Recently, China International Retail Innovation Conference was held in Shanghai. During the conference, KPMG China and China Chain Stores Association jointly released the report “Reshaping Growth – 2019 China's Retail Digitalization Power”. The report conducts in-depth research on the digital status of physical retail enterprises nationwide and the success of excellent brands. It systematically expounds the connotation, transformation framework, capability model of retail digitalization, and the digital status and future goals of the retail industry in Mainland China. And the future prospects have guiding significance for the digital development of China's physical retail industry.
The digital age requires that the growth model of physical retail enterprises be reshaped
The new era of consumer economy has arrived, and the Chinese retail industry is undergoing changes as the three elements of geography, population and technology change. The structural changes of customers and the emergence of innovative business models have become the biggest challenges facing Chinese retailers. Under these two challenges, retailers need to rethink their business models and positioning, and establish a customer-centric business operation system to maintain their competitiveness in this revolutionary turmoil.
Digitalization is a feature of the development of the times and has become an important direction for the development of the retail industry. Gao Shulin, Chairman of Tianhong Commercial Co., Ltd. believes: "Digitalization is not a simple application of information tools, but a systemic change in business models, operating systems and corporate culture that is going to be at the strategic level of the enterprise." Digitalization brings the biggest to Chinese retailers. Change is a change in growth patterns. Incorporating technology elements on the basis of traditional store and category expansion, the integration of the “index-level” effect of digital technology and the innovation model will drive traditional retail enterprises to break through the growth bottleneck and achieve innovative growth. Therefore, in the digital age that has arrived, it is important for physical retailers to understand the key elements of digital capabilities.
KPMG pioneers the core framework and competency model for retail digital transformation - "Smart Chain Enterprise"
Successful physical retail digital transformation and growth must have accurate and feasible frameworks and models. Based on the experience of digital in-depth services for retail companies in different markets around the world and KPMG's research on the future trends of the retail industry, KPMG first proposed the core framework and competency model for the digital transformation of the retail industry – “Smart Chain Enterprise”.
KPMG's core framework for retail digital transformation states that retail digital capacity building must be based on building efficient links between customers and brands, reshaping growth patterns, and creating incremental value as “one goal”; it will operate customers in depth, redefine “goods” and “refine” "Field", promote "cross-edge pulling effect" as "three big hands"; build "four-wheel drive" from four perspectives of product, price and marketing, customer experience, seamless safe trading and agile supply chain; accelerate the construction of "double The “two-layer foundation” of the “model” technology platform and internal organizational capabilities, and actively promote the data analysis capability and the external ecological cooperation system to create a “dual-mode” “two-way pillar”.
Based on the core framework, KPMG has built a retail digital transformation capability model, “Smart Chain Enterprise”, which defines the “eight capabilities” of retail digitalization in five areas: digital operations, drivers, foundations, organizations and ecosystems. The “Big Capabilities” can be broken down into 40 sub-capacity indicators, providing an accurate and feasible definition of the capability system that must be built to drive successful digital retail transformation and innovative growth. “The 'eight powers' represent the eight basic elements of retail digitalization capabilities, and it is also a powerful indicator for companies to guide future growth through digital transformation,” said Liu Jiangang, managing partner of KPMG China Management Consulting.
The digital road of retail industry is "resistance and long"
In this report, KPMG conducted a quantitative survey of a large number of physical retailers in mainland China. The overall report of the report found that Chinese physical retail enterprises are moving from the shallow application stage to the in-depth stage, and have more advantages in terms of innovative products, prices and marketing, seamless and secure transactions, etc., but with agile supply. There is still much room for improvement in chain, data and analysis, digital technology architecture, and eco-partner collaboration.
Yan Liang, president of the China Chain Store & Franchise Association, concluded: "The digitalization of the retail industry is still 'drained and long'. After several years of innovative practice, the situation of 'strong front, weak middle and back' has not been fully broken. From the front desk to the middle and back office, it is a key leap for the retail industry to cross the 'digital trap of retail industry development'. It is a test of the level of enterprise management and technology application. The China Retail Technology Innovation Center established by the association will be included with KPMG. Partners work together to help retail digitalization through training, standards, guidelines (such as cloud guidance on enterprise systems being developed) and platforms."
Looking to the future, KPMG will continue to focus on and gain insight into the digital development of the retail industry, based on the end-to-end digital transformation service capabilities from planning to technology implementation, to help retail companies create and satisfy customers through the full integration of data and technology and business. Demand, enhance digital business, operations and management capabilities. Assist retail companies to reshape their growth patterns, lay the foundation for future growth drivers, and gradually gain business value in an orderly manner.