The world’s largest online shopping event this year showed that the future of retail in China, while entrenched in cyberspace, isn’t doing away with the trips to the mall.

Sales on Singles Day – like Black Friday or Cyber Monday, but bigger – in China soared to a record US$30.8 billion, topping last year’s total by 27 percent.

However, year-on-year, this marked the slowest growth in the 10-year history, a confident signal to retail landlords that have been facing challenges from the rise of e-commerce, says Paige Chuang, senior manager in JLL China’s retail leasing team.

Slowing sales growth means “more online stores are looking for physical space to capture new customers,” she says.

Singles Day falls every year on November 11, and is known as Double Eleven in China. It started life as a kind of anti-Valentines campaign to entice singletons into parting with their money, but has since become a world-beating consumer event synonymous with the growth of China’s middle class. Chinese consumers flocked to shopping centers in the three weeks leading up to the mammoth sale to nab discounts.

“A growing share of the festivities are taking place in the bricks-and-mortar stores,” says Warner Brown, head of retail research, JLL China.

A leader online moving offline

Clothes, sportswear and equipment, cosmetics, and electronics topped the shopping lists of online consumers. In-store, shoppers spent money on food and beverage, discounted gym memberships, underwear, and entertainment such as cinema tickets and children play areas, all of which ran special promotions, according to Brown.

Retail behemoth Alibaba, China’s largest company, “set up pop-up stores offering discounts that can be redeemed in physical stores, and other promotions that get the throngs of shoppers buying things not just online but in shopping malls as well,” he adds.

Starbucks ran one of the highest-profile online-offline campaigns just months after announcing a partnership with Alibaba. In-store promotions boosted sales in its coffee shops across 11 Chinese cities while incentives through Alibaba’s food delivery app, Ele.me, helped to lift online orders over the weekend.

From its start online, Alibaba has moved into physical stores. It acquired InTime, a department store chain, in 2017. Its Hema supermarket is the manifestation of the online-offline trend, a place where shoppers enter a store, buy groceries and walk out without speaking to another human being.

“The online-offline trend has already been building momentum for a couple of years and the physical retail sector now has good grounds for optimism,” adds Brown.

Encouraging buying not browsing

Cynics label Singles Day as a marketing campaign. And slowing growth was cause for concern in some quarters of the economy, where China’s sluggish stock market and the ongoing U.S. trade war threaten progress.

But it’s a mistake to view it as merely consumerist spectacle, says Brown.

“Chinese consumers are growing richer and more sophisticated while remaining open to new ideas,” he says. “Shopping malls operators are getting more skilled at cultivating experiences and running promotions to draw foot traffic.”

Alibaba has deemed the online-offline trend ‘new retail’, the strategy credited with breathing life back into physical retail in the words second largest economy.

Retailers with an established online presence can profit in-store with one valuable commodity: data. By profiling online shopping habits and making judgments about everything from site selection to stock and promotions, they can capture consumer interest without wasting space.

This blended, technology-first approach should serve as a lesson to retail landlords and developers worldwide, says James Hawkey, director of retail JLL China.

“Retail in China has already toppled the meaning of traditional retail; it is no longer simply about providing a place to buy or sell goods and services,” he says.

This article was originally published on JLL Real Views, JLL’s news site exploring the big trends shaping the real estate industry’, with ‘Real Views’. www.jllrealviews.com. Reprinted with permission.