Smart Operations: How digitalisation is transforming China’s retail operations

Smart Operations: How digitalisation is transforming...

Impact of digital technologies on retail operating models. Guidelines for decision makers

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Experimental digital technologies such as automated checkouts, price promotions and stock ordering are already emerging in China’s retail sector, making it a forerunner in the digital retail arena. As these technologies continue to be tested, a winning formula for digitalisation will be discovered soon. For the time being, there are only a few traditional offline retailers with ambitious digitalisation agendas in China to compete with the giant online players like Alibaba and Tencent.

We believe digitalisation will soon change retail operating models, impacting customer purchase experience and service level at the front office. This is most relevant for premium and lifestyle retailers. Even more than that, digitalisation will improve retailers’ competitive cost position at the back office, which is particularly important for discounters and mid-market retailers. Therefore, digitalisation can be a source of competitive advantage for the most innovative Chinese retailers. In the long-term, it will become a must for all retailers to stay in the game, withstand squeezed margins and survive the upcoming wave of industry consolidation.

This article sheds light on selected applications of digital technologies along the retail operating model in China. Based on project experience, it provides an overview of the applications, benefits, implementation needs and typical financial impact of digitalisation. We also outline important guidelines for decision makers to invest in digital technologies and manage digital transformations.

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