Singles Day: Solution to UK retail woes

Black Friday and Cyber Monday have reached unprecedented levels of hysteria in recent years. They're an attempt by the retail industry to drive sales amid falling Christmas season performance that fall somewhere between canny marketing and desperation.

However, a new phenomenon is in town. On Nov 11, Chinese shoppers were treated to Singles Day - the annual shopping extravaganza with a romantic twist. The event has become something of a retail holiday, with thousands of eager shoppers flooding to Chinese websites and stores to pick up a bargain.

Singles Day has evolved from a celebration of single life to become one of the largest days of online shopping in the world. By emulating the success of Cyber Monday, Chinese companies have enjoyed a huge surge in online seasonal spending.

This year, Alibaba marked Singles Day with a four-hour event in Shenzhen that featured David Beckham, Scarlett Johansson and company founder Jack Ma performing a magic trick for the crowd. Sales smashed the Alibaba's 2015 record by 3:30 pm and reached $17.5 billion (16.5 billion euros; 14 billion) at the end of the day.

The Singles Day sales figures are a testament to the growth of the Chinese retail industry - representing a shift in the epicenter of consumer spending from West to East. For the past several years, Alibaba has sold more products in 24 hours than Black Friday and Cyber Monday in the US combined. The Chinese retail industry is estimated to reach the $1 trillion mark by 2018, eclipsing a United States market that is set to hit $500 billion the same year.

If European and American businesses are to have any hope of keeping pace with China's retail market, they must be willing to emulate the practices that have fueled the expansion of the Chinese retail industry.

This is a story of digital strategies being deployed quickly and effectively. China's success is based on a willingness to embrace advances in new technology, fearless firms that are more receptive to cutting-edge innovation and the absence of complicated corporate legacies that frustrate the potential for growth.

A recent McKinsey and Co. report found that only a small portion of Chinese e-commerce takes place directly between the consumer and retailer. Instead, most occurs in the digital marketplace - a 21st century bazaar where consumers forego a single retailer to deal with large numbers of smaller merchants.

Alibaba Group is one such provider, running the consumer-to-consumer shopping platform Taobao as part of wider retail strategy that includes group shopping and price comparison websites. The group also owns the cloud-computing platform Aliyun, which provides the e-commerce giant with data mining and processing capacity. An emphasis on data sharing is also present in the company's wider business model, with Alibaba managing the distribution of information between its companies to predict consumer behavior and offer a tailored retail service.

Large Chinese retailers are also often younger than their European and US counterparts. While this does not provide Chinese firms with an inherent advantage, younger firms with millennial founders have a tendency to disrupt established business practices and provoke growth in their respective industries.

Innovative British retail tech companies are working with Chinese retailers to fuel this change, but the crucial difference between Chinese retailers and the legacy giants based in the US and the UK is understanding of the new consumer battleground. Black Friday aims to bring customers into a store, but Singles Day takes place online. The world's most innovative retailers are focusing their efforts on dominating the smartphone - a pivot that will define the next generation of retail success.

There is a lesson for the British market here. It's time to shake off the short-termism of rental costs and weekly targets, and turn to online strategies that bring customers online. If we don't, London's position as a global shopping capital will become a thing of the past.

The author is founder and CEO of e-commerce fashion platform Metail.

(China Daily European Weekly 12/02/2016 page12)