See 2024 ｜ Peng Jianzhen, President of China Chain Store & Franchise Association： Strengthen scientific decision-making and the construction of modern enterprise system.

[Editor’s note] Insight into the trend and look forward to the future. At the beginning of the new year in 2024, Xinhuanet planned the all-media column of "Seeing 2024", inviting experts, scholars and entrepreneurs to put new hotspots and new trends in the pulse industry, and to enlighten intelligent thinking and reflect industrial changes with professional insight to help high-quality economic and social development.

Xinhuanet Beijing, February 5 (Ren Yuxi) Chain operation is a highly large-scale business model. Chain enterprises and brands can carry out specialized division of labor under the overall planning, and implement centralized management on the basis of division of labor, thus improving the overall operational efficiency and realizing economies of scale.

Throughout the past development process, the chain operation industry in China has shown remarkable development potential and resilience in different formats. Recently, Peng Jianzhen, President of China Chain Store & Franchise Association, made a guest visit to "See 2024" on Xinhuanet, and made an in-depth analysis and prediction on the development of chain store business in China.

Q: With the development of economy, the chain operation industry in China has experienced a process of growing from scratch, from small to large. Looking back on the data in 2023, what is the performance of chain operation in China?

Peng Jianzhen:Judging from the latest data released by the National Bureau of Statistics, the overall consumer market is improving. Judging from the development of various formats in the chain industry, different formats have different performances. In 2023, the department store industry ushered in a recovery growth, with an increase of 8.8%; The supermarket industry decreased by 0.4%; Convenience stores, specialty store and specialty stores increased by 7.5%, 4.9% and 14.5% respectively. Generally speaking, the chain operation market is recovering, and different formats have different performances.

At the same time, some new features have appeared in the whole market. Before 2020, the consumer goods industry showed a trend of consumption upgrading. The trend of consumption classification after 2020 is obvious. In the past few years, almost all enterprises that have more accurate positioning of target consumers have achieved outstanding business performance.

Q: People’s demand for fast and convenient consumption methods is increasing, which provides opportunities for the development of chain enterprises. Based on the performance in 2023, please predict the development of chain operation in China in 2024.

Peng Jianzhen:In 2024, the general trend of consumption classification will continue. At the same time, there are new opportunities in the retail market. Take instant retailing as an example. Instant retailing is the cooperation between e-commerce platform and offline entities. In the past two years, instant retailing has developed rapidly. When consumers place an order on the online platform of instant retail, they can get the goods in about 30 minutes at the earliest. Behind the birth of this format is the change in people’s consumption patterns.

In the past few years, instant retailing has grown at a rate of more than 50% every year. Now the market scale has reached about 800 billion yuan, and will soon reach the trillion level.

With the change of people’s consumption lifestyle, new formats will have great opportunities for development. In addition, in addition to material consumption, spiritual consumption in the future is also the main point to pay attention to, such as concerts, cultural performances, sports leagues and so on. There is still a lot of room for excavation in this area.

Q: 2024 is full of opportunities and challenges for chain enterprises and brands. What should we do in 2024? Please give some development suggestions to the enterprise from a professional perspective.

Peng Jianzhen:In 2023, overall, regional retail enterprises performed better than national enterprises, and FMCG brands performed slightly better than retail terminal channel enterprises. Based on the existing trends, we also give some suggestions for the development of enterprises in 2024.

Twenty years ago, most enterprises would focus on expansion. In the past two years, the association has observed that more and more enterprises have gradually shifted their focus to internal cultivation. Take Shangchao as an example. When Shangchao surpasses, it will focus on staking and occupying the market. But now we will pay great attention to the construction of commodity power. Department stores and shopping centers are no exception. In the past, the focus was on attracting investment and introducing good brands, but since last year, special attention has been paid to the in-depth operation with brands and how to serve the consumer groups well. In addition, the deep cooperation between retailers and consumer goods enterprises is also strengthening. Through customized brands and own brands, they can jointly improve their operational capabilities and better serve the target consumers. It is suggested that enterprises can follow up from these aspects.

From the perspective of industry observers, when enterprises develop rapidly, decision-making is relatively simple. Because as long as the performance increases, many problems can be covered up. But now enterprises have gradually realized this and paid more and more attention to scientific decision-making. The so-called scientific decision-making is the basis of making decisions with numbers, and reducing costs and increasing efficiency through digital means. In this respect, the power invested by enterprises is gradually increasing. It is suggested that enterprises can learn from the cases of excellent enterprises, and help enterprises to make judgments through scientific decision-making, so that every step can be practical.

Q: The development of the whole chain operation industry is inseparable from the joint efforts of the government, associations and enterprises. What are the key work directions of China Chain Store & Franchise Association in 2024, and what benefits will these work bring to the industry?

Peng Jianzhen:China Chain Store has made a plan for the work in 2024, specifically in the following aspects.

First, focus on promoting the ecological cooperation between retailers and brands, retailers and consumer goods enterprises. Retailers and consumer goods enterprises are not only buying and selling, but more importantly, ecological cooperation. This cooperative relationship needs to create value for consumers by studying consumers and building commodity power. The association will then advocate enterprises to do this work.

Second, pay attention to the construction of commercial civilization. In the chain operation format, most enterprises that have done well have established modern enterprise systems. Enterprise internal governance is relatively transparent, in line with the modern enterprise system. In the past, China retail enterprises paid more attention to "home" culture, loyalty and winning the battle, which was very important. At the same time, it is essential to improve the modern enterprise system, which can help enterprises to make a qualitative leap. The association hopes that the construction of commercial civilization will bring new development impetus to chain enterprises.

Third, strengthen international exchanges. For domestic enterprises, going to sea is a great opportunity. Many tea and catering enterprises in China have developed well in Southeast Asia, Europe and America, and achieved good results overseas. In particular, China has been at the forefront in the exploration of digitalization in the past few years, and the international market has recognized the digital application of retail business scenes in China. On the one hand, the association will help enterprises connect with overseas resources and encourage them to find more growth in the international market; On the other hand, it is to promote international cooperation, because China retail enterprises have explored more online and offline business models, and many foreign enterprises have come to China to study and study. In addition to helping enterprises learn better overseas experience, the association will also introduce China’s excellent business model to overseas counterparts.

Fourth, ESG construction will be taken to a new level. ESG is a key indicator of enterprise development. Many enterprises simply interpret ESG as corporate social responsibility. In fact, ESG’s scoring system reflects whether the whole enterprise can develop sustainably in the long run. At the same time, if ESG scores high, it will also get the attention of many investment institutions. The association will promote the industry to pay attention to ESG together and improve the overall ESG level.

Q: The retail industry in China has developed rapidly in recent 30 years. Influenced by social environment, culture and history, China’s retail industry presents different characteristics in the world retail industry, and its development situation also shows obvious differences. Please talk about the characteristics of the development of China’s retail industry and make suggestions for the future development of China’s retail industry.

Peng Jianzhen:Generally speaking, the current situation of China’s retail industry is similar to that of the United States at a certain stage in its history. From 1945 to 1979, the economy of the United States grew rapidly, from about $100 billion to $2.6 trillion. During this period, American business consumption showed an overall upgrading trend, and China was similar to it before 2019. Then, from 1980 to 2010, there was a consumption classification in the American market. For example, supermarkets such as Costco appeared during this period, and many boutique supermarkets and organic supermarkets were gradually born. This process also appeared in China at this stage.

The overall trend is similar, but the difference is that the United States has a trend of consumption classification since the 1980 s. At the same time of consumption classification, enterprises have achieved differentiated development and provided targeted services according to different target customers. Enterprises have a very obvious "label" in consumers’ minds, which is based on the establishment of consumers’ minds. However, around 2012, China’s retail industry encountered the rapid rise of e-commerce before it had time to complete the expansion from scale to differentiation, which disrupted the development process of offline retail industry. The first challenge facing Shangchao is the decline in passenger flow. Offline enterprises are beginning to do omni-channel, hoping to open up online and offline through online business and retain passenger flow. But the reality is that offline customers are still on a downward trend, because it is difficult for offline enterprises to get through online and offline; Therefore, before and after 2016, enterprises began to try to digitize, and only after the underlying digital foundation was completed can they hope to get through online and offline business. Generally speaking, from 2012 to 2020, China’s retail industry has invested in omni-channel and digitalization. During this period, the commodity power of enterprises has not been well improved, the differentiation of enterprises has not been formed, and the positioning and image in the eyes of consumers are not prominent. That is to say, the basic capacity building of enterprises is not enough, and they have not established their own "labels" in the eyes of consumers and failed to establish their own moat.

Based on this situation, it is suggested that enterprises "make up lessons" from the following three aspects. First, strengthen scientific decision-making, only scientific decision-making can enable enterprises to achieve scientific operation on a certain scale; Second, in order to have a deeper insight into consumers, we must find and focus on target consumers and clarify the positioning of enterprises; Third, improve the modern enterprise system. In the past, enterprises usually only used the "home" culture to gather strength. On this basis, a perfect modern enterprise system can make enterprises develop sustainably in the long run. In the future, from these three aspects, the retail enterprises in China will have a strong vitality in generate.