistant will track everything picked up. If a customer logs in her Tmall or Taobao account before making any selections, the system will also add her what they picked up to Tmall’s data system and the customers’ browsing history.

Operation management: smart shelf and cloud service

Shoes on a smart shelf are labeled with bluetooth tags. Once a customer takes a shoe off the shelf, sensors can detect the movement and an interactive wall screen next to the shelf will display information on sizes, colors, and functions.

The store hopes the technology will provide feedback on customers’ shopping behaviors and transfer related data for inventory and turn-over strategy.

A bluetooth tag on a Nike shoe (Image credit: TechNode/Runhua Zhao)

Through an interactive cloud shelf, customers can browse extra products that are available at Intersport’s Tmall store not on display physically. The technology will expand customer-visible product assortment from 1,500 (the physical store’s maximal display capacity) to 10,000. All browsing done on the screen will also be recorded.

The cloud shelf displaying all available Intersport shoe items in China (Image credit: Alibaba)

Customers can expect a 2 hour delivery of any item ordered via QR code or on Tmall, if they live within 5km of the store. The store is already practicing the “A shop at the front and the warehouse behind” (前店后仓) model even in central Beijing.

According to Alibaba staff, Alibaba’s partners produced the hardware for the store. Alibaba took part in R & D including the design of an interactive showcase room for shoe lovers.

An interactive shoe lovers’ room supporting personalized poster-making and social media sharing. (Image credit: Alibaba)

TechNode noticed that some smart sensors are from Urbbec, a 3D sensor startup that secured over USD 200 million funding led by Alibaba’s affiliate Ant Financial on May 21.

While the cost of the devices remains unknown, Jessica told TechNode, “In the beginning, there will, of course, be some investment.”

“But we welcome brands to do their own calculation. Tmall helps with more than supply chain, retail tech, logistic, and payment solutions,” she added. “We also help with consumer insights, branding, and all industrial and product life-cycle things within Tmall’s reach. As the smart operation of a Megastore as such processes and Tmall’s new retail increases scale advantages, cost per unit will decline. In just a few months, a brand can get their investment cost covered.”

Business shifts

For brands entering China, figures like fiscal revenue made in other parts of the world as well as predicted market size are very attractive. In real business battles, nevertheless, the figures have no strict correlation with business performance in China. It’s the practical business operation, branding, and strategies that truly matter.

Victor Duran, CEO of Intersport, knows it well. Currently, Intersport’s online Tmall revenue contributes 50% of the company’s revenue in China. As a newcomer to China, Intersport just opened its 24th store. Victor said he is confident with Intersport’s collaboration with Tmall. The company hopes to set up more than 100 stores around China in the coming years, all with Tmall’s digital support. And he expects the Chinese market to contribute around 20% of Intersport’s global revenue in the future.

In fact, the current shop’s location was based on Tmall’s data calculation and strategic recommendation.

As Jessica and her team proudly mentioned, beyond store data, Tmall is also able to show the best location suggestion by analyzing regional customer profiles, commerce vitality, and purchase habits. The company’s data pool contains everyone who has any Alibaba e-commerce accounts or Alipay.

“Within a 5km radius, Tmall’s registered users will receive a text message notifying them a Tmall co-branding partner’s opening ceremony,” Jessica said.

“Tmall has got all channels ready for us. These include digital and data management of inventory and customer profiles. The also offered us guidance to 3 million target users’ insights, and we leveraged a Chinese affiliate’s 10 million data collected in 14 years,” Intersport’s China Northern General Manager told TechNode.