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How Digital Helped One Chinese Shoe Chain Reverse 13 Quarters of Declining Sales

Belle International once commanded 22 percent of the women’s footwear market in China. But the evolving consumer preference for comfortable, athletic shoes offered by the likes of Adidas and Nike eroded that material market share, toppling the country’s largest shoe retailer to 13 consecutive quarters of declining same-store sales, according to South China Morning Post.

Hillhouse Capital, CDH Investments and a pair of Belle executives put together a $6.8 billion takeover deal last summer to privatize the company en route to reinvigorating the brick-and mortar chain with the digital-first mentality for which Chinese commerce is now known.

Hillhouse founder and CEO and Belle chairman Zhang Lei spoke early on about looking at the shoe-store company through a tech lens, according to Fortune, and focusing on improving the user experience and user interface of Bell’s in-store retail experience. “We view the 6 million to 8 million daily visitors to our stores as DAU, or daily active users,” Zhang said in the Fortune article. Belle, whose brands include Staccato, Joy&Peace and Millie’s, also wanted to overhaul its e-commerce presence and bring it in line with modern consumer expectations.

Beyond making Belle great again for shoppers, Zhang sought to help the company’s 120,000 store associates be more productive and feel proud of their roles. Since the takeover, Belle introduced online-style analytics into its more than 20,000 owned and managed stores. The retailer needed greater visibility into where shoppers were going within its four walls, and what they were or weren’t doing. Heat maps now reveal traffic patterns throughout each store, and provide critical guidance on where to place products for greater exposure and interaction.

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Armed with insights into shopper flow and footfall, Belle also sought granular insights into product performance. The solution: placing RFID tags into shoes and in floormats. The tech shows when a shoe is picked up from its shelf, indicating some level of shopper interest. So if a particular item is handled frequently but purchased far less often, Belle knows that there is some sort of issue with that shoe, or perhaps it’s simply time to take a markdown in order to bolster conversion rates.

What’s more, Belle has gotten into 3-D foot scanning with the goal of matching shoppers with the products that might be the best fit. Zhang envisions mass customizing shoes according to features such as toe size and arch heights, the Fortune article said.

E-commerce is growing quickly in China—it now accounts for 20 percent of all retail sales, and mobile commerce represents 73 percent of e-comm’s gross domestic value. Among nations ranging from the U.S. and UK to Japan and Brazil, only China’s e-commerce trends show the desired “hockey stick”-shaped growth from 2003 through 2017, according to Euromonitor data that venture capitalist Mary Meeker shared in a speech at Recode’s Code Conference. Under Hillhouse’s tutelage and borrowing some of the user-friendly attributes that make digital commerce so popular with consumers, Belle reversed its declining same-store sales patterns into positive double-digit growth within a short time after the takeovers, Fortune said.