Joe Tsai Alibaba Group Vice Chairman Smiles During a Press Conference Ahead of the 2016 Alibaba Group 11 11 Global Shopping Festival in Shenzhen Guangdong Province China 10 November 2016 Starting From Midnight and Lasting Throughout the Day on 11 November Also Known As Singles' Day Alibaba Group Holds the World's Largest 24-hour Online Shopping Event China ShenzhenChina Alibaba Shopping Festival - Nov 2016Joe Tsai, Alibaba group vice chairman, smiles during a press conference ahead of the 2016 Alibaba Group 11.11 Global Shopping Festival in Shenzhen, Guangdong Province, China, 10 November 2016. Starting from midnight and lasting throughout the day on 11 November, also known as Singles' Day, Alibaba Group holds the world's largest 24-hour online shopping event.

Alibaba Group, which continued its rapid ascent with big sales and profit gains in the fourth quarter, is looking ahead and seeing more potential, both in the Chinese consumer class and in digital commerce.

“On China macro, there is an important secular trend under way,” Joe Tsai, executive vice chairman, told analysts on a conference call. “Chinese consumers are driving the shift of the Chinese economy from an export and investment-led to a consumption-led economy.”

He noted that China per-capita GDP now tops $8,000, up from $870 in 1999.

“People’s basic needs for shelter and food are satisfied, so consumption is moving up the hierarchy of economic needs,” Tsai said. “People are spending more on discretionary goods and services. We believe the growth of per-capita GDP in China will continue for years to come and eventually approach advanced economies such as the U.S. where GDP per capita is over $50,000.”

Tsai said the “traditional thinking that pits e-commerce against physical retail no longer holds” and that the mobile phone is erasing the distinction between online and off-line retail.

He said retailers can sell to shoppers through their phones while they’re in the store, learning more about their customers and how to tailor their offerings.

Tsai acknowledged that “digitizing the off-line retail sector is a very, very complex question,” and he said Alibaba with its vast data troves could help stores.

“Those that are willing to sort of disrupt themselves and adopt changes, working with us will come out ahead and that’s why we’re pushing the strategy of new retail very, very hard,” he said. “We think we’re the only people who have the capability and the understanding and the know-how to execute it.”

The web giant’s fourth-quarter profits rose 85 percent to $1.4 billion as sales increased 60 percent to $5.6 billion.

For all of last year, the company’s annual active buyers on its Chinese retail marketplaces rose 11 percent for 2016 to 454 million with the platforms facilitating total sales of $547 billion — although Alibaba only gets a cut of sales conducted through its marketplaces.

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