At a glance
- The onslaught of e-commerce requires traditional retailers to adapt their business models.
- Wanda, China’s largest commercial property developer specializing in large shopping mall complexes, has a track record of superior execution, powered by a technology engine that enables it to implement at scale.
- To stay competitive, it is seeking to reinvent the shopping experience in its malls and to leverage digital to provide unique services to its tenants.
- Wanda’s two-pronged approach provides insights for companies operating in a world where offline and online retail boundaries are blurring.
Chinese conglomerate Wanda Group, headquartered in Beijing, is the country’s largest commercial property developer and the world’s largest movie theater operator. One of its core businesses is Wanda Plazas – large complexes encompassing shopping malls, cinemas, hotels and offices. To enhance this business, Wanda has expanded into adjacent areas such as cinema chains, film production, theme parks, internet technology, sports and finance. Its competitive advantages include a strong culture of execution and a proprietary technology backbone to support and streamline decision-making processes based on data.
The retail landscape in China, as in the rest of the world, is changing rapidly. With the growth of e-commerce giants such as Alibaba and JD.com, traditional retail is coming under threat. For example, Alibaba, China’s largest e-commerce company, has over half a billion active users in China alone. Wanda, with its core businesses rooted in physical retail, saw the online-to-offline space as an opportunity. But how could it best leverage its existing physical assets and incorporate digital opportunities?
The broader issue
China’s modern retail transition began with the opening up of the economy in the 1980s. In the space of a few decades, small local shops were displaced by large quasi-Soviet style department stores, which were in turn eclipsed by shopping centers in the early 2000s. With physical retail still evolving, e-commerce exploded on the scene, taking advantage of the lack of infrastructure in physical retail to address pent-up demand and bottlenecks. Today, China boasts over 770 million internet users, and almost 70% of internet users also shop online.
In the early 2000s, Wanda began building up its shopping center empire. When retail space in tier 1 and 2 cities became overcrowded, the company found opportunities in tier 3 and 4 cities and expanded. But it had to keep an eye out for the looming competition from e-commerce. Not only were China’s e-commerce giants dominating the online space but they were also foraying into the physical space. The line between online and offline retail was becoming blurred, and now it was a race to see who could successfully navigate the online vs. offline world.
In this environment, to keep its plazas relevant Wanda adopted a two-pronged approach:
- making its offline offerings more experience based
- leveraging the power of technology.