China Unicom, the nation's second-largest telecom operator, has teamed up with Alibaba Group to set up an interactive and technology-powered store in Shanghai.

Located along Jiangsu Road, the Smart Living Experience Store is a 177-square-meter space that offers an array of electronic products such as smart speakers, drones and air purifiers that are also available on Alibaba's Tmall and Taobao sites.

Wang Jiabin, technology director of Alibaba New Retail, said that the store underlines the company's efforts to seamlessly integrate a real-time, in-store experience with online shopping.

The types of merchandise being sold are determined by big data analysis that tracks shopping preferences among those living within a 5 kilometer radius of the store, according to Liu Xiaopeng, an Alibaba technician.

"To cater to prospective consumers, we've combined location information generated from the mapping service Amap, search histories from the browser UCWeb, and sales figures from Tmall and Taobao, to get a precise picture of the customer base," he said.

By turning on the Taobao app's augmented-reality function, customers can scan the QR codes located near each product to find out more about its features. Items can only be purchased on either of the two Alibaba e-commerce platforms, but customers can choose to take the product home immediately or have it delivered to their homes.

The pilot program is expected to "greatly increase" customer flow to China Unicom's physical stores as customers belonging to the tech-savvy younger generation today are more accustomed to handling telecom-related matters online, said Huang Zhengshi, vice-general manager of the west branch of China Unicom Shanghai.

"The majority of our existing visitors are above the age of 40. We believe this enhanced digital experience would deepen the engagement with customers and attract not only those between 20 to 30 years old but also more people who have not subscribed to our telecom services," he said.

Last month, China Unicom partnered JD, the country's second-largest e-commerce player which is also one of its newest shareholders, to build the first of such concept stores in Guangzhou, Guangdong province. According to China Unicom, this store features JD's facial and motion recognition technologies, Wi-Fi detectors and smart billboards.