26 May 2021
The Weekly

Despite opening on the cusp of the coronavirus pandemic in December 2019, TX Huaihai Youth Energy Center in Shanghai drew more than five million visitors last year. Unlike most competitors, TX Huaihai is not driven by rental revenue, but by aggregate sales, with shops offered rent-free space in exchange for a percentage of sales. Its curated retail model is based on bringing internet-famous brands and merchants into the real world, with sophisticated data analysis driving decisions and suggesting enhancements to boost performance. The venue doesn’t compete with online retail but serves as a physical location that amplifies it, interacting with the worlds of e-commerce and social commerce to provide a unique and innovative experience for a new generation of consumers. In TX Huaihai’s case, affluent, urban adults under the age of 35, who are largely leaving behind traditional brick-and-mortar shopping in record numbers in search of more compelling experiences, whether online or offline. According to a 2020 Statista e-commerce study, 92% of Chinese consumers shifted to some form of online consumption following the pandemic lockdowns, and 64% of the Chinese population now shops online.

A joint venture between Shanghai Bailian Group and URF (Urban Revitalization Force) Group, TX Huaihai is housed in a six-story building that was formerly home to two big names, Japan’s Isetan department store and Germany’s Media Markt.  The location is one of the most competitive retail districts in the world, flanked by luxury shopping mall iAPM on one end, and the affluent pedestrian zone Xintiandi on the other. A number of major youth-oriented brands — including Nike, adidas, and Puma already have standalone shops in the vicinity, so TX Huaihai needed to look elsewhere for potential retailers, finding an unlikely source in online Taobao stores to tap for its recruitment drive.  E-commerce operators with solid social media followings and track records of strong sales were offered a chance to open pop-up shops for three months, rent-free, with the opportunity to stay on if they hit sales targets. The layout at TX Huaihai is designed to encourage discovery, with a labyrinth of trendy stores recreating the festive atmosphere of a weekend market. One doesn’t go to TX Huaihai simply to make a purchase, but to enjoy cultural experiences with friends.

The social recruitment of niche influencer groups to TX Huaihai has been a fundamental strategy aimed at boosting traffic to stores. Youth-focused community event organizers can take advantage of the ample open space in the front of the mall to host events at little or no charge if their organization meets TX Huaihai’s strict criteria.  Despite the pandemic, there were more than 100 events at TX Huaihai in 2020, and some 180 events have been planned for this year. TX Huaihai also boasts highly sophisticated data collection tools, using cameras and AI visual recognition to detect basic demographic information on consumers and analyse store traffic patterns. This centralized model of driving growth - by delivering innovative experiences that customers cannot get online - challenges the traditional shopping mall model that relies primarily on collecting rent from tenants, and provides a compelling example of how shopping mall retailers can regain customers thought to be lost to online channels.