From Wal-Mart to Mum and Pap Shop
Predicament of traditional retailers and quandary of marketers
With no doubt, Chinese traditional retailers (independent grocers, mom-and-pop shops, cooperatives and free markets) are in trouble as the consequence of the rapid growth of modern retailers and e-commerce. Firstly, big-box retailers (Wal-Mart, Carrefour, TESCO, etc.) in China have set strong foothold in big cities and started to penetrate to medium-scale cities, taking control of areas with high population density. Consumers are attracted by the lower prices they offer and broader choice of product categories. In the next place, chained convenience stores (Family-Mart, 7-11) are becoming increasingly ubiquitous in China and have occupied locations of high traffic, which weaken one of traditional retailers’ competitive advantages — spatial convenience. Last, online retail sales (T-mall, Yi-hao-dian, etc) have exploded in recent years in China, and it is easy to see why. Online retailers can predictably provide convenient, informative, and personalized experiences for vastly different types of consumers. They not only offer lower price but unique home-shopping experience to the customers.
On the other hand, marketers of China consumer goods companies are realizing that they are more difficulty in maintaining good relationships and earning easy profits from traditional retailers. First, major retailers are moving in, driving down the sales & margins of traditional retailers in the vicinity. Falling volumes, in turn, raise the cost of selling to and serving them. Second, the appeal to the market size has attracted more and more competitors and brands, thus intensifying the competition for small stores’ limited shelf and cash. Gradually, marketers found themselves losing the bargaining power in persuading retailers to follow some promotional rules or hard to motivate them by incentive schemes that once proved potent before. Third, the sales data provided by the small retailers are unreliable, making
With no doubt, Chinese traditional retailers (independent grocers, mom-and-pop shops, cooperatives and free markets) are in trouble as the consequence of the rapid growth of modern retailers and e-commerce. Firstly, big-box retailers (Wal-Mart, Carrefour, TESCO, etc.) in China have set strong foothold in big cities and started to penetrate to medium-scale cities, taking control of areas with high population density. Consumers are attracted by the lower prices they offer and broader choice of product categories. In the next place, chained convenience stores (Family-Mart, 7-11) are becoming increasingly ubiquitous in China and have occupied locations of high traffic, which weaken one of traditional retailers’ competitive advantages — spatial convenience. Last, online retail sales (T-mall, Yi-hao-dian, etc) have exploded in recent years in China, and it is easy to see why. Online retailers can predictably provide convenient, informative, and personalized experiences for vastly different types of consumers. They not only offer lower price but unique home-shopping experience to the customers.
On the other hand, marketers of China consumer goods companies are realizing that they are more difficulty in maintaining good relationships and earning easy profits from traditional retailers. First, major retailers are moving in, driving down the sales & margins of traditional retailers in the vicinity. Falling volumes, in turn, raise the cost of selling to and serving them. Second, the appeal to the market size has attracted more and more competitors and brands, thus intensifying the competition for small stores’ limited shelf and cash. Gradually, marketers found themselves losing the bargaining power in persuading retailers to follow some promotional rules or hard to motivate them by incentive schemes that once proved potent before. Third, the sales data provided by the small retailers are unreliable, making
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