According to the performance forecasts released by listed retail companies and the sample survey of the China Association of Department Store Commerce, the overall operating performance of retail enterprises in 2023 is not satisfactory. At the same time, due to the general environment of shrinking demand and weakening expectations, companies are generally cautious about their business expectations for 2024, and even some department stores with performance expectations in 2023 will take a more cautious attitude towards the full-year budget. It can be judged that the industry-wide digitalization (including informatization) budget will be further reduced in 2024.
Compared with their counterparts in international developed markets, retailers in Europe and the United States generally spend about 1% of sales, and according to industry statistics many years ago, the average informatization budget of Chinese retailers is only 0About 5%, there has been an increase during the epidemic, but the increase is not obvious, and it is estimated that the overall budget of the whole industry digitalization (including informatization) is 0Around 7%.
The digitalization of the retail industry is in the process of breaking through to the deep waters, and there are many key nodes that need to be solved. Budget compression, the process of digitalization will be affected to a certain extent, enterprises will delay system updates, and reduce online projects. The focus of investment may be mainly in two aspects, one is to upgrade or replace the system that has affected normal operations, and the other is to launch projects that can produce immediate results.
Against this backdrop, is retail digitalization stalled? We believe that limited budgets cannot stop the pace of digitalization, and enterprises can make breakthroughs in at least the following five areas:
Unleash the potential of existing systems
Normally, before an enterprise develops and launches a system, the business department will put forward the requirements as comprehensively as possible, but after the system is launched, the actual use of the overall function of the system is generally less than 70%, and some even only 50%, there is a lot of functional redundancy or room for further improvement. Communicating with technical service providers, they also regretted that the extended launch cycle and increased the system cost became a dormant function. There may be many reasons for this, such as personnel changes, business adjustments, and unskilled operations.
Your digital team can take a holistic look at your existing systems, learn more about how they support your business operations, and uncover underutilized features that can play a further role in your operations.
Improve your own operational capabilities
At present, an important breakthrough point in retail digitalization is: how to transform the online system or tool into the enterprise's own operating capabilities? Every business has dozens of systems, including online operations, merchant and asset management, membership management, and marketing ......The challenge for enterprise digital teams is how to make tools become the ability to improve efficiency and reduce costs through their own operations (rather than relying only on the service provider team or the agency operation team) without increasing costs.
On the one hand, enterprises can appropriately self-develop technology, increase and meet the personalized needs of enterprises on the basis of the existing systems of service providers, and reduce the cost of customization and purchase; On the other hand, to strengthen operations, the digital team goes deep into business operations to provide concrete, executable, and efficient support for operations. From a practical point of view, most of the enterprises with better digital operations are those with better digital teams and business teams, such as Intime Department Store and Hanguang Department Store.
Core projects drive development
At present, the digital level of different retail enterprises varies greatly, some have initially achieved online and offline integration, and some are still working hard for the basic work of digitalization. The situation of each enterprise is different, and the focus of the system project is also different, so we should focus on the project with the largest obstacle to operation and the most problems at present.
For example, in the era when traffic is king, enterprises generally report that the current CRM system cannot meet the needs of member management under the omni-channel model, and cannot effectively complete management activities such as attracting new users, drainage, retention, and fission. Under the requirements of reducing costs and increasing efficiency, is the business and finance of the enterprise connected? Is it possible to reduce redundancy through the integration of business and finance? These have very good cases in the industry, such as Chongqing Department Store and Zhenghong City.
Co-create with consumers
Under the digital conditions, retailers are deeply bound to customers, retailers can reach customers in advance, plant grass in advance to occupy their minds, and customers can also have a further impact on retailers through attention, sharing, comments, etc. in the consumption process. The so-called content marketing, community marketing, circle marketing and other concepts basically revolve around our user community, stimulate their sense of participation and desire to share, and then produce fission and increase traffic and brand awareness.
At present, social networking is developed enough, and since it has become commonplace, it can be said that the infrastructure for our marketing has been relatively perfect. UGC (User Generated Content) emphasizes that users are not only consumers of content, but also actively participate in the creation and distribution of content. Users participate in content creation on social platforms in various forms such as text, audio and audio, so as to better spread the corporate brand. Some young business projects, such as TX Huaihai and Beijing Bloomage Live, are especially worth learning in this regard.
Huddle with your peers for warmth
Retail peers are on the road to digitalization and have no competition. Working together to raise the level of digital capabilities is actually beneficial to all enterprises, and the industry can enter a healthy development. Due to the different scales, locations, and start-up times of enterprises, the situation of digitalization is also very different. There are always enterprises that have been very successful in the application of a certain system tool, such as online business, CRM, integration of business and finance, merchant management, etc., which can fully learn, communicate, and even cooperate with business.
Of course, the association is also playing an important role in this process, such as organizing exchanges (the new Lufthansa Mall's worry-free business management system has just been organized), compiling standard guidelines (recently completed the review of industry standards such as "Department Store Membership System Requirements"), and sharing cases (case promotion such as shopping guide live broadcast and digital marketing has been carried out), etc. In particular, in view of the high cost and low efficiency of digital collection of goods in the process of online business, the China Department Store Business Association, together with some retailers, is starting to organize a digital platform for goods, hoping to form a mechanism for co-creation, co-construction and sharing.
There are no shortcuts to digitalization, but there are methods. Even if the market expectation is not good and the budget is limited, enterprises can also strengthen their capabilities, tap potential and increase efficiency, and enterprises can also learn from each other, communicate with each other, and gradually become stronger on the road of digitalization!