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China's retail industry in two decades: from traditional to new retail

In the past two decades, global economic and social development continuously faced new opportunities and challenges. For China, the re-structuring of the economy has accelerated, and the retail industry has also witnessed new developments. In 2020, concepts such as “new retail” and “no-boundary” retail continued to flourish, and new business models such as “community group buy” and home-delivery popped up one after another. As of now, online retail accounts for over 20% of total retail sales in China.

From 3.9 trillion in 2000 to 39.2 trillion in 2020, the total retail value of the country has increased tenfold. The rapid growth brought prosperity to the retail industry, but also dwindling dividends. During this process, the retail industry has been showing tenacious vitality under pressure and impact, breaking through the cocoon by means of business model transformation, business innovation, and capital restructuring.

The decade of 2001 to 2010 is undoubtedly the "golden decade" of development for the industry. On the one hand, local retailers achieved initial results competing with foreign capital. On the other hand, the retail revolution, represented by e-commerce and vertical e-commerce, driven by user traffic and the mobile Internet, was rapidly emerging. In 2016, the concept of “new retail” was first proposed, and with the emergence of pioneers such as Hema Fresh, the retail industry entered the new retail era.

Local retailers won the battle against foreign capital
On December 11, 2001, China formally joined the WTO. It was a milestone in China's economic development, and also marked the beginning of the competition between foreign capital and local retailers. After fierce battles, foreign capital was defeated and foreign retailers continued to shut down their stores in China to put a stop to losses. In 2010, RT-Mart replaced Carrefour and became China’s No.1 hypermarket.

All-around digitization
The development of Internet technology has not only brought about e-commerce and new retail but also promoted the digitalization of the retail industry. In the past 20 years, new technologies represented by the Internet have been spreading in the country, closely connecting consumers, commodities, and stores, reconstructing the relationship between the three.

The marketing strategy that combines new technologies with consumer scenarios is typical of digitalization in the retail industry. Through technological innovation, growth is empowered and the industry becomes more resilient. In particular, the outbreak of the Covid-19 pandemic in 2020 has forced a number of retail companies to accelerate their digital transformation and accelerated the development of live-streaming e-commerce, community group buy, and other sales scenarios. The world we live in is rapidly digitizing, and technologies such as e-commerce, cloud computing, and mobile payment have completely changed consumers' shopping and sharing behavior.

Development of community retail services
With the continuous improvement of digital technology and intelligent supply chain, the retail market based on local distribution has become a PoS closest to consumers. Especially, consumer demand for instant retail has been magnified during the pandemic.

Data from Aimei Consulting shows that under the stimulus of the pandemic, the "community group buy" market saw rapid development in 2020, and the market size may have reached 72 billion yuan. It is estimated that by 2022, the market will exceed 122 billion yuan, with an annual growth rate of 28.4%. This retail model has incomparable advantages in the supply chain and physical space compared with traditional supermarkets. It can promote traditional retailers to accelerate their digital transformation, so as to integrate online and offline business and further improve resilience.

Source: Linkshop

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