Exclusive Interview: Kevin Peng, Secretary General of China's Retail/Restaurant Association

Dan Hodgesamp160 quotWhat are the best practices for retailers to deal with COVID19quotKevin Pengamp160 quotFor retail industry different retail formats have different coping strategiesamp160 It also differs in different periods of timeamp8221amp8220The situation that the United States is experiencing is similar to China in late January and early Februaryamp160 At that time the isolation measures issued by the government were also strict and I will focus on the response of that periodamp8221amp8220Grocery Stores perform quite well since the restaurants were closed and people eat at homeamp160 For instance Hypermarket sales increased by 35 community supermarkets increased by 30 150 and ecommerce freshfood platforms tripled in salesamp8221amp8220For groceries the following four aspects of work can be concernedFirst the employee protection and labor shortageamp160 The first thing for retailers is to protect their employees as much as possible because once employees in store were infected by coronavirus or infected customers were traced back to visiting the store the store will be required to close by the government which will have a great impact on retailersamp160 Therefore it is very important to protect employees and check the temperature of customers at the beginningamp8221amp8220As to the shortages of labor as restaurants closed while retail stores lack of labor the cooperation on employee sharing was taken some catering companies sent their employees to work in retail companiesamp8221amp8220The second problem is the hindered supply chain and logisticsamp160 Due to the isolation policies and lockdown retailers need to apply green passes with local governments to ensure the smooth flow of goodsamp8221amp8220The third one is to deal with the customer39s panic buying the store must prepare the large amount of goodsamp160 At the beginning the consumer snapped up frozen foods rice vegetables grains and oils and then cooking products such as condiments and dressingamp8221amp8220Last but not the least is to innovate business according to the changes of consumer needsamp160 Due to theamp8221 Stay at homeamp8221 policies more consumers tend to use homedeliveries some large retailers have set up a lot of pickup spots around residential areasamp8221amp8220As a retail trade association we collect information from members communicate with government and coordinate policies to solve the problem of lack of masks for retailersamp160 We will also survey the losses suffered by retailers and help them get loan and tax relief policiesamp8221Hodges amp8220Are people shopping in stores department store and shopping mall Are people dining in restaurantsamp8221Peng amp8220On this issue it is also divided into two stagesIn the first stage before March 15 everyone will go to hypermarkets and community supermarkets to shop but most department stores or shopping centers are required to close Even when the department stores and shopping centers opened there is no trafficamp8221amp8220The sales fell dramatically most companies sold less than 10 of the pastamp8221amp8220Before March for some department stores shopping malls and specialty stores with strong digital capabilities achieved some sales by online channelsamp8221amp8220In the second stage after March 15 the epidemic in China has gradually eased most of the previously closed stores have been reopenedamp8221amp8220According to our statistics the opening rate of China39s supermarket industry has reached 95 and the number of department stores and shopping centers has recovered to 85 Although enterprises have begun to fully resume business it takes time for consumer confidence to recover and the traffic and sales of department stores and shopping centers have only recovered to 3040 of normal and the challenges are still greatamp8221amp8220On the catering industry In the first stage before March 15 the restaurants were closed Only a few restaurants provide home delivery services through the online platform After March 15 the restaurants have been reopened but most consumers didnamp8217t come back On the one hand the government requires that no more than 3 people sit at one table On the other hand for safety considerations the consumersamp8217 consumption reduced a lot Restaurants are starting to sell amp8220ready to eatamp8221 products but sales are only 10 40 of what they used to beamp8221Hodgesamp160 amp8220How did the pandemic affect Chinaamp8217s retail market online and brick and mortaramp8221Pengamp160 amp8220Affected by the epidemic from January to February 2020 Chinaamp8217s total retail sales of consumer goods fell by 205amp8221amp8220Most supermarkets and hypermarkets have performed well hypermarkets have achieved 35 growth The sale of supermarketsamp8217 fresh food groceries in smaller areas increased by 50150 and the sales of fresh food online platforms tripledamp8221amp8220Online platforms such as Hippo fresh Dmall JD deliver to home experienced a surge in orders in the early stage of the epidemic they were unable to fulfill the ordersamp8221amp8220Brick and mortar grocery storesamp8217 home delivery business growth is also very fast in February their home delivery business generally increased 80200 whether big stores or small stores They have become a large or small preposition warehouseamp8221amp8220And as I just mentioned department stores and shopping centers specialty stores sales are freezingamp8221amp8220These industries are relatively less digitalized and when offline stores close they have almost no sales Among these enterprises with better digital capabilities some sales have been restored through online platforms such as Rainbow Department Store in south China which has achieved 10 of the past sales through online platforms when all offline stores have been closed For department stores the online sales were insignificant in the past things are changing nowamp8221amp8220Another piece of good news is that forced by the pandemic these enterprises are now willing to spend a lot of resources to implement digital transformation In the past when these enterprises implemented digital transformation they always encountered a lot of internal resistance and now this resistance has slowly disappearedamp8221amp8220Because consumers mainly buy food the overall online performance is not bright as before in the first two months of 2020 online retail sales grew by only 3 yeartoyear compared with 195 in the same period last yearamp8221Hodgesamp160 amp8220How did Chinese consumers change their behavior under quarantineamp160 Will these changes endureamp8221Pengamp160 amp8220Yes there are some changes in consumers First of all in the past consumers mainly purchased clothing electrical appliances and other nonfood goods through online channels but now more fresh foods are purchased and more offline retail enterprises are needed to provide home delivery servicesamp8221amp8220Secondly because almost everyone in China uses the Wechat App there is a very special buying channel on Wechat which is group buying consumers buy a large number of fresh food and ready to eat products from restaurants through group buyingamp8221amp8220Third because of the continuing impact of the pandemic consumers39 expectations of future income have declined so unnecessary expenditure has been reduced In addition because many people work at home the consumer demand for clothing has decreased a lot In addition as the epidemic has lasted for more than two months consumer psychology and consumer behavior are also changing In terms of food consumer demand for taste will give way to health Demand for material will give way to creating a more comfortable home environment so consumers will buy more household goods and fitness related goodsamp8221amp8220I think this change will last for a long time Now we have begun to work in the office and the restaurant has reopened but consumption has not recovered as expectedamp8221Hodgesamp160 amp8220Are people wearing protective masks and gloves How are consumers shopping differentlyamp8221Pengamp160 amp8220Yes almost everyone wears a maskamp8221amp8220Now there are also some changes to supermarket shopping behaviors If you go to the supermarket you will prefer the time when there are fewer people and if there are too many people in the supermarket the store will also limit the flowamp8221amp8220Another change is delivery to home services as I just mentioned almost all supermarket delivery to home business or online business is growingamp8221amp8220Generally speaking although the pandemic in China has been controlled consumers are still reluctant to stay in offline stores for a long time so for department stores shopping malls and other timekilling formats traffic is much less than beforeamp8221amp8220During this period because many people buy things through Wechat group buying most of them pursue more costeffective options for nonfood itemsamp8221amp8220In addition one change is that although many restaurants have reopened because consumers are less willing to visit restaurants many restaurants have begun to sell ready to eat products but overall sales are far from recoveringamp8221Hodgesamp160 amp8220What can we learn from new strategies tested in China by brands and retailers such as Nike during COVID19amp8221Peng amp8220We surveyed some brands members in general their sales during the pandemic fell sharply Although the brands have begun to fully resume work consumption is far from recovery which is similar to the situation in the department store industryamp8221amp8220I know there are some brands because the previous digital capability is relatively strong through the use of digital tools they could reach consumers without stores Their sales are not bad So if brands had digital capabilities before sales will be less affected because they can maintain contact with customers But enterprises with weak digital capabilities before the impact will be greatamp8221Click the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Exclusive Interview: Kevin Peng, Secretary General of China's Retail/Restaurant Association

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Daniel Hodges

"About That with Carl Mayer": Involved Media Connected Audience Fall 2024 Report (Episode 5) - By Carl Mayer

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