Retail’s “new normal” under Covid-19 – observations from JD.com

My last piece for Essential Retail was focused on why we still need offline stores in an online world. At that time, the majority of China’s office workers were working from home, and people largely stayed in their homes, with the exception of going downstairs to pick up eCommerce orders or food deliveries. My core argument was that offline stores serve as experience zones – or “wonderlands” – to connect brand and consumer, consumer to product, and even for consumers to connect with one another. I still believe all of that.

That said, in China, we are adjusting to a “new normal”. JD E-Space resumed operations last February, and conversion rates have been strong. I’ve just wrapped up home quarantine, and am no longer confined to my apartment compound, but it’s still mask, gloves and safety goggles on the ride to work. The electric lunch box I purchased for the return to work has proven a popular choice. Our data team found there was a 528% percent month-on-month growth in sales in late February.

With the alarming and aggressive spread of Covid-19 around the world, there has been some interest in what has been learned in China, as other nations brace for the virus’ impact on their health, first and foremost, as well as jobs and economies. To be clear, there is no advice in this column. Rather, here are simply a few observations about the “new normal” of retail in China, based on the JD.com experience.

Offline stores go online

Early on in the response to the virus, with the operative to reduce human contact as quickly as possible, bricks-and-mortar stores shuttered (temporarily) one after another. The Chinese New Year period is meant to be the peak sales period for the clothing industry, as traditionally it is believed that the New Year should be greeted with new clothes. With Covid-19, even before stores officially closed, many stores and their employees suffered from a lack of foot traffic out of fear of cross-infection. JD worked with store employees to help them create cloud stores through the mini-program (app-in-app) program on Tencent’s WeChat (China’s most popular messaging app). Through the stores, shop assistants can share and sell products with target consumers online. Store owners can even review and reward good performance. By 10 February, 2,096 shop assistants had already joined the platform. In just seven days, sales reached nearly RMB 10 million.

Resources from offline go online

The abrupt and rapid rise in eCommerce orders, and the shuttering of offline establishments such as restaurants and movie theaters resulted in a supply and demand imbalance. Not unlike the clothing industry, Chinese New Year is peak season for the country’s restaurants. According to China’s National Bureau of Statistics, in 2019, 15.5% of the country’s restaurant revenues came from the Chinese New Year season, but 93% of China’s restaurants were temporarily closed due to the impact of Covid-19. Restaurant workers were out of their jobs, but delivery and warehousing and other jobs struggled to keep up with the sheer volume of online orders. JD’s offline supermarket 7FRESH created a program to hire workers from these types of establishments for temporary jobs at 7FRESH. JD also partnered with one of its invested companies, Dada Group, to offer 35,000 temporary and full-time positions, of which 20,000 came from JD Logistics, covering positions, such as warehouse workers, pickers, couriers, and drivers.

Entertainment meets liquor sales

In the name of health and safety, Covid-19 resulted in an abrupt loss of in-person interaction. As a result, many activities went online, from workout classes and cooking classes, to book signing tours, and even clubbing. JD teamed up with China-based Taihe Music Group and international liquor brands, Budweiser, Rémy Martin, Carlsberg and Pernod Ricard to host a three-hour live show through JD Live and introduce liquor products for viewers to buy with a single click. During a single show, sales of whiskey products from a single partner increased eight times compared to the previous day, helping liquor brands who lost some of their offline sales channels during the epidemic. 

Retail and logistics technology become key aid tools

One of the biggest demands, especially early on in the epidemic, was for actionable information. Many feared a visit to the hospital, but had a range of questions about how to protect themselves from the virus or how to tell if they have concerning symptoms. Using the technology that was originally developed to provide sentiment-sensing chatbot customer service for eCommerce, JD created an AI Smart Epidemic Assistant where users can simply input their queries and receive educated, sensitive guidance. This is just one example of how technology proven in a retail scenario can be used to provide support that extends far beyond retail.

There are certainly more trends that can be explored. More to come next time.

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