China's retailers need digital agility

22 October 2014

BEIJING: Online retail sales in China are growing more than four times as fast as overall retail according to official figures, and the traditional retail sector is going to have to develop greater agility if it is to keep pace with consumers.

The National Bureau of Statistics reported that in the first nine months of the year retail sales were up 12% year on year to 18.92 trillion yuan, while online retail sales had surged 49.9% to 1.82 trillion yuan during the same period.

Spending was also running ahead of increases in income. The Bureau said that per-capita average disposable income in the country stood at 14,986 yuan for the January-September period, up 10.5% on the previous year, or 8.2% in real terms after deducting price factors.

Online now accounts for almost 10% of all retail sales and its growth shows no signs of slowing. As a consequence, a new report from Forrester Research argues, business agility is now a top priority for Chinese retailers.

"Internet companies are disrupting the retail industry in China and the growing online population of metropolitan Chinese consumers and resellers is adding fuel to fire," said Charlie Dai, Principal Analyst at Forrester Research.

"Traditional retailers need to focus on pervasive business agility and accelerate their customer-oriented digital business transformation through agile O2O architecture," he added.

What this means in practice is that they should develop a unified data platform that can help them provide a consistent online and offline customer experience. "An agile application framework leveraging predictive analytics, social platforms, and gamification is the key to pervasive customer engagement and high-performance ecommerce," according to Forrester.

At the same time they ought to explore how they can collaborate with others – manufacturers, resellers, independent software vendors, service providers – using cloud solutions to mutual benefit.

Finally, while a reliable infrastructure design is clearly vital for traditional retailers venturing into ecommerce for the first time, they should also consider making it scalable to allow for continuous business growth.

Data sourced from Xinhua, Business Wire; additional content by Warc staff