So, China’s retail market is getting more expensive to operate in, and more competitive. Margins are narrow. So what if you could get rid of some of your major operating costs, such as property rental, staff costs, utility bills, or store security costs? How about you do away with all of them? That would do your margins a world of good!

But to do that, you would need to do away with stores.

So yes, we already have online supermarkets in China, which achieve this end. E-commerce grocer Yihaodian (1??), now significantly part-owned by Wal-Mart, is a prime example. But things have just taken a step beyond, and Yihaodian has just announced plans to bring its online, virtual stores into the real world!

A few days ago, Yihaodian announced plans to open 1,000 virtual stores across China in vacant city areas, by employing augmented reality (AR) technology to literally bring its online stores onto the streets. This new concept in virtual stores is to be called “Unlimited Yihaodian (??1??)”. Each of these “stores” will have a sales area of 1,200 square metres and stock about 1,000 virtual products.

grocery shopping online in China

Virtual Grocery Stores: how does it work?

How is this going to work? Say you have a smartphone, and you have downloaded the relevant app. You will then be able to go to a big empty space, and viewing through your smartphone, a virtual store will appear.

As you walk into the “store”, product pictures will appear on virtual walls, with product information. You see something you want to buy, you click on it – just as you do at the regular online supermarket. Then, when you have finished your shopping, you check out and pay by credit card. Your purchases will be delivered to your home.

This is a step up from Yihaodian’s virtual store concept trialled on Shanghai’s metro system previously, where posters of products pasted on the subway pedestrian tunnel walls could be scanned using QR codes by smartphones to perform a similar function. Tesco has trialled a similar QR-scanning concept in South Korea. We talked about both these examples in our recently published report on Supermarket Retailing in China.

Yihaodian has said its first virtual reality stores will be opened in Guangzhou and Shenzhen.

Creative agency: Ogilvy & Mather Advertising/Shanghai.

You can find out more about the rapidly changing grocery sector in China here, or contact us for more information about how Mintel can help your business.