Behind Suning Electric Quotient: The Life and death in the retail industry evolution

Liu Yan/Wen

Suning is undoubtedly an admirable enterprise, just as the winged dragon once ruled the sky of the Cretaceous.

In all the traditional retail enterprises, suning is undoubtedly one of the most firmly touched by the manufacturers of electricity, compared to Gome, the Di-tong, than the hundred, than the big run hair ... are even more resolute. Previously, in ERP, CRM and other management information, Suning has been one of the best retail business samples.

But if you take part in the conference it just held, carefully consider it on the "shop" of the exposition, see 3 of roughly the same, but also in the words deliberately separated logo, but still uneasy, deeply feel the future of the home appliance retail giant is full of uncertainty and this is behind the whole traditional retail industry panic.

Can Su Ning's transformation succeed in the end? No one can know that the mission of a top entrepreneur is to create miracles and become impossible. But if the whole retail industry as a whole, history to analyze, but can clearly see the evolution of the industry path; if we can outline the retail scene for the next 5 years or even 10 years, then we can generally see what kind of business can survive in the new evolutionary "generation". Whether the current retail business can evolve into the dominant species at that time is another matter.

Starting at the end of 5 years

We can imagine the 5-year retail scene, starting at the end:

First, in the next 5 years, China's total social merchandise retail sales may be the current one times, tend to 3540 trillion yuan, then the online shopping market may reach 1 trillion U.S. dollars, that is, accounting for the total social merchandise retail 15–20%. But if you don't think about it that way, but only consider books, digital products, home appliances, such as "standard parts", this ratio may be as high as 40%-50%, or even above the low-lying, the most easily digitized retail industry may already all can net, also means that the number of shops under the line now began to saturation. And fresh, diet, non-standard parts, etc. may also exist more online.

Second, in this process of elimination, the business model for the standard parts is likely to be this: most only need to buy online, without the need for an offline store, or only a small number of display shops, image stores, and 7-11 of community convenience stores in other words, retail from department stores, to supermarkets, After the evolution of mall, it will be replaced by the online electric business platform, which can not be reversed. Instead, the old patterns of community shops and fresh supermarkets are still more difficult to replace.

Third, before retail = inventory + Logistics + offline store + offline marketing, the future 5 years of standard products retail = inventory + Logistics + online store + online marketing. The only difference is that the cost of online stores is lower, the nature of inventory management and logistics management does not change, and it is this unique advantage that represents the direction of productivity evolution, unstoppable.

Therefore, if the 5-year boundary, Suning's offline entity stores many will become a depreciating asset, the need to gradually reduce, and the line is still a catch-up. Therefore, Suning proposed the concept of the store is a compromise results (suddenly shut down too much, the absolute impact of cash flow, is also very irrational), the best way is: First, with the offline still higher gross margin, still a large number of customers from the cash flow to and the Beijing-East competition, and so on, until the online experience more than the opponent is expected to succeed, This is in the race against time; second, the current mode of home appliances to the general merchandise mode, or even Wanda, the same commercial real estate model transformation, which department stores by the network impact speed is only slower, Wanda mode and need more funds, Suning chose the compromise.

The BoE will win?

If the 5-year assumption Cycle, Suning's challenge is enormous, but if you stretch the horizon further, such as 10, there may be no reason to look at the current Jingdong model.

Assuming that 10 years later, China's total social merchandise retail sales is not a key measure, the network of retail share may not be the most critical indicator. The key is to see how much technology has changed in the retail sector, and may need to be more imaginative.

Back to the nature of retailing, the retail industry itself is just an intermediate channel for sending products and services to the end consumers. If it accounts for 10% of GDP, it means that the 10% are "non-essential costs" that can be squeezed, including inventory, logistics and transportation, store display and marketing costs, whether online or in the physical store. These processes do not increase the actual use value of products and services, but also increase the intermediate loss, time cost.

In this process, technological advances have been driven by compressing this cost. The evolution from department stores to supermarkets to mall, for example, is the process of constantly compressing customers ' access to TCO (total cost of ownership). The advent of the internet accelerated the pace of this evolution, the future of the Internet, things networking, sensing network should further compress this cost.

In this sense, from the perspective of the development of productivity: first, the future in the inventory should also be like the manufacturing industry has gone through the same, to achieve JIT, no overnight inventory, and the best way is inventory in the road, the original manufacturer directly to a logistics enterprise supply can, that is, inventory and logistics in one; is to platform, so that the store, show the cost of further reduction, not relying on Ali, Jingdong and other platforms, but also by a exploitation, but the manufacturer of direct supply, just a "ultimate search platform"; third, the final, is from product production to the final purchase of the cost of minimizing the user experience to maximize.

Therefore, the defeat of Su Ning and Gome are not Jingdong and Ali, but the evolution of technology and industry, the future defeat of Jingdong and Ali are not today's backward productivity, but the use of new technologies, create new models, to find new direction of productivity new enterprises.