Department store management changes in the era of big data
Someone once commented that the reason for Jack Ma’s success lies in his reshaping the trust relationship between people through Alipay and the evaluation system. The O2O transformation of traditional department stores will, with the help of big data, reshape the understanding and trust between people and business, people and goods, people and services, people and experiences, and even people and the world.
The current O2O path of traditional department stores - passive struggle
The biggest driving force behind the department store industry’s commitment to O2O transformation is undoubtedly the impact from e-commerce.
According to analysis by China Resources Enterprise, competition from the e-commerce industry has had an impact on profits, affecting the same-store sales of the retail business to fall by 2.6% year-on-year. Guangzhou Friendship also stated at the beginning of the year that online retail had a significant diversion of market share last year, and the overall growth of the traditional retail industry further slowed down, with multiple difficulties and challenges intertwined. Wangfujing Department Store also announced in the announcement that the rapid development of Internet retail and cross-border e-commerce will have a certain impact on the revenue growth of the company and the industry.
Unfortunately, the traditional department store industry’s initial response to this round of impact was not a calm response based on a rational analysis of e-commerce and its own characteristics, but more of a A kind of stress reaction after panic. The most typical iconic behavior here is to build a self-built B2C mall. According to statistics, 36 of the 50 major department store companies announced in the China Chain Store and Franchise Association's Top 100 Survey in 2014 have launched online retail businesses, most of which are self-built B2C platforms.
The act of building a self-built B2C platform is understandable in itself, but it reflects a relatively narrow competitive mindset of practitioners in the traditional department store industry - just like competing for products with past competitors, if you If the product sells well, then I will put in the effort to introduce it and sell it cheaply to catch up with you! In this way, the problem of the weakening competitiveness of traditional department stores is simply interpreted as the lack of online channels, and then the same simple and crude measures are taken. Solution - build your own online channel. The result is obvious. Despite the staggering investment, neither traffic nor sales can compete with pure e-commerce. The large-scale development of traditional department store online channels is far away.
Some companies have chosen the strategy of settling on open platforms. Although they can effectively reduce their own investment, without the initiative and voice of the platform, it is difficult to achieve breakthrough growth. With the rise of the mobile Internet, many traditional department stores have begun to engage in competition for mobile access. Apps of various department stores are emerging one after another, but the results are similar to those of self-built B2C platforms.
Although many traditional department stores have implemented a multi-channel O2O model in form, in fact, it only brings huge investment and disproportionate traffic and sales to the enterprise. Taking Wangfujing Department Store as an example, its e-commerce project construction has been facing serious losses. According to annual report data, as of 2014, Wangfujing’s e-commerce project losses had reached 42.0628 million yuan.
Needless to say, the current O2O transformation of most traditional department stores is essentially driven by the anxiety caused by e-commerce, which makes their O2O road lost from the beginning.
Omni-channel, seemingly beautiful
In 2014, an interesting phenomenon also emerged. In the minds of many traditional retail companies, O2O is even more popular than O2O. The key word is “omni-channel”.
They all feel that O2O is too virtual and not as real as omni-channel.
This can be seen in the strategic reports of many companies. The frequency of the word "omni-channel" far exceeds that of "O2O". "Omni-channel" is also used as a synonym for "O2O" at many industry summits.
The social psychology behind this is not difficult to analyze: "O2O" is too deep, too far, too obscure, and no one can explain it clearly in one sentence, giving people an extremely strong sense of insecurity. But "omni-channel" is different. Having channels means there is customer flow, and having customer flow means it can bring sales and profits. If the channels can be made more complete, it will bring more sales and profits. Ease the current operating decline of traditional department stores.
This simple logic is the easiest to cater to the current anxiety of traditional practitioners and is a more realistic O2O thinking. Some media people once commented on this: "Compared with European and American countries, China's current O2O is more eager for quick success and profits, and lacks the sincerity and ideals to digitally transform society."
The reality is cruel, Solving complex problems with simple thinking will inevitably bring complex results.
When traditional retail companies initially tested the omni-channel approach, they immediately encountered the two major problems of traffic acquisition and traffic conversion. The logic of online real estate based on various traffic portals and offline commercial real estate occupying prime locations and waiting for customers to come to your door is completely different. At present, the cost of acquiring new customers for e-commerce has reached about 300 yuan. In addition, pure e-commerce companies continue to increase investment, and traditional retailers have no advantage in fighting for online traffic. And converting its huge offline customer flow to online has been proven to be just wishful thinking. Consumers between channels do not take it for granted to interact. Bubugao Group, which has been deeply involved in the Hunan market for 19 years, has an annual offline store customer flow of up to 1 billion. Although it has announced an ambitious goal of reaching a conversion rate of 60% within three years, it has also adopted electronic receipts to replace paper receipts. Judging from the current actual performance of Yunhou.com, there is still a big gap between the measures of adding various introductory preferential activities and the goals.
In general, "omni-channel" under the banner of "O2O" still continues the past "commodity-centered" thinking orientation, and still takes the enterprise itself as the starting point. If it does not create additional value for consumers, it will naturally not be recognized by the market.
The true meaning and entry point of O2O - big data application
How can traditional enterprises embark on the correct O2O path? If you want to answer this question, you must return to the essence of business. That is, "taking consumers as the core" to view the value of Online and Offline. Simply put, the biggest charm of Online for consumers is the convenience of information acquisition, while for Offline, it is the irreplaceable sense of real-life experience. Therefore, for traditional enterprises, the best O2O strategy is to enable consumers to achieve the perfect integration of information and experience on their own platforms. To achieve this integration, we cannot do without the help of big data.
A misunderstanding that the traditional department store industry must break through is that it regards channels only as the entrance to traffic, without realizing that its more important value is the entrance to data; the "2" in "O2O" ” is regarded as the conversion of traffic, while ignoring the interaction between data. In fact, in the foreseeable future, big data will become the core asset of all enterprises. Losing data means losing competitiveness. As a channel terminal, the retail industry has a natural advantage in this regard. The traditional department store industry's source of upstream bargaining power will also comprehensively transform from possession of channels to possession of data in the future.
The O2O model that does not open up the data is faulty. The result is that online and offline are fighting independently and cannot create new value.
In December 2013, Amazon obtained a new patent called "predictive shipping", which can analyze user data and send packages in advance before they place an order. This transcendent analysis and prediction ability comes from Amazon’s big data on customers’ previous orders, product search records, wish lists, shopping carts, and even the time the user’s mouse hovers over a product. Obtained from comprehensive analysis, and then the package can be sent out before the consumer actually places the order.
Offline lags behind online in terms of data collection capabilities, but through interaction with big data platforms, offline channels can effectively use data fed back by online platforms to upgrade consumer experience. , to create more value-for-money experiences for consumers. At the same time, as emerging technologies such as augmented reality technology, short-range technology, far-infrared passenger flow detection, QR code scanning, and electronic payment continue to emerge, they will better arm offline physical stores and also improve the data collection capabilities of offline channels. Continuously enhance and interact with online data to supplement it.
The integration of online and offline data will outline a more complete consumer portrait for traditional department stores, fully grasp the physiological, psychological, behavioral and other characteristics of customers, thereby providing a powerful basis for business decisions. Support assistance to achieve precise marketing to consumers.
For consumers, they can not only easily find the products they need online, but also enjoy high-quality service experience offline, which will create great stickiness to the platform. For enterprises, the improvement in operational capabilities brought about by big data will ultimately be reflected in sales growth and profitability, and truly achieve the goal of getting rid of homogeneity, transformation and upgrading. This is the true value of O2O.
Prospects for the transformation of department store operations in the era of big data
As for the big data upgrade of traditional department stores, foreign counterparts have taken the lead. Macy's Department Store started its O2O layout based on big data a few years ago. Specific methods include:
Offline stores are equipped with order processing systems.
Understand consumer movement through in-store wireless hotspots, optimize store movement design, and help brand owners carry out marketing services. In addition, it cooperates with Google Maps to provide brand navigation services.
Cooperate with Google Wallet to provide mobile payment services.
Install information kiosks (kiosks) in stores for consumers to check basic product attributes, selling prices, inventory status and other information, and support online ordering and settlement functions.
The official APP application software is launched. Consumers can check products and other consumer review information, place orders, pay, and post orders through the APP. They can also fill in the online consumer satisfaction questionnaire and give feedback on their experience.
The demonstration effect of Macy’s Department Store lies not only in its innovation in technological application, but also in the optimization of its soft services. For example, Macy's Department Store has customer service personnel next to each kiosk to guide customers to the corresponding brand stores to try out products and help customers place orders and settle orders on their mobile devices. In this kind of consumption experience, customers feel that it is convenient and targeted, and more importantly, they are valued, so the repurchase rate will naturally increase. This also reminds us that for big data applications, hardware facilities and soft services are equally important.
After the initial channel anxiety, the domestic department store industry has gradually begun to rationally recognize the value of big data. In 2013, large domestic department store chains such as Wangfujing, Yintai, New World, and Tianhong launched Wi-Fi and provided free services to consumers. It is understood that the average initial investment for each single store in laying Wi-Fi is between 400,000 and 600,000 yuan. After all is completed, the following functions can be achieved:
Precision marketing, users will be contacted after they connect to Wi-Fi Data information such as methods and action routes will be synchronously transmitted to the backend system. The backend will refer to the user's online shopping data to feedback user attributes, and then push relevant product coupons or event information.
Shopping mall circulation optimization, based on long-term user movement route data accumulation, the mall can optimize the counter location.
For the domestic traditional department store industry, there are two directions worthy of focus in the process of building a department store O2O model based on big data.
1. Establish effective big data analysis and application transformation capabilities. Although the concept of big data has been widely accepted by the industry, it is still immature at the technical level. Analysis and application transformation are far from reaching the stage of automation and intelligence, and the corresponding investment is also very high. How to transform big data into effective productivity at low cost is a difficult problem facing traditional retail companies. In this regard, some domestic department store companies have explored the innovative model of "making the company an O2O platform and employees becoming big data cloud processing terminals", which provides a solution for traditional retail companies at the current stage. One of the representative companies is Tianhong’s “Tianhong Micro Products”.
At the end of last year, Rainbow officially launched the "Tinhong Micro-products" all-employee sales APP. Rainbow micro-products are sent to mobile phones through selected products, and employee "shop owners" can edit them in their own online stores as needed. Products, and then use social tools such as WeChat, Weibo, QQ, etc. to share the products to their own social circles, provide services, and generate sales.
The company is responsible for product procurement and inventory management, marketing graphic production, order processing, logistics and unified customer service, etc., and strictly controls the sales and service behaviors of "store owners".
The effect of Tianhong micro-products is that Tianhong Company not only provides products and support services through a large platform, but also conducts comprehensive big data analysis (recommending popular products). As a small front-end, employees quickly make adjustments based on the customers they face, and achieve effective big data application interaction.
For consumers, through online and offline platforms, they can find the clerks of any store, category, or even counter in any store of Rainbow anytime, anywhere, which is equivalent to tens of thousands of entities in more than 60 stores of Rainbow. The store clerks are all "store waiters" on the "Tianhong Mobile Terminal". They provide one-on-one shopping guide services with customers online. Whether it is pre-sales, during sales or after-sales, after customers make an appointment, offline exclusive services and after-sales will be more convenient and effective. ensure.
2. Through big data analysis, gain self-operation capabilities and get rid of differentiation. At present, most traditional department stores in China are at the level of large category management. Their product coding methods are different categories of codes defined according to the deduction rate of a counter. This coding is only related to the counter deduction rate and has no basic attributes of the product. In-depth data on pricing, inventory, and more. Without mastering product information, it is difficult for department store companies to help counters carry out personalized marketing activities. The role of retailers is weakened and they are closer to the position of "second landlord".
Big data analysis will analyze and control data through both online and offline channels, firmly grasp the single product information of every product entering and exiting the platform, and help enterprises realize the transformation from category management to single product management. . The realization of single product management means that enterprises will be able to effectively grasp the rhythm of product purchase, sale and inventory, control inventory risks, and then fully grasp the self-operation capabilities of products. Traditional department stores are expected to complete the transformation from simple joint ventures → deep joint ventures → single product management → data sharing, unique products → dealer products, collection stores → own products, becoming a market with truly differentiated competitive advantages unit.
Some people in the industry have commented that the reason why Jack Ma is successful is that he has rebuilt the trust relationship between people through Alipay and the evaluation system. The O2O transformation of traditional department stores will, with the help of big data, reshape the understanding and trust between people and business, people and goods, people and services, people and experiences, and even people and the world. Only by playing a contributing role in the process of digitalization and Internetization in this world can we stand proudly in this wave.
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