Abstract:As an important part of the domestic economy, the integrated retail industry has received great attention and policy support from the government for a long time. Since 2023, in the face of the complex and volatile global economic situation, the mainland government has taken active policy measures to expand domestic demand, promote the recovery of the consumer market, and the integrated retail market has become an important engine of economic growth. The data shows that the total retail sales of consumer goods in 2023 will 471495 billion yuan, a year-on-year increase of 7.2%.
1. Definitions and Classification
Comprehensive retail refers to a large-scale retail format, which is mainly characterized by the diversity of commodity scale and brand, involving various commodities such as household appliances, clothing, sporting goods, daily necessities and stationery. This retail format encompasses a wide range of goods to meet the diverse needs of consumers. The classification of integrated retail can be carried out from different perspectives. According to the "Classification Standards for Retail Formats", retail formats can be divided into two categories: with stores and without stores. In addition, according to the different types of goods and business methods, comprehensive retail can also be divided into various types, such as comprehensive supermarkets, hypermarkets, shopping centers, etc.
Second, industry policies
As an important part of the domestic economy, the integrated retail industry has long received great attention and policy support from the government. In recent years, driven by technological innovation, the retail model of the mainland has also shown rapid changes. In order to promote and regulate the healthy development of the comprehensive retail industry, the relevant state departments have formulated a series of targeted policies to create a good policy atmosphere for the development of the industry. For example, in December 2022, the Central Committee of the Communist Party of China and the State Council issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035). The outline clearly points out that it is necessary to support the integrated development of online and offline commodity consumption, and accelerate the digital transformation, transformation and upgrading of traditional offline formats. This not only provides clear guidance for the development of new retail formats such as smart supermarkets, smart stores, and smart restaurants, but also injects strong impetus into the entire comprehensive retail industry. In July 2023, the Ministry of Commerce and other departments issued the "Three-Year Action Plan for Comprehensively Promoting the Construction of a Quarter-Hour Convenient Living Circle in Cities (2023-2025)". The plan aims to comprehensively promote the construction of a quarter-hour convenient living circle in cities above the prefecture level with conditions by 2025, and promote the development of various types of living circles. This not only provides residents with more convenient and efficient life services, but also provides a broader development space for the comprehensive retail industry. The release of the above policies not only provides a clear development direction for the comprehensive retail industry, but also provides a solid policy guarantee for the sustainable and healthy development of the industry.
Third, the development process
The development of China's integrated retail industry has gone through many stages. From 1949 to 1978, the retail industry was mainly monopolized by state-owned enterprises, and the distribution of goods was regulated through a planned economy. At this stage, the main function of retail is to distribute goods, and the concept of integrated retail has not yet been formed. From 1978 to 1992, with the establishment of the market economy system, the retail industry began to gradually liberalize, and self-employed people, small traders and bazaars began to rise. At this time, integrated retail began to sprout, but it was still in a state of low-level, fragmented and disorderly competition. From 1992 to 2001, the government began to actively introduce foreign investment, reform the domestic retail industry, and accelerate the modernization process of the retail industry. During this period, the retail industry began to form a large-scale and intensive business model, and the degree of chain continued to deepen, laying the foundation for the future development of comprehensive retail. Since 2001, with the popularization of the Internet and the rapid development of e-commerce, China's comprehensive retail industry has ushered in a new turning point. Many integrated retail enterprises have begun to experiment with online and offline integration to enhance the shopping experience, optimize the supply chain, and improve operational efficiency, and China's integrated retail industry continues to grow and develop. In the future, with the continuous change of consumer demand and the continuous development of technology, China's integrated retail industry will continue to promote the innovation and development of the industry.
Fourth, industry barriers
1. Brand barriers
The comprehensive retail industry is a highly competitive and highly mature market, after decades of development, a number of well-known enterprises in the market have emerged, such as Wangfujing, Yonghui Supermarket, Rainbow Co., Ltd. and so on. With years of market operation and brand building, these companies have accumulated deep brand equity and extensive consumer recognition, thus occupying a significant dominant position in the market. For new entrants, it is crucial to establish their brand image and reputation in this highly competitive market. This requires new entrants not only to have unique business models and innovative capabilities, but also to invest significant time and resources in brand building and marketing.
2. Channel barriers
In the integrated retail industry, channel barriers are a factor that cannot be ignored. It involves a variety of aspects, including physical channels, online channels, supply chains, and partner networks. These channels not only determine how goods reach consumers, but also affect the company's market coverage, operating costs, and market competitiveness. Among them, the construction and maintenance of physical channels is a major challenge in the integrated retail industry. Retailers need to choose the right store location to ensure they can reach their target consumer group. At the same time, the decoration, layout and inventory management of the store also require a lot of manpower and material resources. These physical channels are expensive to build and maintain, and for new entrants, it takes a lot of money and time to build a complete network of physical channels.
3. Experience barriers
Because the integrated retail industry involves multiple links, from merchandise procurement to inventory management, sales operations, and customer service, each of which is fraught with complexity and uncertainty. Therefore, to succeed in this industry, it is necessary not only to have a wealth of industry experience, but also to have excellent management skills to deal with various challenges and changes. For new entrants, the lack of this experience will make it difficult to accurately grasp the pulse of the market, resulting in inefficient operations and insufficient market competitiveness.
Fifth, the industrial chain
1. Analysis of the industry chain
The upstream of the integrated retail industry chain includes product suppliers and logistics providers, including apparel and household goods to electronic products and food, providing retailers with a rich and diverse selection of goods, and logistics providers mainly provide warehousing, transportation, distribution and other services to ensure the smooth flow of goods from suppliers to retailers. The midstream is a comprehensive retailer, which can be divided into online and offline retail from the perspective of channels. Among them, online retail is mainly sold through e-commerce platforms, social media, etc., while offline retail consists of physical stores such as department stores, supermarkets, and convenience stores. As the end of the industrial chain, consumers' demand, shopping habits and purchasing power directly determine the market pattern and development trend of the comprehensive retail industry.
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