Welcome to China’s new neighbourhood stores

A new retail model is emerging in China’s residential neighbourhoods as well as in smaller fashion commercial districts and retail complexes – best described as the new neighbourhood store. 

The dimensions of these stores need not be large. The space can be more about the pleasures of experiential retail — in line with current retail trends — encouraging communication with consumers and interaction about fashion. From a brand’s perspective, it’s a chance to experiment and connect. 

Rather than standardised product displays, neighbourhood stores place higher significance on creating a sense of affinity between product and customer and nurturing a special atmosphere. 

The template first appeared outside China. In 2018, Nike launched Nike by Melrose, the first Nike Live experience store, on Melrose Avenue in Los Angeles. Created as a hub for members of the brand’s NikePlus running community, it has the energy of a pop-up and an experimental edge (including automatic vending machines). The store arranges goods according to the shopping preferences of local consumers, adjusting them regularly to respond to purchase data. 

In 2020, Nike opened similar neighbourhood experience stores in Taikoo Hui in Shanghai and Sanlitun in Beijing. Both stores are warm and bright with product displays that are responsive to consumer purchase data, fitting rooms with natural light, a yoga room and a gym. Consumers can immerse themselves in the intimate, relaxing, friendly vibe. The stores also have a neighbourhood community sharing area, a member-exclusive Unlock Box and other in-store special services and products. 

In the Nike by Jing’an WeChat group, a customer service staff member is on duty daily to share the store’s latest news and products. The group description lists expectations for how its members should behave, striving to create a relaxed and friendly community.

Nike by Melrose is a live concept store that sits on West Hollywood's famous Melrose Avenue.

Shanghai’s new neighbourhood stores

Now, this trend is turning local. Chinese online women’s fashion retailer Short Sentence opened its first boutique on Shanghai’s Anfu Road in January, seeking to create a similar atmosphere. In April, the store held a first Next-Door-Neighbour gathering, hosted by representatives from the shop’s retail design team AIM, urban culture platform SandwiChina and guests from the community who shared stories about the store space, life and history in the Anfu Road neighbourhood. 

Short Sentence founder Guan Lin discussed Anfu Road’s status as a Shanghai fashion landmark with a diverse and harmonious atmosphere — the very reason that she chose Anfu Road as the location for the brand’s first physical store. The new 100-square-metre store aims to project the warmth of a neighbourhood shop — slightly set back from the street, it has a small garden installation at the entrance that offers a welcoming contrast to the bustle of pedestrians passing by, providing a space to rest. The store’s layout recalls a workshop space, presented as a gathering place for creative, innovative people.

Nordstrom Local concept stores in New York accept returns from retail rivals such as Macy's and Kohls. 

Also opened this year near Short Sentence is furniture store Cabana, located close by at Shanghai’s Kerry Centre. Cabana has produced a map marking the route between the stores. The map highlights neighbourhood stores that a shopper might pass by on the way, such as Juanjuan Old Tailor Shop, Bank Gallery, Jicheng Watch & Lock Repair and Hongyi Grocery Store. “I chose a bunch of ‘handy stores’, which I think are the ones that save your life,” says Demos Zhu, co-founder of Cabana, discussing the map.

A real neighbourhood needs some real neighbourhood stores, insists Demos, pointing out the barbershop opposite Cabana, which has been there for many years. The shop is only 10 square metres and is not heavily branded: Demos sees this kind of place as key to keeping the street filled with life. “I think it’s hard to find other roads like Anfu,” he says. “I don’t want it to be completely occupied by stores that went viral online,” he says.

Creating a community 

The concept of a neighbourhood store offering an experience is extending well beyond fashion and furniture. Nio House, described as a “lifestyle sharing space”, has been created by electric automobile manufacturer Nio, with branches in several cities, including Shanghai, Beijing, Hangzhou, Guangzhou and Shenzhen. A Nio House has a multitude of rooms for exhibitions, dining, reading and discussion. Nio users can also invite friends for a test drive or to participate in themed House activities. 

Nio House has been developed to bring a stronger sense of community to the Nio brand, which is best known for its family cars. Its customers mostly live in first- and second-tier cities, with 70 per cent married with at least one child. The lifestyle spaces are typically located in urban shopping malls, where families tend to shop. 

The key to a good neighbourhood store is finding a neighbourhood with an atmosphere compatible with the brand. While Anfu Road is a high-profile Shanghai example, another might be Chengdu’s Chunxi Road area. A block full of good neighbourhood stores can really slow consumers down, encouraging them to look around. 

In Shanghai, another street with this atmosphere is Wukang Road, but online hype has increased the footfall of tourists and had a negative impact on the street. Demos thinks that only streets where locals want to shop capture a real sense of neighbourhood. “Of course, young people from outside Shanghai come to Anfu Road too, but we get a lot of locals too – that balance is crucial to getting the store exposure while developing the business,” he says. 

Customers can drop off and pick up clothing at Nordstrom Local concept stores.

A comparison might be made with Nordstrom Local, a merchandise-free concept launched by Nordstrom in 2017, offering digital order pick-up, primarily as support and service units for the department stores proper. These small units aim to tap customers wherever they are out and about — socialising with friends, going out for entertainment or just walking around the neighbourhood. There’s a certain degree of randomness to this, which requires retailers to take risks. While mainstream retail districts and shopping centres attract a certain crowd that can be analysed in advance, a shop in a friendly neighbourhood block may attract all kinds of people. 

The neighbourhood store may evolve as more showroom or digital pick-up space than sales unit. Customers visit for the experience rather than with a particular objective — they garner an impression of products in-store, return home and place their orders at leisure by phone. 

Retail freehold owners and developers can play an important role in encouraging neighbourhood shops in commercial districts. Several stores on Anfu Road are owned by the Shanghai Dramatic Arts Center, while Nio House and the Nike experience store in Shanghai’s HKRI Taikoo Hui are owned by Swire Properties. Similarly, enlightened retail developers around the world are recognising the value of small retail units with a more neighbourly feel. Watch them flourish.