Click the image for details Since the second half of 2018, the industry has occasionally heard claims that the 'New Retail trend is about to stop.' By early 2019, with Alibaba and Tencent releasing their new strategies, it is now clear that the New Retail wave, born in 2016 and booming for three years, is finally coming to an end. On January 11, Alibaba Group CEO Daniel Zhang stated at the 'ONE Business Conference' that New Retail cannot be viewed solely at the retail level; instead, it requires building comprehensive digital business capabilities. Alibaba will become a new business operating system that penetrates all aspects of enterprise operations. On January 9, WeChat Open Class was held in Guangzhou, signaling that Tencent has incorporated its previously promoted Smart Retail into a larger industrial internet framework. The '2018 WeChat Data Report' released at the Open Class showed that WeChat's monthly active users exceeded 1 billion; daily messages sent reached 45 billion, up 18% year-on-year; audio and video calls reached 410 million, up 100% year-on-year. WeChat has built an ecosystem at both software and hardware levels. Various signs indicate that New Retail, as a phased product, has completed its mission and is about to 'ebb.' Two changes have a significant impact on the retail industry: First, the resources Alibaba and Tencent invest in New Retail may decrease (or resources allocated specifically to the retail industry may decrease); Second, capital that revolves around the New Retail concept is gradually withdrawing. The savior from the internet cannot change the fundamentals of the industry. After the wave, retail returns to calm: mountains are still mountains, water is still water. //No model, only tools// At its inception, New Retail aimed to establish a new business model to replace traditional retail, using the popular internet phrase 'reconstructing people, goods, and scenes.' Therefore, whether it was Hema Fresh, unmanned retail formats, or the later popular front warehouses and community group buying, all innovative models under the New Retail banner hoped to run a standalone business format and carve out a piece of the traditional retail pie. But from the practice of these three years, the methodologies proposed by New Retail cannot become a complete business model; they play more of a role as digital tools. That is, New Retail has only local variables, not global variables. Therefore, Alibaba hopes to push New Retail from a higher level, aiming to be a business operating system; while Tencent claims to lay out industrial internet, both are essentially the same, converging on the same path. To better illustrate this point, we take Hema Fresh, the model project of New Retail, as an example. Hema's establishment was refreshing to the industry. Initially, people thought it was a physical store integrating online and offline, benchmarking against Yonghui's Super Species. But with cooperation with Sanjiang Shopping and New Huadu, the industry realized Hema actually wanted to build a system to export to retail peers. On September 19 last year, Alibaba released a retail operating system called ReX based on Hema's operational experience. This system can be seen as the culmination of the Hema model, a software-hardware integrated solution combining store operation systems, membership systems, logistics systems, and supply chain resources. Analyzing the evolution of New Retail businesses represented by Hema, why did the business model at the design stage eventually evolve into a digital tool at implementation? One important reason is that the complexity of physical store operations exceeds the depth that internet methods can touch. Rather than transforming the business model of physical stores, it is better to settle for being a digital supplier to retailers. This is the 'empowerment' frequently mentioned in the past two years. After New Retail has run its course, what has it left for traditional retail? 'Third Eye Retail' believes there are two achievements to acknowledge. First: The establishment of delivery-to-home services. Delivery-to-home is the core of New Retail and the only way for omni-channel retail. With the continuous improvement of digitalization, the improvement of third-party platforms, and the maturity of last-mile logistics solutions, delivery-to-home business can basically be confirmed as a viable purchasing model. A Walmart spokesperson told 'Third Eye Retail' that after Sam's Club launched delivery-to-home services, the average purchase frequency of members increased by 30%. This shows that for physical stores, delivery-to-home is a powerful supplement. Second: New Retail technology improves customer experience and enterprise operational efficiency. What is easily perceived is the popularity of self-checkout. 'Third Eye Retail' visited retail enterprises and found that whether through APP + device assistance or self-checkout hardware, consumer self-checkout is basically popularized in the industry, greatly reducing checkout queue pressure and further enhancing the shopping experience. In addition, New Retail has driven the upgrade of ERP service providers in traditional retail. Taking Jiangsu Chuangjiyun as an example, it added a 'middle platform' architecture on the basis of traditional ERP software services, through which it can seamlessly connect with third-party platforms such as Alipay, WeChat Pay, mini-programs, and Meituan. 'Third Eye Retail' believes that if the initial goal of 'reconstructing people, goods, and scenes' is taken as the target, New Retail has at most completed partial changes to 'people, goods, and scenes,' far from the degree of 'reconstruction.' It can even be said that whether the 'people, goods, and scenes' of traditional retail need reconstruction remains to be discussed. // Amateur players out, mainstream players suffer RMB players are most anxious // In 2018, there were cases of New Retail enterprises closing down and models collapsing, such as Diqiugang, unmanned shelves, and some convenience store enterprises that expanded rapidly with capital support. Analyzing the backgrounds of these enterprises, we found that most of their founders had no prior retail experience, generally a group of 'amateur players' crossing over to disrupt. With the financing winter and increasing downward economic pressure, we judge that the 'amateur players' who came for the New Retail concept will be the first to be eliminated. On the other hand, mainstream retail enterprises are facing difficult performance declines. Many retail executives said that since August last year, their enterprises have experienced declining performance, which has not improved so far. 'Third Eye Retail' surveyed data from multiple retail enterprises and found that except for a few fresh food formats that saw growth, all other enterprises experienced year-on-year sales declines. There is no doubt that the weakness of the real economy has deeply transmitted to the consumption level. 'The stock market and real estate have locked up most of people's income, and some private lending and P2P have also absorbed a large amount of deposits. Now people really have no money,' Tian Jianzhong, chairman of Puyang Green City Supermarket, told 'Third Eye Retail.' At the same time, the 'RMB players' who survive through financing and cannot achieve self-sufficiency are the most anxious group. A founder of a New Retail enterprise said that the current cash reserve can last until April this year, and the top priority is to obtain a new round of financing. As New Retail comes to an end, the industry consensus is to return to 'tradition.' Shen Shiquan, president of Xiya Hem Group, believes that what needs to be done now is to calm down and do their own work well. Zhang Li, chairman of Jianfu Convenience, said that enterprises should strengthen heavy asset investment, such as developing fresh-cooked food, building fresh food factories and central kitchens, which are the core elements to enhance product competitiveness. Zhang Li specifically pointed out that don't rely too much on opportunities; only by doing your own work well, being down-to-earth, and persisting can you survive. Chen Wenyuan, president of Walmart China, prescribed three 'prescriptions' for physical stores: strengthen fresh food operations, strengthen private brand development, and continue the 'everyday low price' strategy. At Walmart's New Year media gathering held on January 10, Chen Wenyuan said that Walmart's first self-operated fresh food distribution center in China will officially operate in March this year. The project has a total investment of over 700 million yuan, setting a record for the largest single investment since Walmart entered the Chinese market 22 years ago. In the next 20 years, Walmart plans to renovate or build more than a dozen similar logistics centers in China. Source: Third Eye Retail (ID: retailobservation) New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 16 to March 18. This conference will focus on the topic of 'Breakthrough' and conduct in-depth discussions with many brand owners, supply chain service providers, distributors, and retailers. Compared to previous conferences, this summit will be fully upgraded. In addition to the original topics such as channel innovation, city distribution logistics, and distributor transformation, it also adds multiple parallel forums such as new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing and exchanges, we believe every brand owner and distributor can learn the latest business models, expert opinions, and practical methods, finding new tools and methods for their own breakthrough in 2019, and returning to the track of rapid growth. **Conference Time: March 16-18, 2019 Conference Venue: Longfeng Hall, Chengdu Longemont Hotel Conference Topics 2019 5th FMCG + Internet Conference Topics Date | Time | Venue | Topic 3.16 | All day | Main Forum | Breakthrough - 2019 (5th) FMCG + Internet Conference 3.17 | Morning | Parallel Forum 1 | New Logistics, New City Distribution Parallel Forum 2 | How Can Distributors Achieve Iterative Upgrades? Afternoon | Parallel Forum 3 | IP Empowerment, Boosting Brand Growth Parallel Forum 4 | How Can Community Group Buying Reconstruct the Value Chain? 3.18 | Morning | Parallel Forum 1 | Retail Scene Innovation Parallel Forum 2 | New Product Sales Public Class Afternoon | Parallel Forum 3 | Social E-commerce Parallel Forum 4 | New Marketing Public Class Registration Method Registration is now open. Long press the QR code below or click Read Original to register. 66% off early bird tickets are limited to 200 and are selling fast...! Add the conference staff to register Previous Conference Review Click the links below to review the highlights of the 1st, 2nd, 3rd, and 4th FMCG + Internet Conferences: -END-