It's no longer just about counting online clicks. Retailing is now about clicking with consumers

After nearly a decade of rapid growth, online retailing is beginning to show cracks in a sales format that once seemed bulletproof.

Where once traditional bricks-and-mortar stores were rushing to embrace the online selling boom, vendors who got their start in cyber-marketing are now starting to embrace sidewalk retailing.

After years of chasing clicks to measure success, brands born on Tmall – turbocharged by favorable reviews on the Xiaohongshu (or RedNote) lifestyle platform and on Douyin, China's version of TikTok – are now opening physical stores for the first time.

The reasons are varied. Online traffic is plateauing. Costs of attracting users are climbing. Building customer loyalty through a screen is proving harder than ever for some brands. And consumers themselves are showing a preference for physical contact with products before they buy.

The dynamics of the retail environment are changing.

In March, China's National Bureau of Statistics reported that online retail sales of goods in January and February rose by just 5 percent from a year earlier, sharply down from the 14.4 percent growth recorded during the same period in 2024.

Livestream e-commerce in China is also losing steam. According to data from iMedia Research, the market's growth rate plummeted from a staggering 600 percent in 2018 to 40.5 percent in 2023 and is projected to have fallen to just 15 percent in 2024.

Chinese consumers, especially young families and Gen-Z shoppers, are craving more personal interaction with product bands beyond the "add-to-cart" option.

At the same time, offline retailing is undergoing changes, with signs of recovery in what was once considered a stale form of marketing.

In late 2024, Ningbo-based apparel giant Youngor Group spent about 7.4 billion yuan (US$1.2 billion) to acquire department store operator Intime Retail, aiming to strengthen its offline reach.

Around the same time, Guangzhou-based Miniso, a variety store chain specializing in household items, invested 6.27 billion yuan to buy a 29.4 percent stake in Yonghui Superstores, betting on supermarket resilience in the offline space.

The shift in trend is also structural. According to NielsenIQ, offline retailing in China will still account for around 70 percent of retail sales in 2025, but it will be led by smaller shops, fresh goods outlets and value-driven formats. Community supermarkets, neighborhood convenience stores and lifestyle malls are replacing traditional department stores as the venues consumers frequent most.

"As the retail landscape becomes more fragmented, companies must sharpen their understanding of evolving channel dynamics and respond with precision," said Wu Yihua, general manager of NielsenIQ's retail division in China.

Against this backdrop, some indigenous digital brands are rethinking their channel strategies.

In July 2024, online children apparel brand Allblu opened its first physical store in Shanghai's Columbia Circle, a historic urban renewal site that has evolved into a cultural and retail hub known more for its bookstores, greenery and neighborhood ambience than for high-volume foot traffic.

It was a calculated choice. Rather than chasing a wide field of scattered buyers, Allblu was looking for proximity, for a space that felt like part of everyday life.

"While China's e-commerce infrastructure is among the world's most sophisticated, a big part of retail sales still occur offline," said the brand's co-founder CY.

The decision to go offline stemmed from a growing recognition of what digital channels couldn't offer, especially in apparel, a category that depends on fit, fabric and physical feel, CY said.

Online retail has already perfected the art of goal-oriented shopping: Consumers find what they want and buy it quickly. But that model leaves little room for emotional discovery.

"Shopping is no longer just about fulfillment," CY said. "It's about stumbling onto needs you didn't know you had."

Allblu outlets are sited near schools and wet markets – points where people in communities go to socialize as well as shop.

But this kind of low-pressure marketing doesn't come cheap. Rents, staffing and operations add new layers of cost.

In China's biggest cities, retail rents in premium community malls can reach up to 2,000 yuan a month per square meter, and that's before factoring in utilities, decor and staff training.

"China is already a highly competitive market," CY said. "There's no sales channel that's cheap anymore. What matters is do small things with great love, without thinking like a spreadsheet."

Brands are taking different approaches in their return to the sidewalks. Yeswood, a solid-wood furniture company born online and known overseas as Fancyarn or Yesmu, was operating 1,000 offline stores nationwide by the end of 2024, ranging from large flagship showrooms to smaller style-focused stores.

Moving offline was less about presence for presence's sake, and more about addressing the core limitations of selling furniture online.

Even though its online business topped Tmall's home-furniture category during major e-commerce festivals, the tactile nature of solid wood products, like texture, craftsmanship and spatial fit, meant that many consumers wanted to see furniture personally before they bought anything.

"No matter how good the online presentation, the feel of real materials is irreplaceable," said Hong Yang, Yeswood's director of business development. "After seeding interest online, you need offline venues to capture hearts and convert that into sales."

The company's rapid embrace of offline selling came with a price. Some early stores struggled with inconsistent layouts and outdated displays. And managing multiple store formats added operational complexity.

"Expansion is not just about the number of stores," Hong said. "It's about ensuring that every store, whether in Shanghai or in a small county, delivers a coherent experience."

Fashion labels are also venturing to offline from online.

Los Angeles-based designer brand Nana Jacqueline, popularized online through celebrity endorsements, opened its first offline outlet in Shanghai on Huaihai Road in 2023, six years after entering China. It is now planning its first full retail store in Beijing.

Other online-born brands, such as AmandaX, Wooha and Twoi Design Lab, have opened flagship stores in top-tier shopping malls.

But the risks are real. Calvin Luo, a once-promising designer label that aggressively expanded into malls like Chengdu IFS and Beijing Taikoo Li, closed all its offline stores by early 2025, citing the mounting pressures of fast-paced retail and high operational costs.

For fashion brands especially, where rent is high and short-term turnover is difficult to guarantee, the transition from online buzz to sustainable offline presence demands more than celebrity marketing.

"Offline retail not only comes with high costs, but also demands strong operational capabilities," said fashion industry expert Zhang Peiying. "Many brands, when moving from online to offline, either expand too fast under pressure or dilute their positioning. For those aiming at the high end, a cautious, measured approach is critical."

In China's shifting retail landscape, getting offline is no longer the challenge; staying offline is.