Image source @ Visual China
Text | Narrow broadcast, author | Xiao Chao, executive producer | Shao Lele
2021 is a particularly difficult and fastest evolving year for the retail industry.
Whether it is affected by the ups and downs of the epidemic, or the impact of the new retail model of community group buying and live streaming, the traditional retail industry is full of fatigue, and it is difficult to resist the general trend of reduced passenger flow and declining performance. Most retailers are seeking transformation in the downturn, trying to start member stores, discount stores and other formats.
We believe that the deeper the fog, the greater the significance of exploring the origins of the retail industry and taking history as a mirror. Therefore, we chatted with Dr. Yang Dehong, a special expert of the China Chain Store & Franchise Association and the president of the Chi Sheng Retail Innovation Research Institute, about the history and combing of the retail industry, his evaluation of China's retail industry, his views on new formats, and where to go in the future.
Yang Dehong joined IBM China Commodity Circulation Department in 1995, starting from the promotion of automatic cash registers, has been engaged in the promotion of information technology applications in the retail industry, and has won the Outstanding Contribution Award for the 40 Years of Reform and Opening Up of the Retail Service Industry, witnessing the start and transformation of China's retail industry from abacus to computers.
In the mid-1990s, Dr. Yang Dehong wrote about the beer and diapers that retailers would later know about, published in China Business Daily: After using a computer system to count customers' purchase information, retailers found that male customers who were new fathers usually bought baby diapers and beer together every weekend night. Since beer and diapers are not in the same commodity area, customers have to go far in the mall, so the merchants put beer and diapers into bundles and placed next to the cash desk to do a promotion, and obtained a good sales income.
This typical case of commodity correlation analysis has played an important role in popularizing the basic knowledge and concept of commercial informatization and promoting the informatization of retail enterprises.
The following is Dr. Yang Dehong's self-statement.
01 The essence of retail
The way of life of human beings in the earliest farming society was that they had a piece of land at home, planted corn, grinded their own noodles, steamed their nests, ate their own food, and the problem of eating was solved. Later, someone said, I can't cultivate the land, but the carpenter does a good job, I take a small bench and exchange a few corns with you. Thus, the social division of labor began, the productivity of society was greatly improved, and the concept of commodities appeared.
In the whole process of product circulation, the three essences of the retail industry have also been precipitated: information transmission, transaction matching, and logistics services.
The transmission of information refers to the fact that customers are new to the county, do not know whose things are good in this county, there is a store here that can buy, tell customers who are who produce goods, this is the function of Information transfer.
Transaction matching is to say that this store in the purchase of goods, has helped customers to do a part of the transaction first, the retailer's purchase price is how much, the retail price is how much the customer can accept, all with the producer to negotiate, the customer directly to the retailer to buy on the line.
The same goes for logistics services. The retailer has already transferred the goods from the producer to the store when the goods are purchased, and the store may be only three or five hundred meters away from your doorstep, and most of the logistics has been completed.
Retail stores in the modern context have undergone four stages of development: the traditional retail stage, the modern retail stage, the e-commerce retail stage and the smart retail stage.
The traditional retail stage is marked by the emergence of two formats, department stores and supermarkets. In 1852, the first department store appeared in Paris, France, the different manufacturers, different categories of goods together to sell, not like the traditional bazaar regularly closed, and neatly displayed, clearly marked prices, since then people have the concept of shopping malls, "shopping paradise" is also continued from then on to today.
By the beginning of the 19th century, with the advent of automobiles and refrigeration technology, the number and richness of goods that consumers could buy had greatly expanded, and New York opened its first supermarket. Another change that supermarkets have brought to the retail industry is that consumers can take goods from the shelves at will, check out at the door, and shop more freely and conveniently. Retail has entered the modern stage.
At this stage, for mall operators, the way to increase the shopping experience is to constantly combine goods, decorate stores, and change the way they communicate with consumers. The earliest way retailers and consumers communicate is advertising and DM, in the United States there are newspapers published for shopping malls, the entire page on Sundays is full of various coupon advertisements in shopping malls, and some shopping malls mail beautifully printed advertising brochures to consumers' homes.
The modern retail stage benefits from the emergence of bar codes and information technology, enabling operators to carry out information management of shopping malls, and refined operation is possible. The biggest problem of retail is inventory, the significance of the invention of bar codes is to provide the feasibility and accuracy of inventory inventory, improve the efficiency of commodity circulation, so that the cost of the entire human life is reduced by 3%-5%. The development of a series of information management systems such as category management, enterprise ERP, supply chain management, etc. is based on bar codes.
At the beginning of this century, the popularity of the Internet, retailers and consumers communication methods also appeared customer relationship management system CRM, through this system to consumers to issue loyalty cards or VIP cards, consumers in the shopping time to show this card, the merchant can record the consumer's consumption behavior and data.
The third stage is the e-commerce stage. 1995 was the beginning of the e-commerce retail phase, and now the e-commerce platforms eBay and Amazon were both established in this year. The goods on the e-commerce platform are more abundant and the transactions have become simpler, which is certain, but I think the real breakthrough of e-commerce is to promote the progress of commodity trading in human society in three aspects.
First, e-commerce brings fairness to social shopping. In the past, people's consumption was too limited by geography, you are in the big city, I am in the marginal mountains, we can buy completely different goods. But now that everyone logs into the same URL, they can buy the same goods at the same price, which is fair.
Second, e-commerce breaks the constraints of time and space. You can buy it at any time, you can buy it anywhere, which was not available before. E-commerce has made shopping a very free thing.
The third and most important point of e-commerce on consumption is that e-commerce has introduced an evaluation mechanism. In the past, consumers and retailers did not communicate, what retailers put on the shelves, consumers can buy what, if consumers stand in front of a pile of heads and point at it is not good, the retailer is likely to find a few people to drive him away. However, with the evaluation mechanism of e-commerce, consumers have developed the habit of watching evaluations, and the right to speak has also been tilted to consumers, and shopping has become more democratic.
The fourth stage is the smart retail stage. The popularity of mobile payment has enabled retailers to understand consumers' shopping behavior without going through CRM systems to develop more targeted marketing strategies. The interactive screens, mini programs and official accounts of stores can also play a role in understanding consumers and realizing omni-channel connections between consumers and retailers.
But more importantly, how to use these collected information and data to gain insights and analyze consumer needs, and then through the electronic price tags, smart screens and other terminals in the store, the goods and marketing information are accurately delivered to consumers, helping consumers quickly match suitable goods and offers, reducing transaction costs and time costs, and truly bringing consumers a better shopping experience. On the other hand, how to use data to adjust and optimize retailers' product selection, research and development, operation strategy, warehousing and logistics, supply chain and other links to achieve the purpose of cost reduction and efficiency increase.
02 Where is the traditional retail dilemma?
Especially in 2021, our retail industry has encountered some problems. This must be admitted, our new China from reform and opening up to the market economy, the retail industry to cultivate entrepreneurs only 30 years of history.
We have been busy opening stores over the years, because China has too much market space, from first-tier cities to second-tier and third-tier cities, simple and rough business methods can be profitable, and even some retailers finally switch to real estate. They still lack a lot of things in terms of refined product management and customer management.
For example, a doctoral supervisor in the United States can bring a large number of doctoral students and study the return of goods all day long. But we have too little research on consumers, and you have heard of any domestic professor who specializes in consumer behavior and takes students to publish papers in this area.
Let's take another example of a supply chain. The two essences of the supply chain, one is seeking, buying, finding goods, finding the best goods, and the other is collaboration, to coordinate. In the case of sorcing, most of China's purchasing managers are basically the original "sitting merchants", sitting at home, waiting for goods to come to the door.
The reason why Yonghui did better than others was that Yonghui had a group of purchasers who came out and went to the field. Yonghui's store manager ran to a village at two o'clock in the middle of the night, slaughtered five pigs, pulled them back at five o'clock in the morning, and then began to sell fresh pork. None of our companies do this, only Yonghui spelled it out in that year, so Yonghui's freshness can be famous. Later, others also began to learn to do such things as agricultural super docking and base docking.
But Yonghui's good is not really good, but the best of the bad. Why were Carrefour and Walmart expelled from Japan and driven out of South Korea, only to succeed in China? Or because most of China's own retail sector is too weak.
When e-commerce retail began to develop, why were our supermarkets impacted so quickly? It's because you didn't do it well. Consumers want something you don't have in the store, consumers have to go to the Internet, a look back to send home, so they don't go to you to buy things. If you have it in your store and it's good, why should consumers buy it from someone they don't know? You have to learn how to identify fakes every day.
The retail industry is too old and slow to change, and the rapid changes in e-commerce and digitalization are one reason. Another reason is that when retail learns from e-commerce, it is also necessary to grasp the essence of things, if you are only busy with the cat and the tiger, and then there is a change, it is more difficult to deal with.
So I thought from the beginning that many traditional retailers can't learn from hema, they are completely different from hema. First, hema's target customer base is not the general public from the beginning, and Hema only wants to get the most valuable part of the user.
The cost of retailers to do catering is certainly high, but why can Hema succeed? Because the people who go to Hema are young, white-collar workers, these people's time is more important than fifty cents more expensive than eggs. Hema understands the lifestyle of these people, they buy something, eat something by the way, and then go home and do something else. It's a great way to help solve some of life's problems.
But why do many supermarkets open their own new retail stores and overseas shopping stores fail? Their customer base was originally Grandpa and Auntie, and Grandpa and Grandpa had time to cook. If you don't add new business on top of your original customer base every year, it's hard to spend a huge amount of money to get a new customer base.
Second, Hema's data analysis capabilities are unmatched by other retailers. At the beginning, Hema did not accept cash at all, and had to download its own APP, that is, to convert offline consumption behavior into data, it could summarize, summarize, analyze, and support some business means such as issuing coupons. This is Ali's investment of billions of billions of yuan from Taobao, only to smash out such a gene, in order to support hema.
But you are like other supermarkets that Ali bought, RT-Mart, it can't be changed. Because its original management system and organizational system are not based on the Internet, nor is it like Hema that opens one store after another from scratch. To tear down the four or five hundred stores that Darun found in, without that confidence, the overall cost is too high.
Take Yonghui as an example, they have invested a lot of money in digitalization, have been working hard, have been trying, but have taken a lot of detours. The digital transformation of traditional retailers in China is a very difficult and tragic process. The first is because it is long, and the second is that what we lack is not technology, but more of a lack of digital thinking.
You go home and ask your parents what they know about digitalization and you'll understand. Today's business managers are the same, they spent the first twenty years looking at the ledger, looking at the ERP system, this year you tell them to do digitalization, which is very different from their knowledge structure, the way of thinking is very different.
For a store manager, he made the store clean and hygienic, did not lose goods, according to the original evaluation standards, he is the best store manager. You suddenly ask him to be able to use vibrato, do digital marketing, do consumer operations, which is actually a very big challenge. Even if you tell you young people now, give you a goal, pull ten thousand traffic to the store on Douyin in a month, how to do it, how to say it, what to prepare for the content, you will be a little confused, right?
03 Scenario-based consumption and experiential consumption
However, I don't think supermarkets can't do it. You can say that RT-Mart, Yonghui and Carrefour have not performed well, but as a business format, supermarkets still have the vitality of its existence. Like the originator of Hema and the first supermarket to combine catering and retail, Eataly is still very popular in the United States.
Today's supermarkets are bound to change, because consumers already have more comprehensive information about goods and can access goods at lower prices. The only thing that supermarkets can change is to increase the experience. There are some things we need to experience, such as smelling bread, feeling the freshness of fruit, and trying on beautiful clothes. If you don't use experience to transform and improve these things, I think there is no way to live.
In the future, there will be a total of two consumptions, one is scene-based consumption and the other is experiential consumption. Scenario consumption is that today you go to this place, such as a mansion, in this scene you need to drink a cup of coffee, to talk about something, this is the consumption under the scene. Experiential consumption is that you have to feel the happiness in the process and be able to be interested in it. In a good supermarket, goods communicate with consumers.
People's purchasing behavior is emotional. Why should I go to a big brand store instead of a small shop to buy something? Because I trust big brands more. Experiential consumption, seeing, experiencing, learning more about it, our sense of trust will increase. Live e-commerce will also be a format in the future, the reason why it is popular is that the anchor told you his own experience, you can also communicate with him, judge whether the product is suitable for you, increase the possibility of your purchase, which is incomparable to the e-commerce picture sales.
To give a more specific example, for example, we now try on shoes, whether it is leather shoes, running shoes or walking shoes, as long as it is in the same store, the floor of the shoe test is the same. Why can't you divide the ground into several pieces, one is a carpet, one is a runway, one is a floor, different types of shoes, just walk on different materials? The same is true for trying on clothes, if you can try different light intensities, background colors, you can bring a better experience.
Experiential consumption also has a layer of meaning, how to distinguish between online and offline sales and services. Omni-channel is something that every retailer has to face, and we must fundamentally think about what to do online and what to do offline. The meaning of omni-channel is to meet consumers in an all-round way, so that consumers can buy more comfortably, such as a large bucket of laundry detergent, carrying so heavy, generally will not be used urgently, just let consumers move their fingers on the Internet and send it to their homes.
Some people still can't understand it now, and always want to pull all the people into the store. It is okay to pull into the store, but the consumer will no longer buy laundry detergent in the store, he may be here to buy fresh, snacks and other things, fresher, more experiential things.
There are also people arguing about what the ratio of online and offline sales should be, which is also a wrong way of thinking. What should be thought is that, for example, if you are a young person, the monthly daily consumption is 5,000 yuan, 30% of the 5,000 yuan may be cosmetics, 30% is entertainment, eating a small proportion, which of which you will go online to buy, which will go offline to walk around; for example, your parents may consume 2,000 yuan per month, but 80% of it is spent on eating, so in theory, they will go to more offline stores than you go, and the proportion of offline consumption is higher.
So in the end, the healthy online and offline sales ratio of a store is closely related to their location, the customer base they are facing, the type of goods sold, and so on. Instead of saying that you should pat your head on the head, set a number of goals, and make a lot of effort to pull new things on the line.
This is a supermarket, and it is going to go to the road of experiential consumption. As for scenario-based consumption, I think convenience stores are a good way to sell scenarios. Because it is to be convenient, you want to drink Coke, just go in and buy a bottle of water, do not say first order and then wait for half an hour to bring the water; you go to the office building to eat breakfast, nor do you say to order a takeaway and wait for half a day. Convenience is a service, and service is not replaced online, just like cutting hair, you have to go to the barbershop scene.
And with the development process of Urbanization in China, there will be more and more requirements for convenience. After farmers become citizens, many lifestyles change. So I think the space for convenience stores in the future is very large.
04 New and old new formats
Now the membership stores are also relatively hot, many new ones have been opened, and some retailers will transform the old stores in the city into member stores. I'm also skeptical of them. What kind of shop will be opened, this is an ability. The ability to open a member store is much higher than the ability to open a supermarket.
Warehouse stores are very good to open, find a bigger place to put the goods out, China is not untouched, in the 1990s Pierce Matt, Yansha Wang Kyoto is a warehouse store, has long been gone.
What matters to a warehouse is not a warehouse but a member. In the same category, there may be 30 kinds of goods in hypermarkets such as Walmart, but only three kinds may be sold in Sam's Club or Costco. Their core is the ability to choose products, know which functions and things consumers care about, and help consumers choose in advance.
The club is actually a clever invention. First of all, there was no Internet at that time, there was no way to collect consumer information as conveniently as now, so the member store set up a mandatory membership access, every time you check out you must show the membership card, so that the consumption record has been saved; then 300 yuan to do a card, said that every time you come to buy something to give you a 20% discount, consumers listen to a 20% discount is very good, cheap, 300 yuan to give, the next time also come here to buy, the purchase volume will come up, retailers and suppliers can talk about the price can also be lower, In the end, you can really sell at 20% off. It's such a money-making process.
And after having the consumption data of the membership card, taking the shampoo as an example, I know how many people in your family, how much shampoo you use, and know the frequency and law of your shampoo, I began to adjust the rhythm of goods and adjust the inventory. I will first make a promotion for you to buy back this time, and when you are about to run out and are ready to buy again, I will buy the shampoo in advance and sell it to you in the form of a promotion.
And I sell daily necessities, all of which are in line with the laws of life and have a certain purchase cycle. So it's like I've planned it, I always promote at this time, you always buy at this time. The result of this continuous adjustment and more accurate adjustment is that I can turn around very quickly, assuming that other supermarkets may turn around 10 times a year, and member stores can turn around 20 times.
So behind this is a whole set of product management and data operation capabilities. Many of today's clubs have not yet figured out what is going on.
Community group buying actually solves the problem of inventory. Pre-sales reduce inventory costs, self-pickup reduces store operating costs and last-mile delivery costs. In the sense of retail, community group buying is a promising model.
However, the problem faced by community group buying is the supply chain problem, how to create a stable and high-quality supply chain. Until now, community group buying has not reduced the cost of operation through the efficiency improvement of the supply chain, but through its own subsidies to do costs, first cultivate user habits.
A 200 yuan sofa you sell for 5 yuan, which does not require you to have any level, everyone will definitely come to grab. This is burning money, burning money who will not, who will not lose. But the key is whether burning what's left is sustainable. If you can really sell the 200 yuan sofa for 5 yuan later, you can still make 1 yuan, we have a lot of physical retail now, really scared.
If in the end, the eggs purchased by the community group can really persist in selling at three and a half years, it also means that their procurement, operation, and cost control really have this ability, and if they can continue to do the price, the world will change. But it's also too hard. We have been doing supply chains for so many years in physical retail, there are so many subjective and objective constraints in between, how can we be caught up so quickly, we are not stupid.