The recent sale of Intime has sent shockwaves through the retail landscapeOnce hailed as a beacon of hope in the new retail experiment, Intime now stands as a testament to the turbulent times facing the industryAs significant changes unfold, many ponder the future direction of retail: how can it break free from its current state, and what lies ahead?
Retailers find themselves struggling, losing their sense of direction in an era marked by stagnationIn recent years, the retail industry has faced mounting challenges: physical stores closing en masse while online growth has plateauedWith consumer spending on the decline, companies have resorted to erratic strategies, jumping from discount models to the latest trends in a vain search for salvation.
This anxiety-driven quest for solutions often overlooks a fundamental issue: many retailers focus on expanding their market presence without a foundational understanding of their purpose
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As Dong Lai observed after analyzing the Bubu Gao case study, the emphasis on scale without a core mission leads to inefficiencyWhat is the core of retail? In its simplest form, it revolves around being people-centric and leveraging innovation to create new value for consumers.
Retail innovation manifests in numerous ways—various formats like hypermarkets, convenience stores, fresh produce markets, and discount outlets have emergedHowever, regardless of the format, the underlying competition always hinges on efficiency and customer experienceDigitalization has emerged as a crucial force driving advancements in these areas.
The new retail movement, initiated in 2016, aimed to digitally transform the retail sectorYet, numerous hurdles have come to light
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One glaring issue lies in the inconsistent operational philosophies between online and offline platformsE-commerce excels in traffic conversion and customer engagement but falters in managing the complexities of offline dynamics involving people, products, and environments.
Moreover, as retail companies embark on their digital journey, they often procure a myriad of specialized software services from different SaaS providers tailored for various business needs, spanning production to inventory management, logistics, warehousing, and storefrontsUnfortunately, these SaaS vendors operate independently without collaboration, leading to fragmented systems that produce disparate data sets, lacking cohesion.
This fragmentation undermines the effectiveness of digital transformation, as businesses pour resources into digitization, achieving minimal results
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The harsh reality highlights that solitary efforts cannot rescue the retail industryA cohesive strategy is paramount: how can businesses orchestrate their systems to maximize the potential of digitalization and intelligence? This remains a complex challenge within the retail sector's digital landscape.
Over the decades, Walmart has consistently been a trailblazer in adopting new information technologies, evolving from introducing barcodes to constructing the largest private satellite communication system of its time, and even equipping its truck fleet with GPS trackers
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While other retailers have also invested heavily in information technology, Walmart excellently combines technology with organizational capabilities, improving the management of complex retail operationsBy leveraging information technology, Walmart shifted its decision-making from a centralized to a decentralized model, empowering frontline employees to make faster, effective decisions that meet customer needs while lowering costs.
It’s worth noting that achieving such transformation is easier said than done—a journey fraught with challengesWalmart's digital framework was not built overnight; it emerged gradually through continuous iterations and overcoming obstacles, establishing a cohesive digital architecture amid a myriad of information silos.
Moreover, building a formidable digital management infrastructure demands substantial IT investment
In 2018 alone, Walmart invested around $12 billion in IT, comparable to the over $13 billion invested by e-commerce titan Amazon during the same periodUnfortunately, many Chinese retailers eager to embark on their digital transformation journey lack the capacity to bear the high costs of experimentation required for organizational restructuringMany are still uncertain about the digital path to take.
A practical solution involves seeking out external collaborative platforms to facilitate this digital transition, ensuring predictable growthInsights from Walmart’s experience suggest that retail enterprises must partner with those who possess comprehensive capabilities for systemic developmentRelying solely on technology or piecemeal advancements risks falling into the pattern of redundant systems and ineffective reconstruction.
An effective systemic capability should encompass three core aspects: first, a structured understanding of retailing, enabling companies to discern the best approaches to transformation; second, the creation of a cohesive technological framework that generates high-quality, live data across all nodes, readily available for real-time decision-making through AI and other intelligent methods; third, the establishment of an ecological network, particularly relevant for companies at mid-transformation junctures, where historical data can transition onto platforms while incorporating future suppliers to enrich their digital applications.
However, platforms endowed with these three systemic capacities are extremely rare
One notable exception is Huawei Cloud, which has become a leading choice for Chinese retail companies—currently, 80% of the top retailers in China have opted for Huawei Cloud services.
The partnership between retail enterprises and Huawei Cloud is rooted in the latter’s rich experience, advanced technology, and the ability to build an ecosystem that guarantees retail businesses stability and growthHuawei boasts extensive experience, with its terminal business generating staggering annual revenues and managing an impressive active user base of over 730 millionIts proven ability to navigate complex supply chains across various sectors, including both digital and physical avenues, equips Huawei to understand the pain points and bottlenecks in digital conversion.
Moreover, Huawei has pioneered foundational technologies, particularly in artificial intelligence, having established a comprehensive stack involving computing power, frameworks, and models
The Pangu 5.0 model is notable, offering a full range of intelligent capabilities tailored for industries, optimizing the alignment of scenarios and models, and addressing the diverse needs for both economic and professional performance in AI applicationsWith an in-depth approach, Huawei Cloud's AI capabilities help drive long-term, sustainable support for retail enterprises as they navigate digital transformation.
As a result, companies leveraging Huawei Cloud can achieve systematic digital coverage in retail, enhancing supply chain flexibility, refining marketing strategies, and optimizing storefront operations.
For instance, after collaborating with Huawei Cloud, Bosideng can seamlessly predict in-store sales and manage a massive array of clothing items—hundreds of styles and thousands of sizes—allowing decisions to be made at the store level while coordinating warehousing and production.
Lastly, the creation of an ecosystem is crucial given the intricate nature of retail chains, where Huawei Cloud cannot tackle the entire puzzle independently
To this end, it has attracted an array of advanced technical and market-recognized retail applications, weaving a complex tapestry of collaboration that enhances the industry’s productivity.
Ultimately, this symbiotic ecosystem encourages specialized roles: different entities can focus on their respective expertise, creating a more efficient operational landscapeDuring a recent summit, prominent players like Huawei Cloud, Baishu Software, and many others unveiled plans to collaborate, significantly advancing the industry's digital transformation journey.
With unity in purpose and innovation at the forefront, the path toward a thriving and sustainable retail environment, akin to the Amazon rainforest, can indeed be forgedOnly through a cohesive and strategic collaboration across the retail ecosystem can the industry foster long-term growth, crafting a legacy of flourishing ventures.