Traditional retailers guarding territory on China's "Cyber Monday"

Traditional retailers in China are having to be more creative in order to prevent e-commerce traders from foraying into their territory.

The fierce competition escalated on China's "Cyber Monday," an annual 24-hour online shopping spree on Nov. 11. In 2009, the country's largest online business-to-consumer (B2C) platform Tmall launched its first sales campaign on the day. Tmall is sales platform under the Alibaba Group, as is Taobao.

By 1 p.m. on Monday, sales at Tmall and Taobao exceeded 19.1 billion yuan (3.1 billion U.S. dollars), the total sales volume both achieved last year. The figure is triple the amount of sales at 110 major Beijing bricks-and-mortar stores during the seven-day national holiday this year.

"It's a matter of die or change," said Hu Haibo, an operational manager of Heifei Department Store Group in east China.

He said with rent and labor costs rising, and e-commerce starting to optimize shopping experience in addition to price wars, traditional retailers are forced to change quickly.

The group started a sales promotion last Friday till Monday in all of its 16 stores in order to attract customers.

The stores promised they would sell brand name clothes at a price no higher than those at the brands' online flagship shops.

"The promotion strategy has been a success because many customers enjoy trying clothes on, buying them and having them immediately," said Hu.

Similarly, department stores in Beijing such as New World, Grand Pacific and Hanguang offered major discounts.

ONLINE OFFLINE COOPERATION

Other traditional retailers combined offline and online sales rather than waging wars against online shops.

Beijing's Joy City Mall in Chaoyang District announced that it would serve as a fitting room for Internet users from Nov. 1 to 11, providing customers with item codes to make it more convenient for them to purchase goods online on Monday.

Even if customers do not buy any goods in our mall, they may spend money in restaurants, theaters, cafes and playgrounds, and we still can make a profit, said a Joy City staff member.

He added, "Providing an excellent shopping experience and service is the best way to win back customers."

Food and beverage shops account for 18 percent of shopping mallmerchants in Beijing, according to data released by DTZ, a global property services provider.

It has become the norm for newly-opened shopping malls to reserve over 35 percent of its commercial activities for catering services, according to DTZ.

Catering and entertainment businesses are least affected by e-commerce, because customers have to eventually come to bricks-and-mortar shops for end consumption, according to Zhang Weiguo, director of the Institute of Economics, Shandong Academy of Social Sciences.

Zhang believes traditional shopping malls will focus more on catering and entertainment sectors in their future, which feature lower risk and quicker earnings compared with other sectors.

Other retail giants want a piece of the pie by going online.

Household appliances giant Suning chose to hold the first O2O (Online to Offline) shopping festival starting from Nov. 8 - 11, three days before the shopping spree, vowing to synchronize items, prices, payments, services, deliveries and other shopping experiences accessed both on its website and in thousands of chain stores around China.

"E-commerce is upending traditional thinking, management and business models," said Sun Weimin, deputy chairman of Suning.

Customers can pick their choice in one of Suning's stores, avoid long queues in front of the cashier by paying at its online store and take the goods home immediately.

"At the end of the day, there is no distinction between online and offline. All stores will become a part of online retailing," said Wang Jian, chief technology officer at Alibaba.

From Friday to Monday, Suning's more than 1,600 stores received an average one million customers, amounting to a quadruple increase year on year, said Jin Ming, Suning's CEO.

Jin added Sunning's offline sales in Shanghai increased 300 percent while trade through mobile applications saw a tenfold increase year on year.

Observers said online and offline business models are never opposites, instead they are closely related. Their combination is a practical requirement for better shopping experiences as well as commercial innovation.

"The O2O business model not only provides consumers with real shopping experiences and multiple shopping options, but also allows them the convenience of online shopping," said Chen Hua, economics professor at Shandong University of Finance and Economics. "We can expect more in the near future," said Chen.

Meanwhile, traditional department stores are still looking on the bright side despite the intimidating expansion of e-commerce.

"Our customers have been growing up and getting old with the store. They have feelings for us, as we have for them," said Hu Haibo.

Hu said his store is constantly searching ways to repay loyal customers.

For Feng Xiao, a white-collar employee in Beijing, spending quality time with her family shopping in stores is precious which she would never give up.

"It feels totally different if I sit in front of a cold computer screen all by myself -- especially on special days such as Singles' Day," Feng said.