Startup Launchpad’s October 2018 Future of Retail conference was jam-packed with valuable content from experts in business and technological innovation. We were privileged to host Dr. William Lo as the keynote speaker who delivered his address “In the era of New Retail, how to drive corporate innovation and long-term growth by engaging tech startups.”
Dr. Lo is quite qualified to speak on the subject, as he makes a living turning innovative ideas into storefront concepts in his position as Vice-Chairman, Chief Financial Officer, and Managing Director Hong Kong of Kidsland, China’s largest toy retailer.
With the ever-rising tide of online retail offering endless selection and breakneck speed shipping, brick-and-mortar toy stores often can’t keep up. After all, Toys R’ Us was suffering enough from competition with online retailers that it filed bankruptcy in 2017, and by mid 2018, began to close all of its US stores. So what exactly is Kidsland doing differently in order to prosper?
The Kidsland Group conducts sales in a wide geographic range with over 200 retail shops in shopping malls, over 500 consignment counters in department stores, chain toy stores, and 12 online stores (on Tmall and JD.com). Aside from a plethora of Kidsland stores in China, Kidsland operates 3 LEGO® certified stores in Hong Kong.
Kidsland also sells toys wholesale to distributors, supermarket chains, and online sellers. By selling wholesale, they make the most of existing distribution channels while lowering their logistics and warehousing costs. By working with a variety of markets, Kidsland is able to access a huge customer base and keep costs down.
The typical Kidsland locations in China are only about 2000 square foot in size; however, these locations typically represent over 30 brands. To maximize their small spaces, Kidsland only stocks the hottest, best-selling toys inside their shop while still selling from a much larger catalog in other venues.
Technology in Stores
Kidsland is leveraging technology to increase the customer experience. Despite the limited space available within the LEGO® certified stores, customers can access the entire available inventory from online partners on smart panels staged within the store. Customers can use the panels to scan any SKU to see what a particular LEGO® set looks like when it’s completed, and to find similar toys, making it more likely that customers buy from Kidsland–not a competitor.
The LEGO® certified stores are also using facial recognition technology to understand purchasing decisions with analytics. One particularly important research goal is to match buying patterns with decision making processes–is a particular purchasing decision led by the parent, or by the child?
The insight gathered from facial recognition has huge implications for store design and inventory staging as the company tries to balance the appeal of the store for both parents and children. For example, the LEGO® stores can identify which products are more likely to catch children’s eyes, and can stock these on lower shelves where they are at their eye level. The same is true for parents; products that are found to be of more interest to adults are situated in higher parts of the store. Through researching customer behavior and demand, Kidsland can keep up with the latest trends.
O2O (Online to Offline or Offline to Online)
Dr. Lo ends his talk with the takeaway that the future of retail is in ‘O2O,’ meaning either online to offline, or offline to online sales models. This is good news for brick and mortar stores that are increasingly warned about the threat of online retail. Successful retail can still be based around physical locations, but these businesses should future-proof themselves by integrating online or technological elements to their customer experience.
Customers still desire a hands-on experience that the LEGO stores and other Kidsland locations offer. However, Kidsland realizes the limitations for growth that can exist inside 4 store walls, so they have made partnerships with other retailers, developed other sales channels, and utilize technology and analytics to understand their customers on a deep level. Any business, from a startup to a corporation, can learn from this model.
Watch the talk:
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