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What’s new in new retail: Wang Xiruo, CTO of Hema Xiansheng
New retail is no longer fresh now.
When Jack Ma first proposed the new retail concept at the company’s annual Yunqi Conference in October of 2016, he said: “There is no e-commerce in the next ten years or twenty years, there’s only new retail.” As a result, almost all businesses began to call themselves new retailers. Some say new retail is the combination of big data and retail, some say it is the merge of AI and retail, while others say O2O is new retail. So what is new in the new retail sector? What does the future of new retail look like?
Wang Xiruo, CTO of Hema Xiansheng, discussed the role of technology in the future of new retail on stage at TechCrunch Hangzhou 2018. Wang has been working in Alibaba for ten years. Wang was part of the team that built Tmall from the ground up. After spending some years in the online retail sector, Wang decided to join Hema Xiansheng (Hema) where she witnessed the transformation of the traditional retail sector.
Wang said the essence behind new retail is “to apply the idea and technology of the Internet to restructure people, products, and place in an all-around way—from the place of origin to the hands of consumers.” For people, Wang said, consumer’s online and offline behavior and consumption habits will all be digitalized. And through big data analytics, retailers will be able to customize their services according to their customer’s needs. For products, “by restructuring the supply chain system and service system, we can reduce costs, improve efficiency and provide more quality-assured products.”
As for the place, “the principle is to separate the online from offline, and consumers get the same shopping experience through different means.” Wang said these three elements—people, products, and place—will be digitalized based on the consumer experience and the supply chain. And the foundation behind it is the architecture of the internet, cloud technology, big data, IoT, and algorithm.
In the age of new retail, the consumer’s consumption footprints online need to be recorded and analyzed. Wang Xiruo says Hema is based on a distributed architecture, “and this architecture is combined with a decentralized traffic and a decentralized logistics system.”
Wang explains that Hema is using technology to digitize the entire process from membership to commodities, supply chain, logistics, and distribution. After restructuring the system, a new retail operating system is formed—this new system called “retail cloud” which is highly integrated with businesses. Wang said this new technology can benefit traditional retailers and help them upgrade their businesses to join the new retail bandwagon.
From the angle of data algorithms, Wang Xiruo said that the Hema has realized the fully automatic supply chain replenishment using algorithms and data to make intelligent predictions and sales forecasts. Through data and visual records of consumers in store, Hema is capable of making personalized suggestions. Wang said Hema’s 30-minute delivery service is an example of how they are utilizing algorithms and data.
IoT, currently a hot industry, is also one of the closest ally of the retail industry. Wang Xiruo said the essence of the IoT is to establish a seamless connection between the digital and the physical world. Whether it is consumer experience, supply chain or delivery—all require a large number of smart IoT hardware equipment. Hema has explored in this area, Wang said, for example, behind Hema’s self-service POS is actually an intelligent hardware system that “acts as the consumer’s intelligent shopping assistant,” which improves the efficiency of the checkout process. Wang added that Hema’s electronic shelf label is capable of making real-time price changes via the cloud, which lets consumers see real-time prices online and offline.
New technologies are disrupting the traditional retail industry. Large retailers are forced to adopt the new retail business model. What will happen to the new retail business in the future? Wang Xiruo, who has been in the business for years, is unsure. Wang summarized her thoughts into the following three points: First, “the future will be more open and data sharing will bring about resource sharing.” Second, data itself needs to undergo a transformation—from data to algorithm to AI. Data will have to undergo several phases from being “identifiable, definable, operational, optimizable, to scalable. Third, the age of data has just begun. The ecosystem has not yet formed. Cloud technology, smart hardware, smart chips and AI technology are still in their early stage of development. The era of data technology (DT) in the future is when digitalization and businesses are highly integrated, and so, Wang said, this is a new era full of opportunities and challenges.