The Donglai model will not be the ultimate model for future retail. Exploring retail reform requires four-dimensional driving forces

The Donglai model will not be the ultimate model for future retail. Exploring retail reform requires four-dimensional driving forces

The necessity and complexity of changes in the retail industry. The four dimensions needed for future retail changes are: goods, technology, people and omni-channel. Retail changes should not only pursue a single model, such as the Donglai model, but should explore differentiated paths based on the actual situation of the enterprise.

The retail industry has been very active in recent years. On the one hand, traditional retail formats are struggling, and on the other hand, various new retail forms, new retail formats, and new retail concepts are constantly innovating.

Retail needs change and innovation.

However, retail transformation and innovation must grasp the direction of future retail transformation, and must avoid "blind men groping in the dark" and even more so, must avoid blowing the wind.

The retail reform and innovation in recent years have indeed produced some very valuable and promising retail models. However, there have also been a number of "flash-in-the-pan" retail models.

Retail must change because consumer demand is changing, the market environment is changing, and technological means are changing.

However, retail transformation is a very complex and systematic issue. It is not a simple one-dimensional issue. If we only explore the direction of retail transformation in the future from one dimension, we may be able to solve the problem temporarily, but it is difficult to adapt to the comprehensive transformation of retail in the future.

It is best not to "copy and paste" retail transformation and innovation, but to develop a differentiated retail transformation path based on the actual situation of the enterprise.

In light of the current retail market environment, exploring the future direction of retail change requires thinking from at least the following four dimensions.

1. Commodities

Commodities are the core of retail. To explore the transformation of retail, we must first do a good job in the transformation and innovation of commodities.

Judging from the remarkable results achieved by Pangdonglai in adjusting other supermarkets, the adjustment of products is the core element of its success. Judging from the practice of some retail innovations in recent years, some retail innovations that ignore the important dimension of product innovation have basically failed.

At present, there are three main factors affecting product innovation and change:

First, new changes in consumer demand;

Second, new changes in the commodity market;

The third is the new changes in the retail industry environment.

The organization and management of retail enterprises' merchandise must first keep up with changes in consumer demand. At present, the reason why some traditional retail formats are experiencing serious fatigue is that the merchandise they sell is seriously out of touch with the new demands of consumers.

In recent years, the commodity market has been constantly changing, with new categories, new brands, and new products constantly emerging. Some new categories that are very popular with consumers, such as craft beer, pre-prepared meals, instant tea drinks, and healthy foods, have begun to become the main commodities in the relevant categories. Therefore, the organization of commodities must keep up with the new changes in the commodity market. It is not okay to be limited to traditional brands and traditional categories. The commodity adjustment organized by Donglai this time has basically eliminated the traditional "big" brands, which fully demonstrates the importance of new commodities, new categories, and new brands in the current market environment.

The new retail formats that are constantly emerging must gain a certain market position. Retail is constantly innovating, with more and more new stores, new formats, and new forms. Therefore, any retail store needs to constantly adjust its products in accordance with the changes in the store's business district, eliminate the product advantages that may be replaced by new formats and new forms, and rebuild new product category advantages in combination with its own corporate capabilities.

Now, the adjustment of commodities has brought many new challenges to retail stores. The traditional purchasing model, supplier model, category management concept and method are basically worthless. Enterprises need to find new methods, models and concepts for commodity, procurement and category management based on their own reality.

2. Technology

Technology must be a very important dimension in driving retail change.

All chain retail enterprises are beneficiaries of technological change. Many of our retail enterprises have been able to reach the goal of "thousands and tens of thousands of stores" thanks to the development of computer information technology. Without the application of computer information technology, enterprises would not be able to achieve such scale goals by relying on traditional means such as "abacus".

At present, technological innovation has entered a new era of rapid iteration and change, especially the continuous emergence of Internet technology, digital technology, intelligent technology, AI technology, etc.

Technology has three very important values ​​for the retail industry and retail enterprises:

First, continuously improve retail efficiency;

Second, we will continue to reduce retail costs;

The third is to help companies continuously innovate new retail business models.

Future retail will definitely need to be driven by technology to become more efficient, smarter and lower-cost retail.

Future retail will definitely need to use digital technology and intelligent technology to further reduce retail costs. Traditional retail is a labor-intensive industry. Such characteristics will continue to affect the development of the industry. How to use new technical means to reduce corporate operating costs must become the first choice for industry and enterprise transformation.

The Donglai model is very good, but it is best not to become the "mainstream" model. Reducing the demand for personnel, reducing employment costs, and reducing the operating costs of enterprises with the help of new technologies will definitely be the main direction of retail reform. Otherwise, the development of retail will definitely be unsustainable.

The retail of the future may become a retail with a complex business model. The business model may become more diversified. The iteration of the business model must be supported by technology.

Enterprises must pay close attention to the important impact that technology may have on the industry and the enterprise, and actively explore new retail models that highly integrate retail innovation and technological development.

When it comes to current problems encountered in business operations, we should first consider how to solve them using technical means.

The day before yesterday, I investigated a convenience store company in Jinan - Orange Convenience. This company was founded not very long ago, and now has more than 300 convenience stores. However, the company has more than 80 code engineers. The company basically has the ability to use technology to solve business problems and has achieved good business results.

The Hema model was the first to build a technology-driven retail development model.

3. People

People – customers must be an important variable affecting the development of retail.

In terms of understanding people – customers, retail reform and innovation must always focus on three key issues:

First, we must always grasp the changes in consumer demand and keep up with new changes in consumer demand.

Why did Bubugao and Yonghui produce such good operating results after replacing 90% of the products they previously sold in their stores and introducing more than 10,000 products from the Pangdonglai supply chain? The core reason is that the products in the Pangdonglai supply chain have kept up with the new changes in consumer demand, are more in line with current consumer demand, and can better satisfy current customer purchases.

It also shows that the products sold by most supermarkets have seriously deviated from the needs of consumers. The companies have seriously lacked an accurate grasp of the changes in current consumer demand.

Second, like Donglai, we can build a brand with a high level of corporate integrity and use in-depth and detailed services to continuously improve customers' purchasing experience.

Retail business is about people. Service is indeed very important to improve retail business. Integrity management is an ancient and eternal retail business philosophy. In this regard, Donglai's model is worth learning.

Service is always an eternal topic in retail. We must constantly improve the service capabilities of enterprises and promote enterprise reform, innovation and continuous improvement.

On this basis, combined with the current retail market environment, in order to explore future retail changes, retail companies need to explore how to establish a customer management model as soon as possible.

There are more and more retail stores, and more and more offline and online retail formats. Customer "diversion" is a long-term trend in China's retail market. And it is an irreversible trend.

In the face of such a long-term trend, on the one hand, we need to adjust the products, improve the services, and operate with integrity. However, in the current diversion environment, it is far from enough to just do these three aspects well. Enterprises need to establish a new retail model for how to operate customers as soon as possible.

A new retail system is established around how to continuously increase new customers, how to increase customer activity, how to continuously tap the value of customers, and ultimately create more customers with lifetime value.

4. Omnichannel

China's retail market has transformed into an omni-channel market structure.

When exploring the future of China’s retail transformation, we must take omni-channel as an important starting point.

From January to April 2024, my country's total retail sales of consumer goods reached 15,602.6 billion yuan, a year-on-year increase of 4.1%. The national online retail sales reached 4,411.0 billion yuan, a year-on-year increase of 11.5%. Among them, the online retail sales of physical goods reached 3,735.6 billion yuan, an increase of 11.1%, accounting for 23.9% of the total retail sales of consumer goods.

According to Nielsen's research data: In my country's fast-moving consumer goods market, the market share of offline and online has reached a structure of 42:58.

According to Nielsen's research data: From January to May 2024, my country's FMCG market grew by 4.3% across all channels, with online channels growing by 18% and offline channels falling by 2.3%. Non-food categories performed better than food categories across all channels.

These data fully demonstrate that the current Chinese retail market is already an omni-channel market, and the future Chinese retail market will definitely be an omni-channel market. The future Chinese retail model will definitely be a highly omni-channel integrated retail model. The main growth space of the future market will come from the online market.

At present, an important breakthrough point in retail transformation is how to build a new retail model with highly integrated omni-channels.

At present, the traditional offline-based retail model, a simple combination of online and offline, may not be able to fully adapt to the future omni-channel changes in the retail market. It is necessary to reform the new retail model with a high degree of offline and online integration.

The Hema model has made a positive attempt to transform the omni-channel retail model. Sam's e-commerce + forward warehouse model has also made a relatively successful omni-channel retail practice. The recent exploration of + forward warehouse by some convenience store companies should also be a very valuable attempt. Even Costco, which has such a booming store business, has begun omni-channel exploration.

It is necessary and necessary for retailers and supermarkets to transform into omni-channel stores. In the future, except for Pang Donglai, other companies may have to adopt the transformation path of omni-channel retail.

The future of Chinese retail must form a high degree of integration of various retail formats such as in-store + instant retail + community retail + forward warehouses + e-commerce.

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