Analyzing Alibaba’s sideswipe at US retailers

Brick and mortar retailers are struggling to hold on to their customers in a digital world. Can innovative technologies breathe new life into the industry?
20 April 2018 | 1385 Shares

Jack Ma, Founder of Alibaba, feels the US retail sector needs improvements. Source: AP

Alibaba last week took aim at the US retail sector, labeling it “lumpy” and “clearly not firing on all cylinders”.

In an online post, the e-commerce giant played the prophet of doom, pointing out that over 9,000 US stores closed last year, and another 12,000 are on the chopping block in 2018 (according to commercial property firm Cushman & Wakefield).

It also claimed that US retailers were at a crossroads, unsure as to whether e-commerce was friend or foe. In China, however, the ‘either-or’ question is being pushed aside in favor of the New Retail model, melding the best of in-store and online experiences. The country’s retailers are not torn between propping up legacy processes and trying something new, Alibaba argued.

It makes some valid points. Much of the western retail model is indeed built on legacy systems and there have been recent high-profile failures such as Toys R Us. Nonetheless, there are various disruptive US pure-plays making innovative use of the latest technologies.

Alibaba, for instance, conveniently ignores Amazon, whose Amazon Go cashier-less store concept has seen it move on to the High Street, the place it has already done so much to disrupt.

And there are success stories when it comes to bridging the digital/physical divide. Walmart and Target have struggled in recent years but are now readjusting to meet the new needs of today’s digitally savvy consumers, building their e-commerce operations whilst making the most of their extensive store networks.

“We’re saving customers time by leveraging new technology, and connecting all the parts of our business into a single seamless shopping experience: great stores, easy pickup, fast delivery, and apps and websites that are simple to use,” Greg Foran, President and CEO, Walmart US, recently commented. “We’re serving our customers in ways that no one else can. Using our size and scale, we’re bringing the best of Walmart to customers across the country.”

Target has spent billions on its omnichannel offering; for instance, buying Shipt, a membership-based marketplace and same-day delivery platform that allows customers to place online orders for fresh food and household items from nearby stores. It is also in the process of reimagining more than 1,000 stores across the US by the end of 2020.

Hardware chain Lowe’s also deserves a mention here. It has worked with a startup called Fellow Robots to design and deploy the LoweBot, a robotic in-store shopping assistant. This uses a 3D scanner to detect shoppers and can interact with shoppers by voice or via a touchscreen.

The bot aims to help shoppers find items in-store, answer common questions, display location-based special offers, and monitor inventory, thus helping Lowe’s improve the customer experience and achieve significant cost impact.

Alibaba’s aforementioned online post could ultimately be dismissed as mere mischief-making; it’s hard to believe that co-founder and chairman Jack Ma would write off a country with arch-rival Amazon and Walmart (the world’s largest retailer) in its line-up. Complacency that way lies. And there is no room for complacency in a brave New Retail world.