Digital Transformation of Retail Enterprises During COVID-19?

This analysis explains the situation of the retail industry during the new coronavirus (COVID-19) epidemic, and gives advice on how to implement digital transformation after the epidemic.

1. What is the impact of the epidemic on the retail industry?
1.1 The difference between the new coronavirus (COVID-19) epidemic and the SARS epidemic in 2003

Compared with SARS in 2003, the epidemic was more contagious but less lethal. The government responded faster and had more experience. However, due to the increase in the urban rate, the transportation infrastructure is increasingly developed, and the scale of population movement is about 6 times that of 2003. When the factors of returning to the hometown during the Spring Festival are superimposed, the new coronavirus (COVID-19) epidemic covers more cities. At the same time, in order to avoid large-scale population migration and aggregation, prevention measures such as home isolation and prolonged Spring Festival holidays have been taken, which have a greater impact on the manufacturing and service industries.

1.2 Differences in the market environment between the new coronavirus (COVID-19) epidemic and the SARS epidemic in 2003

1.3 Short-term setbacks in social retail growth, consumer confidence is expected to recover quickly

In 2003, the growth rate of the total amount of the society showed a "V" shape. With the effective control of the epidemic, a rebound trend appeared in June. The new coronavirus (COVID-19) epidemic is expected to have a large short-term impact on the retail market. It is expected that the growth rate of total retail sales of consumer goods in the first quarter of 2020 will further slow down. The epidemic is only a short-term restriction of consumption, and the trend of structural upgrading does not change. Therefore, the non-rigid market for shoes, clothes, beauty and other non-rigid demand is under short-term pressure, and the health-related health care market will benefit in the long term.

2. What changes does the epidemic bring to retail businesses?

2.1 The overall e-commerce business suffered a short-term impact, and various platforms issued policies to promote growth
According to Analysys Qianfan data, under the influence of the epidemic, users' demand for epidemic prevention materials caused the monthly activity data of e-commerce to decline slightly, but due to the delay of merchants and logistics resumption of work, Pinduoduo, JD.com, Vipshop2 The monthly downward trend of monthly live data continued to expand. Hand Tao promoted a small growth through vigorous promotion of live broadcast on the station, while Suning grew against the trend by connecting Carrefour to the home business and continuing to work hard to buy the business.

According to the monitoring of Autodesk data, online retail sales in January both showed a year-on-year and quarter-on-quarter decline in varying degrees, and online retail sales were hit in the short term. In order to reduce the losses of settled merchants, e-commerce platforms have launched merchant support measures in various aspects such as capital, logistics, and tool use, which have led to the growth of the platform in disguise.

2.2 Fresh food e-commerce broke out in the vertical field, and operational challenges will continue to exist for a long time
During the epidemic, in response to the government's call for "less gatherings and fewer outings," the population of fresh e-commerce users experienced explosive growth, and it also exposed manufacturers' deficiencies in capacity and supply chain.

From the perspective of the model, under the conditions of the Spring Festival and the epidemic, the warehouse model performs better. After the epidemic, the fresh food e-commerce platform will also face long-term tests such as user retention, cost control, and efficiency improvement. Focusing on the "community" and deeply cultivating member services, creating a highly viscous and highly interactive retail ecosystem is the direction of future head manufacturers' efforts.

2.3 Offline business accelerates digital transformation, relying on live broadcast to create cloud shopping guide
The epidemic completely shut down offline businesses, which makes offline businesses re-examine the combination of online and offline, and use digital management and marketing to ensure passenger flow. Intime Department Store, Longhu Commercial, Suning and other companies have brought traffic to brands and stores through live streaming. 83 stores of Longhu Commercial carried out nearly 100 live broadcasts with cumulative sales of nearly 400,000 yuan (February 5-15).

The offline commercial and brand "full-person live broadcast" has achieved results in the short term, but the long-term effects are difficult to measure, but there is no doubt that the pace of offline business digital transformation will accelerate after the epidemic. Choices, live broadcasting, smart shopping guides and other forms will also become an important means to help physical commercial marketing.

2.4 Brands and retail enterprises pay attention to the construction of private domain traffic and lock in longer-term consumption and passenger flow

Brands and retail companies vigorously promote live broadcasts during the epidemic is only a microcosm. From a longer-term perspective, brands and retail companies are building exclusive private traffic pools by creating multi-faceted promotion and sales channels. In the process of private domain traffic operation dominated by brands and retail enterprises, accurate and efficient and low-cost user access methods are more important, and the key goal is to lock in the consumption and passenger flow of long-term high repurchase.

2.5 Insight into business data and the establishment of a fast-response smart supply chain will receive more attention

Increasingly diverse marketing and promotional methods have increased the volatility and unpredictability of sales, and the occurrence of the epidemic has increased the uncertainty of sales. For retail companies, the most important thing is the cash flow, and the inventory turnover rate directly affects the company's cash flow.

In the future, retail enterprises will pay more attention to the construction of the back-end digital supply chain, and analyze the accumulated massive data of different channels through data and algorithm decisions to provide more accurate decision-making for replenishment, replenishment, and transfer. Through the decision of the supply mode (supply time, quantity, cycle), the inventory can not only maximize the user's needs, but also control the inventory turnover time within a certain range, reducing the risk of enterprise inventory.

2.6 The epidemic impacted the logistics industry in an all-round way, and promoted the digital and intelligent transformation of the industry

In this epidemic, the logistics companies represented by JD.com and SF Express, which have a thick chassis, complete systems, and a sound network, have fully demonstrated their ability to respond to risks. However, the overall efficiency and quality of logistics need to be further improved. In the future, with the support of 5G technology and Internet of Things technology, the construction of a digital logistics management platform and the application of intelligent logistics equipment are important directions for the development of smart logistics.

3. Thoughts on the digital transformation of retail enterprises after the epidemic

3.1 Retail business model in the era of digital economy
"Online" is an important feature of retail business in the era of digital economy. "Online" emphasizes not only increasing the digital touch points of all links in the business process of the enterprise, digitizing business and data assets, but also emphasizing that data can be empowered at each end of the value chain for real-time intelligent operation Eventually solidified into the digital model and digital capabilities of enterprise value growth.
3.2 Focusing on user strategy and data driving are the tools to help retail enterprises through the transition period
At this stage, retail enterprises are facing multiple internal and external pressures. How to provide better products and services, how to improve the consumer experience and optimize business processes are the main problems facing retail enterprises during the transition period. Retail enterprises need to use insights as a starting point to drive cost reduction and efficiency improvement in all aspects of business operations, while relying on data to revitalize all data and support business innovation.
3.3 The digital transformation of retail enterprises begins with technological innovation and results from organizational change
Digital transformation not only requires technology, but also needs organization and management to ensure it. This is also the reason why Internet retail enterprises represented by Ali and JD.com have maintained organizational innovation ability through organizational structure adjustment in recent years. For traditional retail enterprises, especially large enterprises, the challenges faced by organizational change are even greater.

With the advancement of the user-centric strategy, inter-departmental affairs among large retail enterprises will increase. A large number of employees no longer work based on processes, but work based on goals, and the core functions of enterprises will change from management to empowerment. .