Digitalization seen as path forward for struggling retailers
Retailers and industry watchers are calling for further digitalization to reboot sales amid the pandemic and to further raise operation efficiency.
Due to macroeconomic uncertainty, specialty and department store sales will remain under pressure in the near future, said Secretary General Peng Jianzhen of the China Chain Store & Franchise Association.
"Retailers will be reluctant to make investment in technology solutions while still facing uncertainty," he told the China International Retail Innovation Summit in Shanghai. He also advised digital solution providers to pay more attention to details instead of integrated services that lack focus.
"There's more determination to use data and gain consumer insight and expedite offline outlet transformation," he added.
There's still huge growth potential in digital innovation for retailers and franchise businesses, and a recent technology project initiated by the association aims to break down data barriers by allowing retailers, brands and technology providers to adopt a standardized data format.
Burger King China CEO Zhu Fuqiang pointed out that food takeaway makes up 45 to 50 percent of its overall business and dine-in customers can also order from smartphones and self-service kiosks.
“Digitalization has helped us better cater to consumer needs thanks to collaboration with delivery sites, and stores close to neighborhoods and office buildings have rebounded faster than those at shopping centers," Zhu added.
Suning Technology Group Vice President Jing Wei pointed out that many retailers still need to learn how to fully leverage digitalization to match their own business models and operation strategies.
Suning said it hopes to extend cloud retailing functions to more than 15,000 retailers by the end of this year to help them manage merchandise and operate smart retailing platforms.
"Most small and medium-sized businesses hope to see real benefits of digitalization projects within three months, and in lower-tier cities, hardware facilities will not necessarily have immediate investment return."
He suggested targeted supply chain solutions and customized merchandise at lower-tier cities to benefit shoppers and manufacturers.
Only about 1 percent of small businesses have adopted digitalization practices, he estimated, and they're advised to prioritize digitalization and focus on key areas according to each retailer's demand and market circumstances.
The digitalization of local retail services offers huge development opportunities in the next five years and requires further investment in infrastructure and logistics, said Dada Group CEO Philip Kuai.
"Many retailers that have adopted delivery services have remodeled their businesses with a smaller physical presence to optimize cost structure," he noted.
Although Dada itself has yet to become profitable, it sees a win-win situation between retailers, distributors and shoppers, and some retailers' delivery services have proved to be profitable thanks to higher operation efficiency.
