Click to read the original text and participate in registration. Currently, China's physical retail industry is in its early development stage, with overall low circulation efficiency and a lack of "top-tier" brands in the industry. The virtual retail infrastructure driven by e-commerce, including big data, logistics and distribution, new finance, and cloud computing, has begun to take shape. Chinese consumers are highly digitalized, with rich brand awareness channels, and their shopping paths highlight omni-channel characteristics. China's consumption is upgrading, and the new generation of consumers has diverse and personalized consumption propositions, with a great demand for new consumption content. In fact, the essence of new retail is two points: improving efficiency and creating value. I believe that new retail must first create customer value, from personalized customization of products and services, scenario-based displays and demonstrations, to emotional and entertaining interactions that carry these soft values, and then to precise customer relationship management, thereby managing customer value more deeply, including personalized value, experiential value, emotional value, and so on. At the same time, any business development cannot be separated from efficiency improvement, such as consumer purchase efficiency, store operation efficiency, manufacturer efficiency, channel and logistics, and service business efficiency. Against this backdrop, how should traditional enterprises embrace new retail? The Failure of Traditional E-commerce Marketing Models First, traditional enterprises can no longer sustain e-commerce; traditional e-commerce marketing models have failed. Whether on Taobao or Tmall, the overall momentum has weakened, growth has slowed, traffic acquisition costs have risen, conversion rates have declined, and the "low-price bestseller" model has failed. Gree and Midea have competed fiercely for fifteen years. Last year during "Double 11," Dong Mingzhu unexpectedly cooperated with Midea for the first time, sending a notice to Taobao and Tmall: they would not participate in any bestseller promotions that sacrifice manufacturer interests. Gree and Midea were previously sworn enemies; this was the first time they reconciled. We all know that Gree and Midea together account for 70% to 80% of household air conditioners. Now they are no longer cooperating with traditional e-commerce, which means the model of bestseller promotions at the expense of manufacturers has come to an end. Consumer loyalty is low, Taobao and Tmall cannot meet their upgrading needs, transaction amounts are also declining, consumer word-of-mouth is worsening, and price sensitivity is increasing. So Ma Yun did one thing: he hired middle-aged men and women at an annual salary of 400,000 yuan to become internet celebrities, encouraging square-dancing uncles and aunties to shop online. Now only a group of people not covered by e-commerce are playing e-commerce; traditional e-commerce has reached a desert. Moreover, the key issue is that traditional e-commerce cannot meet the strategic requirements of brand manufacturers to "promote high-end and sell new products," and upstream investment resources have decreased. Upstream brand enterprises are no longer cooperating with e-commerce. This platform-based business is not making money from consumers but kidnapping consumers to earn from suppliers. So core suppliers represented by Midea and Gree have stopped playing, and Suning and Gome also declined because suppliers stopped cooperating. Today, Professor Peng talked about Liu He's views on China's macro economy. From the perspective of China's current macro economy, I summarize it in eight characters: "Guo Jin Yang Tui, Tui Gao Mai Gui" (domestic advance, foreign retreat; push high, sell expensive). First, domestic advance and foreign retreat: from heavy industry to infant formula, a wave of domestic advance and foreign retreat has emerged. I just attended Sany Group's annual meeting; Sany's performance doubled last year, and they now hold a market share of 25% to 26%, which is the combined share of Caterpillar and Komatsu. Domestic enterprises are rising and are in a period of aggressive strategy. Sany has a slogan: "Sany, Sany, one-third," meaning to increase from 25% to 33%. Domestic car brands like Geely and Trumpchi are thriving. Feihe achieved 10 billion in sales last year, with a planned minimum target of 6.5 billion and a challenge target of 7.5 billion. In October, I just attended their annual meeting and asked why they held it in October. The answer was that they had completed their tasks. They hold the annual meeting whenever they complete their tasks; they completed two months early, and in the last two months they hit 2.5 billion, reaching 10 billion. For 2018, the minimum target is 12 billion, with a challenge target of 15 billion. Previously, we hoped domestic formula would break through; now they are actively coming up. The entire Chinese nation is rising, and the trend of domestic advance and foreign retreat is very clear. Second, push high and sell expensive: enterprises claim to promote high-end and sell new products externally, but internally it's about pushing high and selling expensive. Essentially, it's product upgrading; new enterprises provide new services, and this is a trend. Traditional e-commerce has derailed from supporting this real economy. Ma Yun sees the trend of industrial structure clearly. If traditional e-commerce does not transform, it will become a seller of street stall goods. Mainstream brands and industry leaders cannot cooperate with traditional e-commerce and do not want to cooperate with it. What about traditional marketing? Traditional terminal marketing models are gradually failing, for the following reasons: First, channel flattening and terminal format upgrades have reduced the space for intensive channel management. Transaction, finance, and logistics methods have undergone disruptive changes; channel dividends are gone, and terminal dividends will also disappear. Second, China's urbanization is accelerating, and after urbanization, commerce must concentrate, leading to a decline in the increment and growth rate of secondary markets. The space in secondary markets is declining, and the dividends of secondary markets will soon disappear. I am in marketing; marketing is opportunity-oriented. Although everyone agrees with strategic orientation and top-level design, I still believe in opportunity orientation, following the feeling, without so much logic; development is logic. I think the dividends of secondary markets are decreasing, so intensive channel management and terminal control are no longer effective. Third, the value orientation and purchasing behavior of the new generation of consumers have changed. All Wanda Plazas are now socializing and entertaining; people go to Wanda Plaza for social entertainment, not for consumption. Community business districts are all connected online and offline, changing from O2O to O+O. Fourth, traditional marketing resources, personnel, and management have high input costs, and consumption value-added has decreased, so it has reached its end. Five Directions for Enterprise Marketing Strategy and Model Innovation New retail has emerged in response to the times. Some people question new retail, but I clearly know what comes after new retail: marketing becomes redundant. If China develops new retail for another ten years, marketing will be unnecessary, and I will be unemployed. Because in marketing, everyone is an IP, and the value presentation, value delivery, and value experience constructed around each person's IP have covered traditional marketing. In this context, what is the strategic direction of enterprise marketing? First, the strategic orientation of new retail is to actively embrace the new generation of consumers and adhere to value orientation. This value refers to the soft value of brands and products. Second, upgrade technology and quality to create attractive big single products. Last year I wrote a book called "Big Single Product," and this year I wrote "New Terminal." These are core components of marketing transformation. I don't want to start from top-level design but from methodology, explaining how to create big single products and new retail terminals. Without solving these problems, future self-marketing cannot be built. Marketing is first about form and then quality; it's not theoretical innovation first, but practical methodology innovation, then rising to theoretical innovation. Third, emphasize scenario and experience, and enhance entertainment promotion. So next year, after "New Terminal," I will write another book called "New Promotion," which is about entertainment promotion, encouraging everyone to play. Fourth, treat consumers as friends, provide value-added services, warm interaction, and deepen relationships. I also want to write a book called "Warm Service," which is about service with warmth, not treating customers as consumption targets but as friends and confidants, so the attitude, method, and characteristics of service will be different. Finally, cross-border integration to build a win-win ecosystem. This will be the last book. Because scenarios are changing, we need to build a win-win ecosystem. Any expression of consumer scenarios must be a combination of cross-industry alliances to present a real scenario. Innovation Directions for Enterprise Marketing Strategies These books will cover new scenarios, new cross-border, new promotion, new terminals, and new services, thus forming a series of new transactions. This is my vision. Through this vision, I see the direction of enterprise marketing transformation. Where is the overall trend and terminal of future marketing? First, products shift from homogeneous proliferation to attractive boutique products, creating attractive products, big single products, and screaming products. In terminals like Hema Fresh and Super Species, consumers in such scenarios can at least make sounds. If enterprises do not have attractive products, they will be drowned in such scenarios and terminals, and you can only work for Ma Yun and Ma Huateng. Only irreplaceable taste and screaming scenarios can reflect the essence of "screaming" products. What was the most enthusiastic scenario at Hema Fresh at the beginning? It was Ma Yun grabbing a king crab. King crab in the minds of Chinese people is high-end, eaten by the rich, but now ordinary people can also eat it. This is a screaming attractive product. Second, channels shift from channel coverage to omni-channel and new terminal construction. My book mainly talks about how to build new terminals. Third, pricing shifts from low-price impact to pushing high and selling expensive. Fourth, promotion shifts from promotional stimulation to scenario experience. Promotion should shift from immediate stimulation, buy-one-get-one, flash sales, and these crude and simple price impacts to scenario experience. Seeing that king crab gives you the desire to eat it; this scenario is a foodie's scenario. Fifth, promotion shifts from mass advertising bombardment to entertainment interaction. Previously, Kuka Sofa's 818 event was just smashing a golden egg for a 180-yuan discount; now this method is outdated. But if you organize an event like a plank or yoga challenge, you will post it and show off your love, so consumers need to experience in such scenarios. The highest realm of marketing is self-marketing, centered on the consumer's individual IP, doing individual marketing, automatic customization, automatic communication, and automatic promotion. A person online is just data; you might be communicating with a robot, and marketing is not needed. Marketing has no value in the entire social value chain. Common Dilemmas in Terminal Operations in Reality Based on the above background, the problem to solve is terminal construction. What problems do traditional enterprises encounter in terminal construction? First, terminal layout and structure are ineffective, failing to meet the traffic requirements of the new retail era. The new retail era is scenario-centric, not simple dense coverage or simple regional coverage. What are the consumption scenarios in core business districts, communities, online, campus stores, and convenience stores? The same consumer has ever-changing scenarios. Terminals should be built around scenarios, not physical locations. If you build terminals based on physical locations, you will find that the terminal cannot attract traffic, close deals, or convert, because you have not followed the consumer's scenario requirements. Only scenarios can generate demand and purchases. Second, terminal image and product homogenization lead to poor experience and fail to attract the new generation of consumers. Simple levels are useless; without consumer immersive scenarios and role involvement, they cannot perceive differences in product value. Third, traditional promotions are in a prisoner's dilemma: almost no promotion, no sales; even with promotion, sales may not happen. The current situation is that promotions in all industries occur in three stages—May Day, National Day, and year-end—accounting for 70% of annual sales. After the results, the entire supply chain is disrupted, the value chain is disrupted, the price system collapses, and enterprises still don't make money. Fourth, terminal services are formalistic and fail to move consumers. In fact, moving consumers has become disturbing consumers. Service providers cannot be everywhere when needed and nowhere when not needed. Fifth, user relationship maintenance is weak, with continuous loss and unknown reasons. Value mining activities for non-purchase, related purchase, and recommended purchase cannot be carried out. The entire terminal talent flow and logistics information settlement are very primitive. Sixth, terminal operation management is extensive, leading to weak maintenance, high operating costs, and low efficiency. Especially for terminal consumer products such as building materials, furniture, automobiles, and infant formula, which are not wholesale products but terminal marketing products, this pain point is becoming increasingly obvious. Functions and Interfaces of New Terminals Such pain points also prompt me to think: what functions will future terminals form, and what interfaces will they need? Ma Yun thinks it's people, goods, and scenes; I summarize five: store, customer, goods, people, and service. People and customers are two different things. First, for traditional terminals, because there is no virtual scenario, only physical stores, you need to determine the business district. What is the consumer scenario in this business district? What kind of store should you have: a 4S consumer store, a full-category store, or a single-category store? Also, you need to transform from O2O to O+O; simple up-and-down traffic diversion is not enough. The first company in China to do O+O was Beijing QuMei, which called it O&O (offline and online). But integration was still insufficient; now we need full-series integration, and also adopt the 1+N model. 1+N is still useful: with one terminal as the center, omni-channel, full-link, full-experience, and full-scenario traffic diversion. The interface form of terminals has also changed, and the image has become scenario-based, not the traditional simple "dressing up." Second is the customer. Customers must change. How to divert this target group, how to gather customers, close deals, retain customers, and get referrals? Customer relationship management methods need to be added. These are already mature, but traditional terminal manufacturers have not used these methods to connect online and offline. Third is goods. First, the core of goods is to have attractive products. Centered on attractive products, build diversified product structure combinations around consumers in the long term, rather than the traditional breakdown into volume-driving, price-war, and image-building products. Now, according to the use of consumption scenarios, build cross-border combined industry chains, presenting consumers with a complete set. For example, when I go to Hema Fresh, besides buying pork and two crabs, I might also need to buy some chili sauce and vinegar, and maybe a pot, a cutting board, and cookware. According to the consumption scenario, I might buy all these products. Some young consumers, to bake egg tarts, buy a full set of products, and after baking twice, they leave them aside. Counting the cost, two egg tarts cost over a thousand yuan. So future products are not competition-oriented but product combinations centered on consumers' special usage scenarios. Fourth is people. All consumer soft value service experiences cannot be separated from people. If the internet does not require face-to-face experience, it certainly cannot improve experience. Face-to-face requires personnel incentives, making personnel truly autonomous masters. So all enterprises with good terminal services have introduced partnership systems without exception. Strong corporate culture, standard operating procedures, partnership incentives, and finally humanized care give employees a sense of pride and enable them to provide touching service. To achieve this effect, manufacturers need to cooperate with enterprise terminals to provide training, support, and services to terminal personnel. For example, Robam Appliances does this very well: they set up a vice president specifically responsible for training all personnel and opened a school with 2,000 people. As long as Robam installs a range hood in your home, the entire set of equipment is different from others, and indeed there is such value experience. Although a range hood is several thousand yuan more expensive than others, it definitely makes you feel high-end. Finally, service: provide consumers with ultimate experience through professional value-added, efficient response, gratitude and warmth, and intimate interaction. Upgrade Direction of New Terminal Construction: Improving Terminal Functions on Five Levels So, what is the upgrade direction of future terminals? I think we need to improve terminal functions on five levels: First, three-dimensional terminal layout, laying out terminals around consumer scenarios, not according to regional area coverage; these are two different things. Second, scenario-based terminal image, not simply showing a logo. Consumers are not interested in corporate logos; they like corporate IPs. If your brand cannot be IP-ized, you cannot move consumers. Some enterprises shout brand names every day, but if consumers don't like it, what's the use? So terminal scenarios are not to express the brand but to capture consumer minds. Third, entertainment-oriented terminal promotion. The other two are emotional terminal service and data-driven terminal operation. Let me elaborate below. I. Optimization of Terminal Layout and Selection First, according to consumers' lifestyles, build large terminal scenarios around business districts. Which are consumers' core scenarios, which are impromptu scenarios, and which are fragmented scenarios? Lay out terminals according to the product consumption scenarios where consumers are. If I open a large store in a Wanda Plaza in a second-tier city, I need to know the purpose of consumers coming to Wanda Plaza: for entertainment and socializing. Then the large store's layout should be based on the product's IP. The brand IP, product IP, and service IP are entertaining, interacting with consumers' experiences rather than product-centered displays. In some scenarios, consumers are there to buy things, not for entertainment, so you need to organize your big single products. In some terminal consumption scenarios, purchases are for convenience, so you sell accessories and auxiliary products. Therefore, you need to decide your store construction and product mix based on consumers' consumption scenarios in different business districts. Second, position the functions of different types of terminals. In core business districts, socializing should optimize experience, promotion, and brand enhancement. Like Muji, which has locations in various consumer trade stores, somewhat like a fragmented combination of small IKEA, allowing consumers to quickly feel the IP when entering such scenarios. For example, the clothes I'm wearing are Muji. In a very cold environment, Muji set up a warm scenario, which stimulated consumers' purchase desire. In addition, community business districts should be convenient, effectively cover, and capture volume, allowing FMCG deep distribution networks to continue to play a role. Third, online and offline form an integration. For example, Xiaomi opened a specialty store under the Oriental Pearl Tower in Shanghai, which is Xiaomi's national flagship store and its largest. Because young people go there to play, in such entertainment scenarios, entertainment functions are reflected. Consumers are emotional; in certain scenarios, they have emotional cognition. Although they talk about rational purchases and have data support when buying, the impulse at the moment of purchase is related to the scenario, which is related to the lifestyle of the new generation of post-80s and post-90s. Fourth, build a 1+N three-dimensional channel to achieve omni-channel coverage. For consumers whose consumption is not scenario-impulse but scenario-inspired, they will be very rational when buying. At this time, the 1+N model is generally used: the large store scenario plus coverage of various segmented channels. For example, if you want to introduce a designer, there are design institutes, distribution, cross-industry alliance traffic diversion, community experience, etc. There are several channels diverting traffic to one core. Kuka Sofa, Robam Appliances, Marco Polo, Oppein Cabinets, etc., all use this 1+N model: one large store plus N invisible channels for effective traffic diversion, including internet diversion, because these products are very fragile if relying solely on pure internet diversion. Another example is Shangpin Home Collection; its traffic diversion can only target budget consumers, which does not match the company's current push-high-sell-expensive strategy. Shangpin can cooperate with Opp Lighting or NVC, but if it goes to high-end furniture products like Kuka Sofa or Marco Polo, it won't work. Kuka Sofa explicitly rejected Shangpin; its attitude is that if you want to cooperate, you can have a separate brand, otherwise Kuka Sofa will fall into a deadlock because cooperating with Shangpin is inconsistent with the company's overall strategy. So why is traditional e-commerce awkward? Because its pure traffic diversion and pure price-setting model can only attract budget consumers, not the middle class. O+O is for convenient purchases and standard products; 1+N is for differentiated products and combinations of auxiliary semi-finished products. Using two forms of terminal construction to complement terminals can combine virtual and real. II. Six Strategies for Scenario-based Terminal Image There is an IP called Gudetama (Egg Yolk Boy). Many people like its life philosophy. Its exterior is entirely transformed into Gudetama. In one store, there are various Gudetama scenarios, like "getting something for nothing," "sleeping in," humorous and lazy. It sells various Gudetama derivatives, similar to Disney's movie derivative sales model. The entire exterior and interior are arranged according to scenarios, different from traditional Disney movies. Disney has its own advertisements, One Piece has its own advertisements, all built around the IP theme. So I think future terminal scenarios: First, display brand connotation. Brands must be IP-ized. If they cannot be IP-ized, they are just a logo or a slogan. This brand positioning is outdated and cannot enter consumer minds. Second, highlight product selling points. Selling points should be IP-ized, highlighting the product's selling points, which product is associated with which IP. Third, deepen customer experience. Let them GAME. Whether it's Hema Fresh or Super Species, it's actually a food Disneyland, a food carnival. There's fun and excitement, so you shop impulsively. Fourth, express promotion themes. Use carnival forms to highlight promotion themes. Fifth, leverage hot events. Finally, interpret and promote IP. For example, a sofa brand continuously interprets the Transformers IP, combining Transformers with sofas, capturing this target IP and giving itself a high-tech feel. How to implement these six strategies of scenario marketing in terminals? Many enterprises are actively innovating in reality. III. Innovation in Terminal Promotion Strategies First, innovation in promotion themes. Themes should be entertaining, IP-ized, and social. That is, the promotion's style must be high. If you ask consumers to smash a golden egg and post it on their Moments, they won't do it because posting such low-class things often loses followers. You need a high-class scenario for consumers to give you a like. So promotion themes need to be upgraded. Kuka Sofa does this well. How does Kuka Sofa express its core appeal? "Because I love my family, I care about my family" (因为爱家,所以顾家), making showing off love the promotion theme, because showing off love is what young people love. Second, innovate promotion forms. Forms should be simple, flexible, drive sales, and outcompete rivals. Third, innovate promotion implementation. Implement close to different scenario terminals, business districts, create momentum, interactive participation, and scenario creation. Fourth, innovate cooperation models. Be good at cross-industry alliances, cross-border integration, and manufacturer-dealer collaboration. For example, Miss Water (水密码), a not-so-high-end cosmetics brand, integrated with Kidswant (孩子王). Kidswant has activities every month; after mothers and children finish activities and buy diapers, they can get a half-price Miss Water package downstairs, forming a good interaction. A store in Zhengzhou sold 380 sets of Miss Water in one day, each set priced at 399 yuan. In fact, specialty stores like Watsons and Sasa can achieve such performance in a day's activity, not even on Saturdays or Sundays. This kind of joint activity is an innovation in terminal promotion. Looking at terminal cross-border marketing, the essence is to increase traffic and multiply value, with conditions of compatibility, complementarity, and parity. Construction requires creativity, connection, negotiation, and alliance. How to ally? I think the best future is to combine cross-industry alliances around the same consumer group. Buying a Midea rice cooker and cooking Wuchang rice—combining the pot and rice gives fragrant rice; this is a cross-industry alliance. Another example is scenario alliances, like Miss Water and Kidswant. Also, cross-border service links, combining bank VIP and product VIP, and the display of brands with the same brand tone. There is an advertisement: Dong Mingzhu went to Feihe and said, "If I had a grandson, I would give him Feihe formula." Actually, formula and air conditioners are unrelated, but both brands represent high-quality domestic products and both claim to be in the national brand plan; this is the principle of parity. Future cross-industry alliances are very useful for traditional physical industry promotions. The purpose of alliance is to form a unique consumption scenario. For example, IKEA and Tencent's cross-border cooperation between physical industry and IP creates a new immersive experience. The cooperation of Disney + Lego + Uniqlo: Disney prints an IP on Lego toys, which becomes a Lego image printed on Uniqlo T-shirts, forming a cross-industry alliance—combining physical products with IP and IP-izing physical products, infiltrating promotion into the product level, making products carry promotional attributes. Also, China Merchants Bank's "Palm Life"—financial and physical consumption. Once a financial institution cooperates cross-border with a manufacturer, the direct result is that everything appears more affordable, and all the partner's sales terminals become the financial institution's communication carriers. IV. "Warm" Terminal Services First, treat consumers as friends and confidants. Second, design service content and forms according to the pain points and pleasure points of their main usage scenarios. For example, Audi's seasonal cleaning and Robam's worry-free service. Third, focus on touching design to enhance emotional service experience. Kuka Sofa also does worry-free service. In Beijing, Kuka has more than a dozen vans; as long as you call, they can come to your home within two hours to wash your sofa, free twice a year, until the sofa is washed out. This is called touching service. I often joke with them that free sofa washing accelerates sofa depreciation; otherwise, a sofa lasts ten years and there are no repeat customers. Haidilao, Kidswant, etc., also belong to touching service. Finally, there is the issue of customer concept: deepen customer relationships, focus on community building, circle interaction, customer care and communication, etc. For example, Fotile's life school teaches you how to cook; Midea's kitchen appliance division and Disney created a food happiness experience store; Lego's family interaction; Xiaomi Home. These cases are very appropriate. So what can be done in future interactions with consumers, and what is the interaction content? I think interaction with consumers should include these five contents: First, act as the user's secretary, with many practical tips; second, act as the product manual, because some consumers are lazy and don't read manuals; third, act as a technical expert, immediately troubleshooting special problems; fourth, act as a confidant, with some family interactions and gossip to chat about; finally, act as a nanny for customers, complementing and communicating with things beyond the product and other items in your home. V. Terminal Operation Management Terminal operation includes data-based issues such as consumer identity and behavior recognition, traffic analysis, personnel safety, and store clerk management. Data visualization, intelligent shopping guidance, logistics analysis, electronic labels, mobile intelligent warehouse management, intelligent VIP recognition, and other functions are technical issues, so I won't elaborate. This part mainly improves marketing precision and operational efficiency. This will become increasingly mature, and intelligent recognition will become more obvious in the future. Intelligent collection, supported by big data, can quickly enter consumption demand decomposition and consumption behavior pattern decomposition, and will become more and more accurate. As long as you use a mobile phone, you have no secrets; all consumption behavior is constantly monitored. Use this information data to build a link, and future platforms will have unified orders, unified promotions, unified inventory, unified logistics and after-sales, and unified membership management. The above are the five levels that traditional enterprises should first focus on in new terminal construction. In China's manufacturing industry, less than 20% can achieve this; most enterprises have the will but not the power. Finally, let me summarize. First, what is "new retail"? Second, how to understand consumer behavior interpretation centered on scenarios. Third, the five major elements of terminal construction: store, customer, goods, people, and service. Around these five elements, specifically discuss how to do terminal scenarios, terminal promotion, terminal service, and terminal operation, and also discuss how to do manufacturer-dealer collaborative terminals. Think about the future of terminals and the path of new retail. Fourth, the "scenario-based" nature of terminal construction. Because scenarios are everywhere, the result is that I step down, because marketing becomes redundant. Thank you all! This article is by Cheng Shaoshan, a renowned marketing expert, Vice President of Huaxia Jishi Group, and Senior Partner. This article is not permitted to be reproduced, excerpted, copied, or mirrored without permission. For reprinting, please apply for authorization through the Huaxia Jishi e-insight (ID: chnstonewx) official account backend. New Distribution has been authorized.