8 Retail Trends In China – No 6. Prime Time For Local Luxury

17 March 2014

Local Luxury

Luxury has been a common theme in china’s recent retail history. From the Chinese going abroad to buy, Hong Kong as a luxury goods market and every global luxury and premium brand finding a home in the ‘high streets’ and top class malls of China, luxury is seen as more than a status symbol; it is the evaluation of the elite and the definition of the ladder of success. The hunger for luxury is, indisputably, one of the most defining features of the rising middle class and new Chinese generation. It was only a matter of time before we saw the emergence of home grown luxury brands and we envisage them gaining traction in the Year of the Horse – the ability to mix national pride, artisan skills and high-end luxury is an unbeatable formula in China. In our opinion, this segment will take time to build as the mindset of ‘foreign = better’ is still entrenched but we nonetheless believe it will continue to grow and result in the formation of some very strong, innovative Chinese luxury brands. We expect to see these starting to assert their place in Chinese decadence and also emerging as global players within the luxury market. Having watched the creation of Chinese brands in the toughest of conditions locally, we have no doubt that if they can establish their presence overseas, they will significantly strengthen their position within the minds of local Chinese. This is a long road and the Year of the Horse will be an important staging post in the journey.

8 Retail Trends In China – No 5. Execute To Survive

14 March 2014

In Store Execution

As success outside ‘traditional’ bricks and mortar retailers continues, we anticipate increased pressure on manufacturers to conjure up growth. This is most likely to be achieved through a combination of basic marketing principles and decreasing costs in the system which, in turn, will demand greater sophistication in retail execution and sales forces across China. However, this kind of expertise and culture is not developed overnight, and it’s reasonable to speculate that specialists in this area will start taking over from the distributors that typically undertake this function. This does not bode well for these distribution companies that, until now, have had significant power – handling everything from the book, to the movement of physical stock, to in-store dealings. All this has been done with very little visibility for the brand owner, but as growth was so good, everyone was happy. Now, with the slowing in retail sales, we predict that a laser-sharp focus will be on delivering growth at lower cost. What will this mean? More science in field sales operation, better technology to drive execution, and complete visibility for the brand owner in terms of what it is paying for. All of these demands present a very real problem for distributors that are currently not geared for this level of in-store implementation. Don’t be surprised if there’s a sudden growth of outsourced sales force specialists, and an increase in the standard of in-store execution as a consequence.

8 Retail Trends In China – No 4. Local Retailers Become Masters Of Their Own Universe

13 March 2014

Local Retailers

You can safely assume that local retailers will continue on their path of extraordinary evolution to becoming world class. Undoubtedly, they will become more sophisticated in their deployment of systems, stricter in their management and begin to deliver better value than the international retailers currently fighting for market share inside China. Local retailers, either national or region-specific, are already starting to outstrip their international counterparts and in the Year of the Horse you can expect this to accelerate, with geographic expansion and increased output through existing sites. Local retailers already have the ability, through multiple means, to extract more profit from their locations, with the added advantage of ‘neighbourhood’ knowledge and connectivity. As they absorb elements of global retailing best practice, we forecast an ever-improving performance.

8 Retail Trends In China – No 3. A Bank In The Hand

12 March 2014

Digital Banking

As e-commerce continues to develop fast, so too will the ability of Chinese consumers to bank via mobile platforms. we’re already seeing this happening in multiple ways, from street vendors processing credit cards via their android tablets, to e-commerce companies like Alibaba offering their consumers small savings accounts, to phone-to-phone SMS transfers. Tencent (China’s largest internet portal) has started offering customers a banking platform and with its 400million+ users, it’s destined to have a big impact. In the Year of the Horse we’ll witness consumers being able to use, share and spend money faster and more easily, leading to more transactions in more locations. This is good news for small businesses that have previously been constrained by payment issues, and might well regenerate the steadily shrinking small, informal trader. Just imagine how the ability to transfer a relatively small sum of money with a simple cellphone connection will enable transactions that were simply impossible in smaller rural areas. We expect to see points of purchase springing up virtually anywhere – not just in markets, but even on the most remote street corner. Such is the growing power of digital and peer-to-peer banking.

The History Of Retail In 100 Objects – Paper Money

11 March 2014

Paper Money

It’s Tuesday so it’s The History Of Retail In 100 Objects post – This weeks object is Paper Money

The earliest paper money was used in China around 1000 BC and it was most commonly used as a letter of credit, transferred over large distances. the 13th Cent ury, when Ghengis Khan conquered China, he quickly grasped the potential of its paper money and began using it as a currency throughout his empire. He seized people’s existing supplies of gold and silver and gave them paper currency in exchange, leaving the population no opt ion but to trade with paper money. Although the use of paper money spread and continued for several hundred years, it was not wholeheartedly embraced. In Persia, its introduction in 1294 led to a complete collapse of trade. In the 15th century in China, the issuing of paper notes was mismanaged, leading to rapid depreciation of their value and causing inflation. As a consequence, the use of paper money in China ceased in 1455 and did not resume for many years. Europe came far behind Asia and the Arab world in its adoption of paper money, primarily because Europe didn’t have paper until around 1100 AD. The alleged first instance of use of paper money in Europe was in Spain in 1438 during a Moorish invasion (a Spanish military leader paid his soldiers with paper). Early on in the introduction of paper money, European governments took over its production and began printing ‘official’ paper money. These paper receipts were all given fixed values and people began leaving their heavy coins with merchants in exchange for them. The earliest known English goldsmith certificates were being used by 1633 as proof of ability to pay. Nations and colonies developed their own paper money, leading to the variety of notes in use today. In 1816, governments established the ‘gold standard’, to ward against inflation. This tied the value of paper money to a specific amount of gold, held in the government treasuries. The US officially adopted the gold standard in 1900. Today, not all notes are widely accepted and the average lifespan for a currency’s circulation is only 39 years. The longest running paper currencies are the British pound, (introduced in 1694) and the US dollar (introduced in 1792).

Contribution to Retail History

Paper money is a promise to ‘pay the bearer’ a set amount and as such its success as a currency depends on mutual confidence in its validity (unlike early coins which had an intrinsic face value of their own). It was pivotal to the opening of trade between regions and nations, offering a light, easily portable alternative to the cumbersome weight of coins.

The History Of Retail In 100 Objects Is Available As A Free Podcast

History of Retail Podcast

8 Retail Trends In China – No 2. Convenience Pulls A Punch

10 March 2014

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Relatively low numbers of car owners by population, combined with city congestion, has meant Chinese shoppers have always valued convenience retailing. So far this has not represented a competitive threat for large format retailers but in the Year of the Horse we expect this to change. Convenience retailers’ growing understanding of the power they have to compete as a true retailer – rather than just an ‘impulse location’ – will exert more pressure on ‘traditional’ retail. Their vast distribution network is already in place and as they tweak their product offering to increase the value of basket sizes, we predict strong growth. Around the world, we’ve witnessed this retail approach lead the consumer away from larger formats and we fully anticipate it will now do the same in China. Look out for competitors vying to buy the well-established traditional branded convenience stores as international retailers realise that these small outlets are real strongholds. Winning will come at a price however, as critical mass and distribution affordability will ultimately be the determining factors for business success. These will take time to set up, and whether already entrenched convenience brands will be able to leverage their head start remains to be seen. Regardless of who and how this slice of the retailing pie expands, we’re confident that it will prove to be a very robust format in years to come

8 Retail Trends In China – What’s In Store For The Year Of The Horse

7 March 2014

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As China rebalances there will be significant changes and challenges which bring with them tremendous opportunities. Retail is always fast moving, dynamic and change is a constant. The two together, retail in China, represent a potent recipe for success as long as you can orchestrate it. So, as we are now in a new Chinese year – the Year of the Horse, I  have put together, with Mike Smollan, from  Smollan the 8 key retail trends you should be watching out for and creating strategies and activities around. Will be posting each one over the next few days…Here is the first one.

The Irresistible Rise Of E-Commerce

e-commerce will continue to engulf many areas of retail worldwide, but it’s in China that we fully expect to see the biggest surge. So much that by the end of the Year of the Horse China will become the biggest e-commerce market in the universe. Rising digital penetration amongst the Chinese and the development of digital banking (see ‘bank in the hand’ below), is set to sharpen both the appetite and ability to purchase anything and everything online. Businesses like Taobao (consumer-to-consumer online retail) and Tmall (b2c online retail) are already leading the charge – and indeed Taobao’s creation of a safe and cheap option for everyone to be buyers and sellers in a digital market place looks set to cement e-commerce in Chinese daily life. It’s inevitable that as other enterprises realise that online can provide a greater return on investment, they will start to put more effort and resources into it. We foresee more and more businesses beginning to use the digital platform to stimulate their flat traditional retail sales, further fueling the digital retail revolution. Undoubtedly a key enabler of this continued growth will be China’s low cost, dynamic supply chain; products can be delivered swiftly with little or no extra cost to consumers and this, coupled with the decreasing amount of time available to visit stores physically, will help make online shopping a nationwide norm.

The History Of Retail In 100 Objects – Cowrie Shell

4 March 2014

 

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It’s Tuesday so it’s The History Of Retail In 100 Objects  post – This weeks object is The Cowrie Shell. In the earliest civilisations the concept of ‘trading’ was well established, but there was no equivalent to money for use in such transactions. To get your food you would ‘barter’ an item such as fish, fur, clot hes, decorative items, tools or even weapons. From 9,000 to 6,000 BC the nearest equivalent to currency was cattle. Archaeological evidence suggests that the first widespread form of currency was introduced around 1200 BC, through the adoption of the cowrie shell as a trading ‘token’. These shells shared many of the attributes of modern coins – being durable, portable, easily recognisable and hard to fake. As well as being counted out in payment, they could also be traded by weight. The cowrie shell was indigenous to the Indian and Pacific Oceans, but its use as a trading token spread and it became the most commonly used means of payment across large parts of Asia, Africa, and some of the outer reaches of Europe. The significance of shell trading in China is evidenced by ancient artefacts that show simplified representations of the cowrie used as part of the characters for words with economic meaning – such as money,coin,buy. Just as with currency exchanges today, the value of the cowrie shell could fluctuate, depending on where it was being traded. For example, in some places a few cowries would buy a cow; whereas in the Maldives (where cowrie shell collecting and trading was a big business), several hundred thousands of cowries would be required in exchange for a single gold dinar. The Portuguese, English, French and Dutch played a significant role in promoting the cowrie as a currency for commercial transactions, including using it for trading in slaves. In Western Africa, ‘shell money’ remained legal tender right up until the mid 19th century.

Contribution to Retail History

As the first recognised ‘common currency’, the cowrie shell played a vital contribution to the development of commerce and early formal retail. Non-perishable, lightweight and robust, it opened up international trade opportunities by enabling transactions to be carried out across continents and between different cultures.

The History Of Retail In 100 Objects Is Available As A Free Podcast

History of Retail

The History Of Retail In 100 Objects – The Shelf

4 February 2014

Shelves

It’s Tuesday so it’s The History Of Retail In 100 Objects  post – This weeks object is The Shelf

The shelf is a fundamental component of the store experience and allows retailers to display products and encourage sales, impart information and deliver promotional incentives. The type and quality of materials used in the fabrication of shelves contributes to perception s of the retailer and the products offered for sale. Shelves were created in ancient times out of a desire to elevate and protect valuable objects, which at the time tended to be scrolls or other types of written documents. Advancements in printing which made the publication of books possible meant libraries needed extensive shelving for storage. The application of shelves was readily apparent to retailers who equipped stores with horizontal surfaces to store products in back rooms and display products to customers so they could easily be retrieved by clerks. The boom years for shelves arrived with the birth of self service shopping in department stores in the 1800s and later in supermarkets. The new approach to retail meant shoppers needed to be able to see and touch products and shelves were the solution. Shelving materials can consist of wood, metal, glass, plastic, stone or composite materials and come in an endless array of finishes. Shelves perform the most basic of functions within a retail environment, but the combination of materials, finishes and configurations present retailers with an infinite number of options when it comes to creatively merchandising a store. In addition to their important contribution to merchandising, shelves play an important role in supply chain management. Different categories require specific shelving solutions which can vary widely from car batteries and cans of paint to folded shirts and delicate ceramics. Shelf design must account for the unique characteristics of each, to enable effective merchandising while providing adequate holding capacity to maintain acceptable in-stock levels based on anticipated rates of sale and the retailer’s replenishment capabilities. An amazing array of shelving is evident in the retail industry today.

Contribution to Retail History

Early shelving options allowed retailers to increase the inventory capacity of their stores and the productivity of selling space. Chain stores who made use of consistent shelving configurations were able to optimise product assortments and increase sales. The extensive range of shelving materials, finishes and configurations also advanced the practice of visual merchandising which greatly affected store experience.

The History Of Retail In 100 Objects Is Available As A Free Podcast

History of Retail