In the past three to five years, China’s retail industry is undergoing changes that no one can ignore. The rapid rise of various types of e-commerce, the traditional retail industry is facing unprecedented challenges.
So what will China’s retail future look like? At this interesting point in time, this question becomes more contemplative.
1. Cross-channel integration
At present, many traditional retailers have completed the layout of multiple formats. In the past 3 years, we often mentioned online and offline, e-commerce and traditional retail. In the next 5 years, an obvious trend is that the boundaries between online and offline are beginning to blur. E-commerce can open physical stores, and traditional retailers are also going online. Competition no longer stems from online and offline models, but begins to return to the essence of retail: who can serve consumers more efficiently.
In 2014, China’s total retail sales reached 26.2 trillion, of which 23.4 trillion still came from offline sales channels. Offline sales still dominate, but according to Deloitte research, 59% of offline sales are affected by digital carriers. The impact of digital carriers on consumers has penetrated into all aspects of the purchase decision process, covering the entire cycle of consumer behavior.
Recognizing the important impact of digitalization on consumers, it is not difficult to predict: retailers that have not yet put cross-channel integration on the agenda have actually missed many important consumer communication channels. Taking FMCG as an example, a report by Bain and Kantar shows that omni-channel retailers are rising.
Cross-channel integration may be the optimal solution for serving consumers more efficiently.
2. The ultimate experience
If the past three years are defined as the era of wasteland where various new forms of retailing are emerging, then I will tend to define it as the era of intensive cultivation in the next five years. This is reflected in the following aspects.
1) Extreme convenience: Chinese convenience stores have entered a period of rapid development
Shanghai has always been the most developed city of China’s convenience stores. In most of the areas within the Shanghai Ring Road, there will be a convenience store within 1 km. I did not expect the status quo to be rewritten soon. The convenience store format is less affected by e-commerce, and the three major challenges currently facing are product innovation, franchise model and entering new regions.
2) Extreme price and operating efficiency
The traditional retail giants represented by Wal-Mart and RT-Mart are among the representatives of extreme price and operational efficiency. In the context of new retail, traditional large-scale supermarkets are actively trying out multiple business models, expanding the offline city market, intensively cultivating regional markets, and further improving operational efficiency. In the next 5 years, opportunities and challenges will coexist. Expansion often comes from regional intensive farming to improve operational efficiency, such as focusing on developing the scale of a city / province. For example, according to a report by Kantar and Bain, Yonghui ’s market share in Chongqing, its second largest market, is 2.5 times that of its largest competitor, and Wumart ’s market share in its largest market, Beijing, is 1.6 times that of its largest competitor, Carrefour. . Wal-Mart’s base camp in Shenzhen has 2.1 times the share of its biggest competitor. After the establishment of scale in key cities, these leading retailers began to expand in the surrounding areas to establish a leading position in the urban agglomeration.
In addition to large traditional stores, under the background of macroeconomic downturn, due to consumers ‘emphasis on cost performance and retailers’ inventory processing needs, there is still some room for growth in the ecology of discount department stores and discount supermarkets. Outlets operate in the form of commercial real estate, providing consumers with low-cost and high-quality products. Although many outlets in China are operating bleakly, the entire format is still in a period of vigorous development.
The improvement of consumers ‘purchasing power and the improvement of quality of life have further strengthened consumers’ demands for self-expression. Fashion and personality are becoming more and more popular. Therefore, the buyer’s shop model, which is dominated by differentiated, personalized and niche brands, is rapidly growing.
Buying shop is a business model developed by Europeans, also known as buying business. It refers to the selection of different brands of fashion, accessories, jewelry, leather bags, shoes based on the unique fashion concepts and interests of the target customers. As well as cosmetics and other products, the storefront is fused together. In Hong Kong and Taiwan, this kind of shop is usually located in a shopping mall and is an independent shop-in-shop. In Europe and America, this kind of shop is mainly in the form of street shops, and has a history of nearly a hundred years.
Although the form of buyer’s shop is still in the cultivation period in China, the business model of buyer’s handcraft is still one of the future development trends. We can already see the vigorous rise of various e-commerce platforms that rely on it.
In recent years, the performance of many high-end organic food stores, pharmacies, maternal and child stores and other community chain stores has grown rapidly. Regardless of whether it is a physical retail or an e-commerce platform, we have seen the rise of independent professional stores that are deeply involved in a certain industry or category.
In addition, under the trend of physical retail specialization, the change from “big and complete” to “small and beautiful” is happening quietly. The area of the store is smaller, and the types of products are more concentrated. It mainly sells products suitable for travelers, including lock wheel trolleys, neck pillows, snacks, travel cosmetics and so on. The location is chosen at transportation hubs such as airports and railway stations.
Post time: Jun-01-2020