Wanda and Tencent have announced a joint venture to bring “smart retail” to revitalise Wanda’s vast portfolio of shopping malls.
We are used to hearing about the identity crisis in malls and the High Street with the rise of online retail. However, in China the big players are going back to bricks and mortar, bringing technology into shopping centres to develop a “new consumption model” which could be a lifeline for retail IRL.
Wanda Internet Technology Company
Wanda Commercial Management Group is the world’s largest brick and mortar commercial entity. The Group had 235 Wanda Plazas in operation at the end of 2017, with a total retail space of 31.51 million square meters and annual customer traffic of 3.19 billion visits.
The new venture with Internet giant Tencent – Wanda Internet Technology Company – will integrate online and offline retail. Tencent brings to the table WeChat, the largest social media platform in China, and in return gets back access to Wanda’s billions of offline shoppers.
A third company is involved in the joint venture. Gaopeng is a Tencent-invested company in the electronic invoice business.
Ownership of the jv is broken down with Wanda Group’s Wanda Commercial Management Group (51%), Tencent (42.48%), and Gaopeng (6.52%). Qi Jie, President of Wanda Commercial Management Group, is to be the chairman of the new JV, while Gao Xia, CEO of Gaopeng, will be CEO.
In a statement Wanda said, “For Wanda Plazas, the cooperation will bring in enormous online traffic through WeChat and other platforms, enabling them to undergo smart upgrades, build a robust membership system, and increase the company’s overall value.
“The cooperation will offer Tencent access to huge volumes of offline traffic and varied consumption scenarios, directing its online traffic and technology into its offline resources and accelerating the implementation of Tencent’s smart retail strategy.”
Alibaba – More Mall
Alibaba Group, China’s largest online sales platform, announced in October 2017 that it would open a mall.
In an effort to integrate its online and bricks-and-mortar resources, the new retail outlet includes new retail technologies like virtual fitting rooms, physical versions of popular internet shopping brands and entertainment options.
Tencent has been keen to catch up with Alibaba who have already started investing heavily in retail IRL. Between them the two companies, worth a combined $1 trillion, have spent more than $10 billion on retail deals since the start of last year.
Although smart malls are not anticipated to generate huge profits immediately, it is anticipated that there is significant future earning capacity. Good news for Wanda Commercial who have tried but struggled to create their own in house technology to revitalise their retail offering. The pairing with Tencent seems like a smart move for smart retail.