According to retail technology expo, over the past decade, China's retail industry has undergone radical changes, with the industry landscape being disrupted and reshaped at an unprecedented rate, and new technologies, formats and business models emerging. The retail industry is witnessing perhaps the fiercest competition in the market, and at the same time, there are many leading companies that are determined to seek change and are at the forefront of digitalisation.
McKinsey conducted in-depth interviews with more than 20 retailers and surveyed more than 30 CXOs, and divided the digitalisation process of retail enterprises into four major stages:
Informatisation IT infrastructure upgrading and transformation, systematisation and informatisation of business processes;
Linearisation Layout of online channels to achieve omni-channel operations, with data insights assisting some of the operational decisions;
Digital Intelligence Comprehensively applying operational decision-making based on big data analysis, realising the use of automation and intelligence, and reducing costs and increasing efficiency on a large scale;
Platformisation/Ecologisation Industry or value chain integration, ecosystem construction, data technology to drive emerging businesses and empower industries and trades.
According to retail technology expo, the digital transformation of China's retail industry is facing the following status quo, and the transformation journey is still "long and difficult":
Status quo 1: The digital transformation of retailers is at the stage of exploring "online" (Digital 2.0) and moving towards "digital intelligence" (Digital 3.0).
Status quo 2: The digital construction of most retailers still focuses on front-end channels and traffic operations, while the upper and middle reaches of the value chain, which are more difficult to transform, are still the "short board" of digitalisation.
Status quo 3: Retailers generally regard digital transformation as a key strategic direction for future development and invest heavily in digital construction, but the input-output ratio is still unclear.
Status quo 4: Retailers are actively embracing organisational and talent changes to drive digital transformation, but the reality is that it is difficult to move forward.
Across regions and formats, four key trends are reshaping China's retail market, from which the whitepaper distills four key takeaways for retailers:
Insight 1: As the retail industry slows down and profits decline, digitalisation is no longer just about pure channel expansion, but also about driving leaner operations in shops, merchandise, and the supply chain to reduce costs and increase efficiency.
Inspiration 2: Regardless of online and offline, the era of relying on the "traffic dividend" in the retail industry has passed, and the previous model of "subsidies for growth" is not sustainable. Omni-channel, fine-tuned traffic and user operation is a necessary ability for retailers to maximise the value of traffic.
Lesson 3: Consumption demands are becoming more rational and personalised, retailers should return to the essence of "commodity operation" and put "good goods" in front of users.
Lesson 4: Stores are expanding from commodity purchasing channels to multiple roles such as user experience places, user operation positions and instant delivery fulfilment centres; retailers need to urgently promote the upgrading of shop and frontline staff operations through digital transformation.
Source:McKinsey Greater China