China New Retail Conference 2021, a concurrent event of AWE2021, was successfully held at National Exhibition and Convention Center（Shanghai）on March 24, 2021. The conference was organized by CHEAA.com as well as GfK China under the guidance of China Household Electrical Appliances Association (CHEAA). It brought together heavyweight guest speakers from fields including home appliance, retail and technology, as well as platforms and institutions to share their insights into the new trends, new ideas and new technologies regarding retailing.
China’s home appliance market changes from a new-demand-boosted market to a replacement-demand-boosted market after the implementation of the government’s “home appliances going to the countryside” policy and the subsidy program for home appliance replacement carried out during 2009-2013. The penetration rate of home appliances is quite high. Statistics from National Bureau of Statistics show that the number of washing machines per 100 households in China was 96.0 units as of the end of 2019, refrigerators (freezers) 100.9 units, air conditioners 115.6 units and color TVs 120.6 units. The high penetration rate means new demands for home appliances will be small, and the competition over the existing market will be intensified. This plus the sudden outbreak of covid-19 in early 2020 (which led to the pent-up consumption demand of consumers) makes retailing mode innovation a necessity.
“After years of development, a lot of things regarding new retail change, from physical and spiritual macro environment, consumption environment to consumption philosophy.” Wang Yao, Vice President of The Commerce Economy Association of China, said in his speech. In this context, new consumer bases grow at a fast pace. “Of the four existing consumer bases, generation Z consumers do not have heavy pressures in their lives. These people leads the consumption trends of the society. We can see that they tend to pay for spiritual experiences including travel, luxury goods and advanced education, particularly those from iconic brands. They’re confident and patriotic and they care about arts and innovations, making them a leading group in China’s upgraded consumption trend. At the same time, there are also consumers who are rational, in pursuit of cost efficiency while pursue a better lifestyle and the realization of self-value. We can see that there are two different markets, which means enterprises are facing an unknown world.” Wang Yao said that, the pandemic put enterprises including home appliance enterprises into a fast-changing market, which means enterprises need to fix the issues that rise from the innovation and the integration of online and offline channels.
In the past one year, the pandemic makes an impact on people’s living habits and consumption habits, expediting the channel reformation of industries and enterprises. “We can see that home appliance enterprises are deepening the cooperation with distribution channels, and exploring the innovation of distribution channels, modes as well as digitalization, such as F2C mode, C2M mode, live streaming sales and group buying.” Jiang Feng, Executive President of China Household Electrical Appliances Association, pointed out that, the innovation of retailing is always going on with small changes made yearly, clear changes 3-5 years and significant changes 8-10 years. These changes are mainly driven by changes of two sides-the supply side which covers product innovation, new category introduction, tech-driven retailing mode innovation as well as the remodeling of retailing scenarios, and the demand side which means changes of consumers including different consumption philosophies of different generations, and the rise of new consumer bases such as the generation Z.
“The key words of generation Z consumption philosophy are cost-efficiency, social media, brand experience, product appearance and innovation.” Zhang Cun, General Manager of the home appliance division of GfK China, said. He pointed out that, the black swan event brings an opportunity for retailing innovation. With the rise of generation Z as a big future consumer base, the traditional consumption philosophy will be overturned and retailing innovation will become a necessity. “In the post-pandemic era, retailers’ efforts in connecting online and offline channels and manufacturers’ efforts in decentralizing distribution channels will make boundaryless retailing a new direction of retailing.”
Distribution is no longer a dominating factor as it used to be. And the era of pure e-commerce is becoming a thing of the past too. In fact, the reformation of retailing innovation has started. According to GfK China, online retail sales value of white goods accounted for more than 46% in 2020, a skyrocketing rise compared with the 3% in 2012, which shows consumers’ changed attitude towards online shopping. As online market slows down its growth and gets saturated, it is believed to grow along with offline market together and as a compliment of each other down the road to meet consumers’ demands for better deals and easier shopping experience. Social media promotion, community group buying and live streaming sales are emerging as a new trend of retailing.
According to the Innovative Retailing White Paper of China’s Home Appliance Industry 2021 jointly released by CHEAA.COM and GfK China, more than 40% of consumers increased their online shopping frequency during the pandemic. It is learned that most merchandises were delivered to their doorsteps by e-commerce online platforms while some were purchased through community group buying and other online platforms. This is also why internet enterprises invest big into the emerging market.
Peng Zhi, Director of Retailing Solutions of Volcano Engine, Yu Zheng, head of Smart Hardware Ecology of Consumer Business Group of Huawei, Cai Xun, Advertising Director of Tencent, Li Wenxian, head of sales of Ciliyinqing of Kuaishou, and representative from Xiaohongshu also shared their insights into changes of retailing.
Year 2021 is believed to be a year of market recovery. Home appliance consumption is a critical part of it. Government Report of this year clearly states that “We will encourage steady increases in spending on home appliances, automobiles, and other big-ticket items”, which shows the importance of steady home appliance consumption to the domestic market. The resilience of home appliance industry as well as the importance of home appliance consumption is dependent on product innovation, distribution reformation and retailing innovation. As price of traffic from big platforms goes all the way up, home appliance enterprises need to build their own traffic to reduce cost and increase value for users. Therefore, they all start to step up their deployments of smart retailing and deepen the integration and the synergy of online and offline channels.
Ding Wei, CEO of HEGII Group, Wang Weqing, Senior Vice President of BSH China, Ai Xiaoming, President of Whirlpool China, Song Zhaowei, General Manager of Casarte of Haier Smart Home, and Liu Jingjun, board member and General member of Bissell Asia also shared their insights into what retailing changes bring to home appliance industry. Plus, representatives from Daikin, Fotile, Casdon, Huoji and Ecovas also shared their views on retailing innovation.
“Though the pandemic dealt a heavy blow to the market, both platforms and manufacturers have made their best efforts in distribution reformation.” Lv Shenghua, Chief Editor of CHEAA.COM, pointed out that, the blooming online market and the irreplaceable offline market are finding a way out by balancing with each other. The new retailing mode is fast evolving and is affecting the consumption habits of more and more people while promoting the formation of a new retailing pattern. “Embracing technical changes, tapping into consumption demands and optimizing consumption experience are the future directions of manufacturers and retailers.”