retail

Seven core trends of retail industry in China after virus crisis:

1. A shift from selling products to managing customers. While traditional retail companies focus on their products, the ones in the forthcoming era should be more attentive to consumers’ changing needs.

2. A shift in consumer target—from masses of people to differentiated groups. Through a differentiating reconstruction of "buyers, products, and stores", companies accurately identify their customers and develop a competitive advantage.

3. A shift from one-way marketing to community/interactive marketing, which is based on trust and personal recommendations.

4. The building of a differentiated supply chain. In response to different customer demands, retail enterprises are required to reconstruct their supply chain accordingly.

5. The building of a platform-based, ecological organization. The structure of future retail industry resembles that of an ecosystem.

6. The improvement of digitalized operation via big data and artificial intelligence.

7. A partnership mechanism based on incremental-value creation and profit sharing is needed in new retail ecosystem.

------Ji Luo, Partner of Chinastone

Chinastone has been closely following Suning’s change management in the internet era. We have organized two projects with Suning in recent years: corporate cultural change project co-led by Chinastone and Suning in 2015, and discussion panel of change management in 2017.

Successful cases of company transformation are rare. Not surprisingly, critical voices have accompanied Suning’s transformation since 2009. After eight years’ hard-work, Suning has successfully transformed from a traditional, offline appliance retailer to a smart, highly integrated (online & offline), and ecological retail enterprise. As a signature case study of how traditional large Chinese enterprise changes in response to the rise of Internet, Suning’s experience is worth in-depth analysis.

Key Factors of Suning’s Success in Change Management:

1. Entrepreneur is the motive force and engine for change management. There is an inextricable connection between Suning’s successful experience and Jindong Zhang’s entrepreneurial spirit. Suning’s version of future retail industry, which integrates the business model of both Walmart and Amazon, was questioned both inside and outside the company at the beginning. Change always destroys existing order, challenges previous experiences, breaks inertia, and leads companies into chaos; undoubtedly, this is a miserable state. Therefore, determination of entrepreneurs is of vital importance; any slight hesitation or suspicion causes failure in change management. The high level of strategic confidence and determination that Jindong Zhang and Suning staffs maintain under resistance is proved to be successful.

Note: Jindong Zhang is the founder and CEO of Suning.

Key Factors of Suning’s Success in Change Management:

1. An organic combination of systematic change strategy and incremental processes. For Suning, change management resembles a prolonged battle, the victory of which is not won overnight; determination, patience, and persistence are required. Tactically, Suning made changes step by step. The first step of “+Internet” was completed in the end of 2013. Then their second step was “Internet + Retail”, which reformed and optimized offline operation procedures and retail resources. During the whole process, Suning’s change is driven by “three horse-drawn carriages” (three core concepts of management—strategy, organization, and talents).

2. Suning's transformation not only utilizes successful experiences of running traditional businesses, but also adapts in accordance with contemporary trend. While it places an emphasis on openness, it still focuses on industry need and creating value. Suning develops online and offline business simultaneously. In this way, its competency in the past is transformed into new strength. And this is one important reason why Suning is successful in change management. Suning does not blindly follow diversification strategy. Instead, using the strategy of “retail + finance/investment/cultural and creative industries/etc.”, Suning integrates and constructs core elements of the retail industry, that is to say, it builds a retail ecosystem.

3. In the past few years, Suning has transformed from a traditional retailer to an internet business platform; the most difficult part involved in the process is the reconstruction of the relationship between organization and its employees. One important feature of Suning’s transformation is that the company has transformed its process-driven business units, and reshaped the organizational structure into individual small units that are result-driven and customer-oriented. In other words, a large company should operate like small business which can not only take advantage of big company's capability in resource allocation, but also possess flexibility—the strength of small businesses.

4. In the internet era, any enterprise that keeps pace with the times never ceases to reform itself with the aid of new technology. While Suning is well-known for its modern, efficient logistics system, most people tend to ignore its technological strength. One ought not to view Suning’s success in change management in separation from its forward-looking investment in information technology.