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Digitization + Experiencing, A Reform of Traditional Retailing
Speaker: Zhu Xi, from Wuhan Department Store Group Co., Ltd., China
September, 2013
I. Wuhan Department Store Group Co., Ltd.
II. 2012-China’s E-commerce Year
III. Experiencing Commerce, the Ultimate Way
IV. The Two Technical Trends Are Changing the Retailing Pattern
V. Change Commercial Pattern and Embrace the “All Channels”
单击添加副标题
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The proportion of E-commerce sales volume in Chinese retail market will exceed 50% ten years later.
Even if the share of E-commerce just reaches 50%, I will admit defeat and give Ma Yun RMB 0.1 billion.
Developmental Trend of Retail Industry
Digitalization
Traditional Retail Industry
ExperiencingConsumption
The change is a reform for the traditional retailers, and a return to the original
spirit of retailing industry.
Wuhan Department Store Group Co., Ltd.
Great River, Great Lake and Great Wuhan
Great River, Great Lake and Great Wuhan
Wuhan’s GDP was RMB 800.4 billion in 2012, and its gross sales
volume of social consumables was RMB 343.2 billion.
Great River, Great Lake and Great Wuhan
Founded in 1959, Wuhan
Department Store Group Co.,
Ltd. is the largest integrated
commercial enterprise in Hubei
Province and one of the 20
large-scale retail enterprises
that were listed by Ministry of
Commerce as the key
cultivation objects. The
company mainly conducts
operations in shopping mall
and retailing chain
supermarkets.
Great River, Great Lake and Great Wuhan
In 2012, Wuhan Department Store
Group Co., Ltd. had its sales volume
increased by 30% on year-on-year
basis, and its profit by 21%. Its total
sales accounted for 8% of Wuhan’s
total social retailing sales of
commodities.
Great River, Great Lake and Great Wuhan
Analysis by experts in the industry:
1. The growth rate of Chinese macro-economy will slow down
and the E-commerce industry will be further impacted;
2. Housing price will be unaffordable high and RMB will
depreciate domestically.
3. China will intensify anticorruption and advocation of honesty
and cleanness.
4. Rent, labor cost and other related expenses will rise rapidly.
The development of retail industry will become tougher. So to
speak, the traditional retail industry will have no choice but change
itself.
China’s E-commerce Year
2012-China’s E-commerce Year
According to the report issued by CNNIC, in 2012, the transaction of
China’s online shopping totaled RMB 1,259.4 billion with an increase by
67% compared with 2011. China’s online purchasers totaled about 200
million, and the proportion of online shopping increased to 43%.
0
2000
4000
6000
8000
10000
12000
14000
2011 2012
Amount of onl i neshoppi ng
RMB 1259.4 billion
RMB 756.4 billion
2012-China’s E-commerce Year
The turnover on that day
reaches RMB 19.1 billion
yuan;
In 2012, online sales had accounted for 6% of China’s total retailing volumes.
November 11, 2012
The order volume on that
day exceeds 1.5 million; the
order volume in three days
approaches 3 million; the
sales volume increased by
20 times on year-on-year
basis.
Experiencing Commerce, the Ultimate Way
Wuhan Department Store Group Co., Ltd. annotated its
“experiencing commerce” by establishing MALL, which is an
urban complex integrated with top-grade department store,
catering, cinema, sports and leisure, etc. that will provide
consumers with brand-new shopping experience.
1. The change of consumption concepts and behaviors promote the emerging of experiencing commerce.
Shopping Training
Catering
Leisure
Sports
Entertainment
Causes for Experiencing Commerce Emerging
Causes for Experiencing Commerce Emerging
2. The popularity of urban complex brings opportunities for experiencing commerce;
Shopping center is the mostly common platform for experiencing commerce for its architectural design, space quality and business pattern are more easily to be blended with “experience”.
Causes for Experiencing Commerce Emerging
3. The prosperity of E-commerce has the commerce transited to experiencing commercial mode;
E-commerce urges the transition of the physical stores. Basic physical form, corresponding commodity experiencing form and service experiencing form are indispensable for a commercial complex form.
Causes for Experiencing Commerce Emerging
Retailing Enters the Age of Consumer Sovereignty
CEC( Chief Executive Cu
stomer)
Though customers are not directly
involved in the enterprise, they
intangibly play a more important
role in enterprise’s strategic
direction and market path.
Retailing Enters the Age of Consumer Sovereignty
In CEC( Chief Executive Customer ) era, enterprise should
integrate consumers’ participation into its traditional value
chain and search for, analyze and tap consumers’ data with
technology as the core platform, so as to thoroughly
understand each customer.
Retailing Enters the Age of Consumer Sovereignty
Customer = Democratic Party
Retailing Enters the Age of Consumer Sovereignty
How retail enterprises can grasp consumers’ heart in the
age of consumer sovereignty?
They should provide “one-to-one” marketing and service
when customers really need them; conducting single-
direction sales promotion to consumers, such as mass
texting and mailing DM, is not service, but disturbance.
Retailing Enters the Age of Consumer Sovereignty
How to fulfill “one-to-one” accurate marketing?
It’s essential to develop digitalized retail industry and
digitalize each customer and employee. Through digitalizing
the relationship with each customer, retail enterprise can
establish all-around social relations with consumers via social
network, thus gaining an insight into consumers’ demands.
The Two Technical Trends Are Changing the Retailing Pattern
It’s estimated by American Retail Federation that the gross
retail volume in Chinese market will possibly reach RMB 50
trillion yuan in 10 years, of which 20% will be contributed by
online retail. 10 years later, 80% of the consuming demands of
young people who grow up with the Internet will be satisfied
online.
Online Sales Trend
1. Smart phone enables us to directly obtain almost all
information about all retailing commodities, forces retailers to
keep their price competitiveness and regularly update their
website.
Online Sales Trend
2. Physical shopping are changed by technology.
(1) Interactive “magic mirror”: It can show what one looks like
in the dress (without the need of putting on the dress),
recommend proper ornaments, and point out the direction of
similar products.
Online Sales Trend
(2) Virtual receptionist: It can deal with all relevant matters such as providing discounts via 2D barcodes.
(3) 3D printer: Consumers can use it to create their own products at site, such as towel, ware and clothes.
Reception
Online Sales Trend
Some analysts predicted that physical shopping experiencing will
possibly become completely different from the previous ones. For
example, Gap, Best Buy and other stores will turn into pure experiencing
places and test centers for “touching and feeling” commodities.
Change Commercial Pattern and Embrace the “All Channels”
“All Channels” strategy
“All Channels” strategy
aims to establish a unified
360° “customer view”. It is
a kind of shopping
experience that will get
consistency from physical
store, online store, mobile
store and social store at
any time.
“All Channels” strategy
Domestic retailers need to integrate various independently-
operated channels existing presently and highly coordinate
them, thus providing consumers with optimal seamless
shopping experience.
How to embrace the “All Channels”
Firstly, return to the retailing spirit, and get integrated with the
internet spirit. Retailing spirit aims to recognize who are the
customers, where they are, what they want to buy, and what
they are talking about.
How to embrace the “All Channels”
Secondly, change the concepts of
business district. Internet is like
“avenues” full of consumers’ breaths
and voices as a new popular retail
circle. If we do not foster the idea of
“Internet commercial circle”, we will
be unable to establish real “All
Channels” retail strategy.
How to embrace the “All Channels”
Thirdly, establish the consumer-demand-chain centered
organization. Integrate resources and unify online and offline
back-stage services by means of professionals’ retail
experience and spirit.
18 days after his “retirement”,
Ma Yun, Board Chairman of
Alibaba Group, showed up and
incorporated “Cainiao” Network
Corporation, acting as the board
chairman. “Cainiao” Network
aims to establish platform for E-
commerce, logistics and
storage enterprises.
Trend Forecast
As for long-term development of retail industry, it’s necessary to make
reference to foreign operating modes of retail industry, constantly intensify
self-operation, launch self-own brands, customize commodities, organize
direct purchase from sources, realize differential operation, and regain
middlemen’s profits. Self-purchase and self-operation will be the radical
solution for retail industry.
Trend Forecast
Urbanization will set free the great consuming potential.
Consumption in third-tier and fourth-tier markets has become
increasingly mature. The proportion of service industry in economy
will be substantially raised. Urbanization will become the most
powerful engine in the promotion of economic growth and will
create new developmental opportunities for retail industry.
Forecast is prejudgment of matter’s developmental trend that is made
via professional analysis on the matter’s previous and present
developmental status, rather than a guessing “feast” joined by all
citizens. The ability to master future trend will become a decisive
factor in enterprise’s sustainable development.
Trend Forecast
Thank you
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