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The virtual mall and shopping from home

For commercial property developers and mall operators, the changing face of retail in China presents them with a dilemma; in that many luxury brands have already made it clear that they will engage in little or no further expansion in China, so their reliance on the high profile anchors for their ground floor space is now in question. They also must recognise that the consumer habits are and will continue to change rapidly, and that unless the shopping experience is enjoyable, whether purchases are made or not, they will not visit a mall. The offer of F&B is always a carrot as far as the Chinese consumer is concerned, but spend on food, has no direct relationship to spend on product from retail space in the same location.

They are also now under threat from e-commerce sites reducing the overall spending in the hard retail environment, and cannot afford to become purely a showrooming destination rather than a purchasing one. So shouldn’t they recognise that if their mall was to become a showroom, they to are being presented with an opportunity to host their own e-commerce site from which to sell the products of the brands under their roof and in fact any others? Most malls already have their own website, so adding an e-commerce function would not be a major technical or marketing challenge. For the mall operator, they achieve economies of scale by representing a group of brands, and creating a platform with a locally recognised and established name, that could then be made available to other brands that do not want or cannot afford a physical space in that particular location in China.

Technology also affords a further option that offers potential in the next few years to the mall operator or the luxury brand; the virtual mall or retail store. A space that can be created to look and feel as though the consumer is in an actual mall, but in the electronic rather than physical format. Technologies exist in their early form to scan the interior of stores and replicate them electronically online or on a mobile platform, thus an entire mall, shopping street or individual store could be recreated to extend the current e-commerce experience and make it more representative of a physical one. Consumers could sit at home with friends and enter a mall, visit stores and make purchases without the hassle of traffic jams, delays on public transport, or aching feet.

I expect China to become a leader in new retail experiences that revolve around mobile and disruptive technologies. Consumers are not fased by using the latest technology, and in fact expect changes to happen quickly. They spend significant amounts of time on their phones and tablets which are regarded as facilitators in their lives, and retailers and mall operators will adapt to their expectations and practices or they will die. From early 2000 was the decade of physical luxury retail in China, and we are now at the cusp of a change to mobile luxury retail as the principal means of interface between the brand and their consumers. The physical space will not go away because it reinforces a brands credentials, but like a theatre, its there as the supporting space in which the principal players, the product and the technology work together…

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