Three Levels Of Pformation Of Chinese Retail Enterprises

From the point of view of international industry history, retail industry has always been dominated by continuous changes.

In contrast to the mature market, a fast forward version of the retail romance is staged in China.

The driving force of mature markets in different periods has almost come to China at the same time, pushing traditional retail to the cusp.

The four driving forces are:

The stratification of the consumers is obvious: the rise of the middle class, the emergence of new consumption concept, and the more personalized demand.

Change of supplier pattern: the growth of international big companies is slowing down, and the influence of local products and import minority brands is constantly improving.

Disruptive technology breakthroughs: the Internet, especially mobile Internet, is changing the form of consumption.

Industry boundaries are increasingly blurred: cross domain competitors change the rules of the industry game, focusing on the share of wallet.

Since reform has arrived, the question before retailers is not to change, but to "change what" and "how to change".

In terms of "changing what", it is a general direction to change from the concept of "buying and selling" to "taking consumers as the center".

The traditional retail business is mainly based on production and marketing, and its mode is simple and extensive.

"Consumer centered" means that retailers first need to understand consumers.

More importantly, retailers should tap the sleeping data treasure, collect data from consumers, integrate with brand data, and grasp the behavior changes and trends of different consumer groups.

Secondly, retailers should put consumers' insights into daily operations.

Many retailers want to "change", but don't know where to start.

Some have launched a lot of punctuate investment, resulting in little success. Some of them are willing to work hard but unable to move in front of personnel resistance and ability gap.

Based on the experience of retailer pformation at home and abroad, we pform the comprehensive pformation plan into three levels.

The first level: seize the opportunity to win quickly.

Facing external pressure and

Change, the primary task of change is to implement fast win measures, revitalize resources and win time.

According to the experience of BCG (Boston consulting company), five quick win measures usually bring hundreds of millions of dollars in efficiency improvement in six to twelve months.

Supply cost management: China's retailers are relatively extensive in terms of supplier management, and the negotiation means are single. They do not make full use of the analysis of factors such as end-to-end supply cost, market share, profit contribution and so on, converting the scale of purchase into the actual bargaining power.

BCG helps a leading domestic retailer to make good use of the competitive relationship and share differences among many suppliers and win better profit and account through negotiation.

In some categories, the gross margin of 4~5 points can be raised within one year.

Streamlining the commodity structure: many retailers, due to the lack of fine management of commodities, plus the strong suppliers of big suppliers, store a lot of unsalable goods in stores and warehouses.

While analyzing the beverage category for another retailer, BCG found that only 1/3 of the total sales accounted for 1% of the sales and 2% of the gross profit.

In line with consumer demand and commodity efficiency, formulating a clear replacement standard can not only speed up the new product shelves.

At the same time, it can further integrate the supply chain resources and create a good environment for cultivating new brands and private brands.

Improve sales efficiency: traditional retail, especially under the influence of electricity providers, frequent promotions, consumer fatigue.

In order to get out of this vicious cycle, we should first clear the business objectives of sales promotion according to consumer purchase behavior and category positioning.

Secondly, promotion depth is not simply determined by experience or competitive benchmarking, but consumers should consider the promotional response to different categories and evaluate the total supply chain cost of promotion.

BCG has helped a customer to use the market information to match the sales volume of the competitor, analyze the difference between sales promotion and promotion effect, reduce the last 10% sales promotion, and raise the gross profit margin of the category to 1~2 points.

Scientific pricing: at present, the retailer's pricing mode is mainly based on commodity cost plus gross profit, which can not reflect consumers' value perception and price sensitivity.

Through the systematic analysis of price information, BCG and an American retailer used big data to excavate three directions: first, differential pricing based on the price sensitivity of different regions; two, according to the difference pricing of consumers in different buying scenarios; three, to maintain high price competitiveness for consumers' high recognition goods (KVI), and to increase profits for non KVI goods.

Through this series of efforts, the retailer has gained profits and maintained the image of parity.

Loss, shortage and efficiency: BCG customers (one of Europe's largest retailers) has increased the cost effectiveness to two hundred million euros in six months through the above initiatives.

At home, retailers in a coastal area are facing a 20% annual increase in staff costs.

BCG helps the company optimize the scheduling arrangement according to the store area and traffic volume, and finds that the individual shops have an optimized space of about 15% employees.

To seize the opportunity to win quickly, retailers can get valuable resources and time. In order to really turn the tide, we need to invest in building the key capabilities to survive in the new environment. The four most important ones are:

Supply chain capability: China's retail supply chain relies heavily on suppliers in the long run.

Purchasing team and store operations focus on supplier charging and rebate, rather than running stores, resulting in a long-term lag in the professional ability of the retail industry.

In the past period of rapid expansion, the local management team was fully responsible for local performance and formed their own battalion situation.

But the scale can not be integrated, actions can not be consistent, retailers' influence on negotiation and cooperation with suppliers is greatly reduced.

To solve this problem, we need to reform and break through the organizational structure, reporting mechanism and headquarters management capability.

Physical distribution capabilities: even if the online market is developing rapidly, there is still a huge market under the line.

The breakdown of consumer groups and shopping occasions will accelerate the emergence of new formats in the Chinese market.

The creation of new formats requires retailers to have a deep understanding of the "destination" category combination and the "landmark" experience.

The retail technology involved is not a one-sided imitation.

Brand building ability: clear retail brand positioning can give consumers a strong reason to shop and shop.

Deep tillage, accurate product mix, promotion themes and store experience (including functional and emotional level) are conducive to building consumer brand preferences.

Full channel capability: the development of retail channels is a general trend, but the whole channel strategy needs more resources and capabilities than single channel. Every enterprise should decide the depth and pace of investment according to its own development stage and market environment, and constantly experiment and adjust the pace.

The traditional retailer's full channel mode needs to grasp five elements: first, understand the consumption pain points, focus on the links that can bring benefits; two, provide seamless shopping experience around the core scenario and capture the opportunity to expand the share of the wallet; three, make use of the combination of commodities and innovative sales promotion activities, which is different from low price competition; four, invest in building the big data capacity of the whole channel, enhance the fine operation capability; five, use the store layout and storage layout, and realize the multi-channel distribution and delivery by offline logistics.

The third level: reshaping the foundation of development

There is no shortcut to pformation.

This process is relatively long. It requires patience and determination.

The fast win income and the new ability building can enhance morale, bring valuable confidence and vitality to the team, and the three levels of deep change are therefore organically combined.

Organizational pformation: most of the pformation barriers are mostly related to people.

Under the premise of Stabilizing our army, retailers should gradually adjust their organizational structure, performance indicators and decision-making mechanism. At the same time, we should establish a platform for attracting talents and attracting talents.

Transformation is also inseparable from the remodeling of corporate culture. Enterprises should seize the opportunity to implement efficient and innovative organizational culture and provide protection for implementation.

Management Innovation: pformation involves a large number of cross sectoral initiatives and resource scheduling, which requires deep involvement of top management.

In addition, the pformation project management system is established, and the full-time change management office integrates internal and external resources to promote the smooth development of the pformation.

System pformation: the realization of pformation needs a powerful system process as support.

The retail background is like the main frame of a tall building. Its construction requires full participation, but there is only one piece of drawings, and there is only one set of guiding principles.

Under the framework of clear management principles, it is necessary to ensure full cooperation among departments so as to create value for customers at the front end.

In a torrent, what Chinese retailers need now is not only the courage to go forward, but also the calm judgement and clear path to change.

They need to get rid of the fog in the turbulent changes, see the water potential, and ingeniously borrow the power to explore a way out for the breakthrough.