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Innovation holds the key to retailers' success in China
By Egidio Zarrella |
May 22, 2012, Tuesday
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Print Edition
Print Edition
THE retail industry is one of the most exciting areas in China, as we start to see a major transformation in the Chinese consumer. It has been well recognized that the China market will provide significant chances for both domestic and multinational retailers. There will be considerable demand for goods and services across China which retailers must supply to. The use of technology will be a critical channel for retailers to get to their current and future customers.
The Chinese consumer is starting to match or even exceed the Western consumer in prowess of online shopping and interaction. In fact, by 2013, China will surpass Japan with more consumers now buying online. It is a massive transformational change.
In terms of the luxury sector in China, we see luxury brands are spending more time developing digital media as part of their marketing strategies. China has also seen a growing number of blogs providing coverage of luxury goods and these can be more powerful in shifting or reinforcing brand perceptions. We see the emergence of more innovative formats such as Ipad apps, that create new possibilities for interaction with consumers.
Meanwhile, Chinese retailers are looking to their overseas counterparts and are pushing for innovation not just in the digital realm but in the traditional bricks and mortar. The innovation of the apple stores fronts combined with sophisticated online stores is a model many retailers look at very carefully. Such a combination of physical and virtual worlds works well in China. The government is laying down an impressive digital infrastructure which allows faster market propositions to consumers. Retailers must understand the growing digital economy and ensure they can meet customers' growing needs.
Yet Chinese retailers cannot just look at the front facing side of their business. Innovation must now come in the back-end i.e. how they get the goods from suppliers and manufacturers. This is where the digital revolution will bring the greatest benefits to the retailer and ultimately the consumer.
Speed to market is critical; retailers require now sophisticated systems to manage their supply chain. It is in this realm retailers must become more efficient to get their products faster to market but an efficient price.
Chinese retailers are finding that they must adapt or be a part of this changing value chain. All technology investments need to be looked at very carefully but one needs to get involved or face considerable pressure to become more competitive in this area.
Egidio Zarrella is a partner with KPMG China.
The Chinese consumer is starting to match or even exceed the Western consumer in prowess of online shopping and interaction. In fact, by 2013, China will surpass Japan with more consumers now buying online. It is a massive transformational change.
In terms of the luxury sector in China, we see luxury brands are spending more time developing digital media as part of their marketing strategies. China has also seen a growing number of blogs providing coverage of luxury goods and these can be more powerful in shifting or reinforcing brand perceptions. We see the emergence of more innovative formats such as Ipad apps, that create new possibilities for interaction with consumers.
Meanwhile, Chinese retailers are looking to their overseas counterparts and are pushing for innovation not just in the digital realm but in the traditional bricks and mortar. The innovation of the apple stores fronts combined with sophisticated online stores is a model many retailers look at very carefully. Such a combination of physical and virtual worlds works well in China. The government is laying down an impressive digital infrastructure which allows faster market propositions to consumers. Retailers must understand the growing digital economy and ensure they can meet customers' growing needs.
Yet Chinese retailers cannot just look at the front facing side of their business. Innovation must now come in the back-end i.e. how they get the goods from suppliers and manufacturers. This is where the digital revolution will bring the greatest benefits to the retailer and ultimately the consumer.
Speed to market is critical; retailers require now sophisticated systems to manage their supply chain. It is in this realm retailers must become more efficient to get their products faster to market but an efficient price.
Chinese retailers are finding that they must adapt or be a part of this changing value chain. All technology investments need to be looked at very carefully but one needs to get involved or face considerable pressure to become more competitive in this area.
Egidio Zarrella is a partner with KPMG China.
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