Why this JD.com exec still believes in physical retail

“I believe the endgame is still the co-existence of online and offline, with well-oriented omnichannel solutions to offer to both the consumers and the brands,” Jiang said during the NRF 2021 Virtual Summit on Fashion’s Digital Transformation.

Jiang said that while shopping centres and department stores in some parts of the world may have closed, in China, they are still expanding. Some have shifted from traditional retail to more experience-driven themes – like opening more food and beverage offerings and centres for kids’ entertainment inside the mall, for instance.

It is with this observation that Jiang said the online and offline world need to co-exist harmoniously.

“I believe there are many experiences which are missing from an online experience. Even with all the augmented reality and virtual reality technology, customers still have this inherent need to interact or experience something,” Jiang explained. “Like for example, a customer would want to touch and feel the fabric, or listen to store personnel tell the brand’s story or talk about the inspiration behind the design of the product.”

“Those would all be missing in an online experience. But of course, at the same time, having a presence online would be more convenient for the consumers to make a purchase and with more frequency,” he added.

“So what we’re doing is bridging the brand’s online and offline presence. We needed to bring consumers to the brand’s offline stores for them to get a better experience.”

JD.com, founded by Liu Qiangdong in 1998, is a Chinese online marketplace headquartered in Beijing and one of the two largest B2C online retailers in China by transaction volume and revenue. The marketplace sells electronics, clothing, accessories, sports equipment and other items that it sources from brands and suppliers directly to consumers.

Preference for luxury brands

Jiang said in the near future, JD.com wants to work with more luxury brands as visitors to the site have actually shown active interest in this category.

“At the peak of Covid-19, consumers of course mainly bought household goods and grocery-related products, but later on, when customers got used to buying online, and also with increased confidence, we have noticed that more and more customers actually started buying more expensive pieces and our luxury category was actually one of the fastest growing categories in our latest 11.11 event and for the entire 2020,” Jiang said.

According to Jiang, in last year’s 11.11 event, JD.com generated over 271.5 billion RMB (US$ 41.9 billion) in sales.

Jiang said during the period, the retailer saw strong growth in “accessible luxury” which he said are brands that are high-priced international brands but are accessible to consumers like Coach or Michael Kors. Jiang said top luxury brands like Prada, Ferragamo, Amaia, among others, also did well.

“We feel it’s very interesting to notice the trend of what customers were buying, initially they were buying standard, more affordable pieces and now, they are buying the more expensive ones,” he said.

Jiang said integrating the brands’ online and offline offerings was a big help to luxury brands last year.

“During the peak time of Covid-19, the senior management of Prada called and said, ‘Look, we still have stores that are open, but the inventory is not moving, the staff are sitting in the stores but there are no customers coming in, so how can we better utilise our staff and also utilise our inventory?’ That’s why we started to think about bridging online and offline inventory, and we actually did the integration very efficiently in just one month,” he shared. The Italian fashion house Prada opened an authorised flagship store on JD.com in 2019.

“What we did was, we put inventory that the customers can only find online and some which they can only find offline. The customers actually have a very strong preference to make the purchase from inventory which are from offline stores, because that gives them the confidence to think it is actually shipped from the Prada flagship store, so that for the consumer, it’s actually authentic.”

Jiang said the retailer has seen changes in consumer behaviour in the past year and intends to continue on working with its partner brands to offer more to customers.

Fashion is always about reinvention

Karin Tracy, Facebook’s head of industry for retail, fashion and luxury, said she was actually quite optimistic about the fashion industry during the pandemic.

“The fashion industry has always been about reinvention and innovation,” Tracy said. “It’s truly in our DNA, and I’ve learned recently that Fashion Week itself was born out of a crisis, and in 1943, editors and buyers came together in New York City and mounted the first one to keep the industry going as war was raging in Europe.”

Tracy said in the past year, the fashion industry again went through a whole other kind of retail disruption.

“Customer behaviour has shifted dramatically, and forced people to rethink how and where to shop and this shock to the retail system was profound, 98 per cent of consumers are trying new consumer behaviours, new brands, new places to shop, and of course, new shopping methods,” she said.

One of the new methods and shopping trends Tracy mentioned was “discovery commerce”, one of the tools that Facebook utilises.

“Discovery commerce is that moment where a perfect product or service has somehow found me,” she explained. “It’s an online shopping experience that’s helping to translate the joy and the serendipity of shopping in the real world all over to the digital space. [It] is an elevated window shopping experience where instead of people finding products, products are finding people.”

Tracy said the global health crisis has made every single consumer become savvier and more sophisticated about buying things online, so the expectation of having a more harmonious retail experience has gotten much higher.

“We call it frictionless,” she said. “Making it as easy and seamless as possible. And this is what every retailer has to be thinking about if they want to be successful moving forward.”

The NRF 2021 Virtual Summit on Fashion’s Digital Transformation was moderated by Retail Connections managing editor Chris Field and was also attended by Tru Fit co-founder and chief customer officer Jessica Murphy.