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Retailers told to alter business model
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Traditional retailers should change their business model and develop more products of their own to meet the challenge from online vendors, a senior official has said.
“Retailers need to focus again on the products they sell, instead of paying too much attention to renting out counters,” Xu Wenjie, director of the Trade and Commerce Administration Department at the Shanghai Commission of Commerce, said yesterday.
“Selecting or developing your own products requires much more knowledge and better skills but it seems like the only way traditional retailers can compete with online shops,” Xu said.
Currently, most department stores in Shanghai depend on renting out their counter space to make money. They look more like property management companies than retailers, the official claimed.
One way to diversify is to develop private labels, or those branded with the name of retailers. They have become more common in local supermarkets and hypermarkets, and may emerge in department stores.
The annual Private Label Fair, which will be held at the newly built Shanghai Convention & Exhibition Center on December 11-13, may provide an opportunity for retailers to learn and try to develop their own brands and products.
Private label has a history of 20-plus years in developed markets where retailers try to differentiate themselves from the competition in a bid to make more profits.
In the West, private label products account for more than a third of retailers’ total stock. In China, it was less than 5 percent five years ago, the commission said.
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