Entity Store Is An Irreplaceable Mainstream Retail Channel.

WAL-MART is not the only entity retailer to announce that it will close its stores on a large scale.

Messi's department store also announced earlier this month that it will further close 36 chain stores at the beginning of the year. Finish Line also said that the company will close 150 chain stores by 2020. Meanwhile, Sears holdings, which has closed nearly 600 stores in the past year, is also launching a new round of shop closures in the US market.

Is the closing behavior of the retail giants on the other side of the ocean prelude to "closing shop tides" in China's retail market?

Of course.

Since 2013, shops have been closed shop.

According to the statistical yearbook of the National Bureau of statistics in 2014, the total number of stores in large supermarkets in China decreased by 2567 in 2013 alone, and 214 in the whole country.

However, business observers believe that from the global perspective to the Chinese market, there is no denying that the offline stores will usher in a realistic trend in the reconstruction of the channel pattern because of Internet technology and consumption changes. The physical stores will substantially reduce the proportion, but in the long run, the physical stores are the mainstream retail channels which are irreplaceable.

First of all, compared with most of the industrial manufacturing and high-tech service industries, the evolution and replacement of retail formats are slow, and are less affected by technological innovation and product upgrading.

Before the rise of online shopping, department stores and shopping centers and chain supermarkets as the mainstream retail formats each time span was more than half a century, which surpassed most of the industrial products, especially the life cycle of personalized consumer products.

Online shopping has risen rapidly in the past decade since the birth of the last century, which makes people believe that the innovation of retail business mode and the replacement of formats have accelerated.

However, the situation that online shopping has completely replaced shopping centers and supermarket chains has not yet appeared.

According to the National Bureau of statistics's total retail sales volume of consumer goods in 2014, 2 trillion and 800 billion of China's online shopping market in 2014 was roughly 10.7% of the total retail sales of consumer goods.

This data means that we must admit that online shopping has become an integral part of modern retailing. It has become a new retail form that can not be ignored. But will online shopping continue to maintain high growth? In the future, how much will it occupy in the retail market? In fact, it is difficult to predict accurately.

According to the optimistic forecast of AI consulting, Yi Guan consulting and Ali Research Center, by 2020, the volume of China's online retail pactions will exceed 10 trillion yuan, and the proportion of online retail pactions will account for 16.3% of the total retail sales of social consumer goods.

But even so, it can be seen that by 2020, the physical retail outlets still occupy more than 80% of the market share of the mainstream retail channels.

In the United States, although WAL-MART began to close shop, according to the foregoing, WAL-MART stores are more re evaluating and adjusting their own portfolio, which does not mean that the whole shop is going to the end.

Take WAL-MART as an example. In China, WAL-MART also started a big store early, but its plan is to open 115 new stores in 2015-2017 years, including hypermarkets and Sam stores.

Among them, the main force of the shop is in the two or three line of new cities and towns.

Even in such four or five tier cities as Hubei Chibi and Hunan Xinhua County, WAL-MART has become the first national supermarket chain to enter.

It can be imagined that WAL-MART is still interested in the emerging consumer groups in the process of urbanization in China and has put the "treasure" here.

By the end of 2015, WAL-MART had reached 433 stores in China.

Coupled with the deepening and sinking of China's four or five tier cities, WAL-MART's physical stores have not been greatly reduced, but are adjusting their focus.

In fact, when Amazon appeared in 1999, the whole industry was also saying that in the next ten years, all retail entities would be replaced by electricity providers. But now fifteen years later, physical retailers are still living well.

It is to be seen that in the US, 90% of the total retail sales of $3 trillion and 300 billion are completed in physical stores.

And the better signal for China's retail market is that the US online retailing is beginning to slide from the 10% share that has reached the highest proportion.

In the 2007-2014 years, the sale of pure electric business in the United States has dropped from the highest 10% to 5%, and the other 5% share is the purchase of consumers through mobile Internet in the physical stores of retailers.

Secondly, because people's basic behavior of "touching and close viewing products" can not be violated, people can not live apart from socialization and socialization. The basic nature of "shopping pleasure of on-site experience" can not be violated. Physical stores will still exist everywhere in the future, but exist in different formats and ways.

Conversely, due to the lack of on-site experience and experience, its sales have a natural ceiling.

AI predicts that the growth rate of online shopping pactions in China will decrease year by year, and will increase from 70.2% in 2011 to 16% in 2018.

AC Nielsen's survey also shows that 67% of consumers still enjoy the pleasure and satisfaction of shopping in physical stores.

Accenture's survey found that from the convenience point of view, the physical stores that had improved shopping experience still had absolute advantages. 93% of consumers said that physical store shopping was "very convenient / convenient", far higher than that of network (75%) and mobile devices (61%), and the proportion of consumers who planned to shop more through physical stores increased from 18% to 18% a year ago.

The trend of consumers returning to the store indicates that the shopping experience of the physical store can not be replaced by other channels.

Third, the whole channel of O2O is retail. The future has become the industry consensus. Physical retailers are also investing heavily in building multi-channel and data facilities under online and offline integration.

In the United States, a large proportion of the 10% electricity supplier sales are contributed by online retailers.

In addition to Amazon, eBay, Newegg and Overstock, four of the top ten local businesses in the United States are pure online retailing. The remaining six are born by traditional physical retailers, and the six traditional entities retailers can quickly catch up with traditional electricity providers. The common feature is that they have borrowed from the strong supply chain of several kinds of goods, and then expand the marketing mode on the line, and develop different O2O models according to the DNA of the original entities, and then do the international market.

In China, 80% of physical retailers have also launched full channel retailing, which means that physical stores can get full channel inversion advantage by blending online and offline.

In the past 2015, he invested in shares from Ali.

Jingdong strategic investment Yonghui supermarket and so on can be seen that as the "air force" business is accelerating landing, and as the "army" offline retailers, from B2C business to the outlet of cross-border electricity providers are accelerating the opening of the offline experience shop, online and offline integration of the whole channel will become the mainstream of the future retail industry.

According to the survey data from the Westfield group, 72% of the customers will go to the physical store before buying online; 78% of the customers should read it online before buying the store.

This shows the importance of physical stores as a hub for online and offline traffic.

This is why the famous American Warby Parker, Piperlime, Bauble Bar, Amazon and so on are investing in the establishment of a physical store. China's e-commerce Alibaba, Jingdong, Dangdang, jumei.com and so on all have to go to the line without exception.

According to the analysis of shopping centers in the United States, O2O consumers are 3 times the frequency of shopping by single channel consumers, 3.5 times the amount of consumption, and the conversion rate of stores is 4 times that of online shopping.

Pure online shopping (including returns) can only achieve 77% of the original paction amount. "Online order and store purchase" can achieve 107% of the original paction.

Fourth, the electricity supplier in China is expanding from a region with relatively high population density and strong consumption ability to the eastern and western developed areas with electricity supplier's relative advantages to the sparsely populated Midwest and 345 line cities. The distribution cost of the last mile of the electricity supplier suddenly increases, while the rental cost of the entity retailers in the 345 line cities is not only reduced rapidly, but also due to the impact of the electricity supplier, the rent has a downward trend, and the balance of the cost advantage will tilt to the entity retailers.

The most important thing between the electricity supplier and the entity dealer is

Contention, the logistics cost of the electricity supplier and the rental cost of the entity business are the two key variables that determine the success or failure of each other in the cost. When the change of the rental environment and logistics environment leads to the balance of the cost to the physical store, the entity store can get a very favorable reversal time.

As compared with the high cost of online e-commerce, the entity store can not only provide a better visibility of brand advertising, but also become a low cost traffic entrance in the whole channel, and usher in a window of declining cost and rising sales.

Finally, from the perspective of commodity category,

The category of the main business entities is mainly clothing, clothing, knitwear, home appliances, digital products, food and household goods. The high priced products in the fresh products will gradually become saturated. When the electricity supplier is infiltrating into the fast selling products with low unit price and high delivery cost, the electricity supplier will not have comparative advantage compared with the entity retailers.

The three core of retail is price, choice and convenience. The convenience of the entity store, social shopping and personalized choice and sense of experience, together with the use of data fusion, online and offline, and more consumer demand, will make the store more intelligent, so that the advantage of the whole channel of the physical store is more unparalleled than that of the pure online shop.

However, it needs to be pointed out that the future of China's physical retail stores is still the mainstream channel.