---
title: "The Essence of New Retail Transformation: Adaptation and Matching of People, Goods, and Scenes"
description: "The cooling of the new retail industry, marked by Hema's first store closure and the exits of SF Preferred and Country Garden, is beneficial for its healthy development. The essence of retail transformation lies in the re-matching and adaptation of people, goods, and scenes, with new retail representing a full-industry digitalization and a shift from goods-centric to people-centric operations."
author: "能叔叔"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-06-14"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-essence-of-new-retail-transformation-adaptation-and-matching-of-peop-79320bbd/"
markdown: "https://xinjignxiao.com/en/articles/the-essence-of-new-retail-transformation-adaptation-and-matching-of-peop-79320bbd.md"
original_source: "https://mp.weixin.qq.com/s/4wWR0oIe-ZK4K39KclMk3g"
translation: "https://xinjignxiao.com/zh/articles/%E6%96%B0%E9%9B%B6%E5%94%AE%E5%8F%98%E9%9D%A9%E7%9A%84%E6%9C%AC%E8%B4%A8-%E4%BA%BA-%E8%B4%A7-%E5%9C%BA%E7%9B%B4%E6%8E%A5%E7%9A%84%E9%80%82%E5%BA%94%E4%B8%8E%E5%8C%B9%E9%85%8D-79320bbd.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-essence-of-new-retail-transformation-adaptation-and-matching-of-peop-79320bbd/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Essence of New Retail Transformation: Adaptation and Matching of People, Goods, and Scenes

> The cooling of the new retail industry, marked by Hema's first store closure and the exits of SF Preferred and Country Garden, is beneficial for its healthy development. The essence of retail transformation lies in the re-matching and adaptation of people, goods, and scenes, with new retail representing a full-industry digitalization and a shift from goods-centric to people-centric operations.

Click to read the original article for details.
Whether it is the first store closure of Hema Fresh, or the accelerated exits of SF Preferred and Country Garden, the cooling of the industry is not a bad thing for the healthy development of the new retail sector.
The summer of 2019 has arrived in the flow of time, but the winter of the capital market has just begun. Even the new retail track, which has been favored by capital and shown a "counter-cyclical" growth trend, is gradually cooling down. It has been three years since Mr. Ma first proposed new retail at the 2016 Yunqi Conference. These three years have been a period of deep integration between domestic retail and online, gradually stepping into the new retail era, and also a period of birth and competition for new species.
According to data from the Prospective Industry Research Institute, the market size of the domestic new retail industry reached 38.9 billion yuan in 2017, and the upgrade of the entire retail industry has just begun. It is expected that by 2022, the market size of the domestic new retail industry will reach 1.8 trillion yuan, still with broad growth space.
With such a big cake, there will naturally be those who covet it. Since the concept of new retail first appeared and now with "new species" everywhere, the fresh food track has always been the experimental field and weather vane of new retail. This retail transformation, driven by the new generation of consumer power, has gradually entered the critical mid-game as competition in the fresh food track intensifies. The economic frost has arrived, the tide of VC capital has receded, leaving only naked swimmers shivering on the beach.
In SF's escape and Country Garden's failure, corporate genes are not the fundamental issue, but rather that Wang Wei and Yang Guoqiang never understood what is truly "new" about the so-called "new species." Meanwhile, Hema, raised by Alibaba and regarded as an industry benchmark, and Miss Fresh, founded by Xu Zheng and Zeng Bin, are more worthy of observation by industry insiders. The success or failure of Hema Fresh and Miss Fresh is not only about their own survival but also about whether the new retail model can be proven in the present.
**The essence of retail transformation is the re-matching and adaptation among people, goods, and scenes**
Currently, the retail industry has undergone four transformations. As early as 1852, changes in specialized operation and production models led to the separation of production and sales, resulting in the world's first department store and the first retail revolution. In 1859, the popularization of large-scale production and the practical need for cost reduction and efficiency improvement for capitalists gave rise to standardized management and large-scale retail models, leading to the birth of chain stores and completing the second retail revolution.
The third retail revolution was marked by the emergence of supermarkets. After entering the information age, the retail formats under the chain store model could no longer meet people's shopping needs. With the popularization of modern cashier systems and ordering systems, the efficiency of commodity circulation greatly improved, and SKU management became easier than before. In this situation, supermarkets with tens of thousands of SKUs met people's demand for category diversity. Additionally, after the large-scale improvement in commodity circulation efficiency, cost reductions also made supermarket goods more price-competitive.
The fourth retail revolution is closely related to us. The emergence of e-commerce was a subversive blow to the circulation channels of traditional retail. In the era of universal e-commerce, more flattened channels further reduced the cost of commodity circulation channels, broke spatial limitations, and truly realized the free circulation of goods.
New retail is the fifth revolution of traditional retail. Rather than saying new retail subverts traditional retail, it is more accurate to say that under technological iteration, it is the natural evolution of retail's digitalization, integration, and ecologization. Among these, digitalization is the means, integration is the methodology, and ecologization is the ultimate goal form of the new retail format.
If we analyze the past four retail revolutions from the perspective of people, goods, and scenes, we may find the essential differences between new retail and previous retail models.
In Uncle Neng's view, the essence of the first retail revolution was the mutual adaptation between goods and scenes driven by productivity growth. The second retail revolution (the birth of chain stores) was the transformation of goods and scenes promoted by improvements in management systems and circulation efficiency. The third retail revolution was the format transformation of goods and scenes under changes in demand. The fourth retail revolution can be seen as the retail upheaval caused by the transformation of traditional distribution channels triggered by e-commerce.
The transformation brought by new retail is not just a change in the relationship structure of people, goods, and scenes driven by a single factor, but a full-chain ecological reaction from consumer demand, raw material production, brand manufacturers, circulation systems, warehousing systems, to front-end sales and even user experience. It is a complete reshaping of the entire industry supported by digital technology, with big data, the Internet of Things, and 5G technology as connecting nodes.
From the historical evolution of retail, it can be seen that the core lies in the matching of supply and demand. The essence of all economic activities is to create value to meet demand, and the core of this process is the matching of supply and demand. Social progress and technological innovation continuously improve the efficiency of matching commodity value with demand. When such natural evolution breaks through a critical point, it brings about industry-wide transformation.
**The "newness" of new retail lies in the full-industry digitalization from product production to terminal sales, in the evolution of traditional warehousing systems supported by big data analysis on the demand side, and also in the shift from a "goods-centric" to a "people-centric" approach.** Under new retail, traditional store-level granularity operations transform into user-based granularity operations, that is, user operations centered around user experience, and the shift from traditional "selling goods" to the two-way flow of "goods and data."
Taking Miss Fresh as an example, after connecting the circulation chain from raw material production areas to central warehouses and then to front-end warehouses, it achieves consumer reach through the O2O model, reconstructing the traditional fresh food circulation chain. Through mathematical model analysis for refined operations, on one hand, precise user portraits from data improve the SKU quantity of different sites to complete the matching of product value and demand; on the other hand, feedback from front-end user data continuously optimizes the analysis model, achieving cost reduction and efficiency improvement through the two-way flow of "goods and data."
**The growth framework and new opportunities of the 2C model under the new retail ecosystem**
Hu Dinghuan, a researcher at the Institute of Agricultural Economics and Development of the Chinese Academy of Agricultural Sciences, said in a media interview, "Only those who do not understand agriculture would think of building a full industry chain in agriculture. This model does not exist in China or abroad. Production, processing, logistics, and retail enterprises have always been clearly divided."
In fact, not only agriculture but also retail is the same. The complexity of retail determines the clear division of labor and cooperation among upstream and downstream links. Relying on new retail to achieve a full industry chain is a pipe dream. Therefore, the future of new retail must be an ecological path.
In Uncle Neng's view, **the so-called industrial ecology is essentially an open value collaboration network within the industry.** In the electrification era, breakthroughs and applications of electric power technology extended into multiple branches. In the internet era, user-centric extensions gave rise to open value collaboration networks such as social networking and e-commerce. Therefore, the ecology of new retail is actually a value collaboration system of various links in the retail industry extended with users as the core.
Taking Pagoda as an example, first, Pagoda is a typical new retail enterprise under a chain business format. Second, Pagoda also plays the role of a channel provider, closely cooperating with fruit production bases and reversely assisting in the standardization of fruit production. Third, it collaborates with intelligent companies through alliances for data empowerment. In addition, it deeply cooperates with key nodes of the entire industry through capital strength and R&D, thus forming a new retail ecosystem.
As a result, the value of the "user platform" role of new retail enterprises is highlighted. Therefore, user growth for new retail enterprises is not only about current data growth but also about the construction of the future retail ecosystem. For the initial user growth of new new retail enterprises, the growth framework under the 2C model can be referenced:
> (1) Separation of product and commodity, that is, using products for traffic introduction and commodities for value realization;
>
>
>
>
> (2) Stratification of product and commodity, that is, those who experience the product are users, and those who purchase the commodity are customers.
>
>
>
>
> (3) Profit sharing between product and commodity, that is, cost-centered traffic products and profit-centered value commodities, where the former focuses on CAC (customer acquisition cost) and the latter focuses on LTV (customer lifetime value).
Taking Apple's iPhone as an example, its early epoch-making and industry-guiding products accumulated hundreds of millions of fans, while later products are commodity-oriented, pursuing high profit margins while satisfying commodity value. Xiaomi is another enterprise with the same growth logic.
In the complex retail industry, the single-point breakthrough hit-product thinking is an effective way to gain users in the early stage. Using certain internet-famous single products to trigger user growth, and then gradually expanding SKUs after completing the accumulation of initial user numbers, is more efficient.
Image source: Internet
**If the industrial age solved the problem of product scale, then the internet age solved the problem of user scale, and new retail aims to solve the precise matching between products and users.** This has given rise to some new retail business opportunities. We use a coordinate chart to represent several characteristics of the current new retail formats, where the vertical axis represents socialization to functionalization, and the horizontal axis represents the tendency towards offline and online scenarios.
Using this chart, we can further analyze the reasons for Hema Fresh's success. Overall, Hema's success stems from precise market positioning and differentiation strategies. In terms of scenario selection, Hema uses offline stores as traffic entrances to attract traffic for online business, thereby achieving synergy between offline and online operations. Secondly, Hema's target audience is very precise. In terms of consumer subject selection, Hema targets white-collar workers who are not highly price-sensitive but pursue quality. Thus, Hema, which emphasizes offline experience while being functionally oriented, has gained a large number of users through differentiation and achieved success.
From this chart, it can be seen that there are still some opportunities in the brand positioning of social-oriented with heavy offline scenarios. The currently popular community group buying model also falls into this quadrant. In practice, business models with a social orientation and heavy offline scenarios pay more attention to real social relationships among people, so the characteristic of stratification is more obvious.
**Conclusion:**
Every retail transformation is a process of re-matching the three elements of people, goods, and scenes. The difference of the new retail revolution lies in its deep technological integration, wide industry penetration, and significant impact on retail formats. But overall, the construction of the new retail ecosystem cannot be separated from the traditional rules of the retail game. **The complexity of retail lies in its deep involvement in back-end product production, its touch on front-end consumer experience, its huge categories and circulation systems, and its refined operations and cost management. It is precisely because of the complexity of retail that new retail must adopt a steady and pragmatic strategy.** The cooling of capital and the escape of naked swimmers may not be a bad thing for the new retail industry.
Source: Uncle Neng's FMCG Talk (ID: zzd1312)


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671