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Press release

Big gains at stake for consumer products companies that act decisively, systematically in China’s era of New Retail

Big gains at stake for consumer products companies that act decisively, systematically in China’s era of New Retail

Bain & Company’s joint China e-commerce report with AliResearch identifies the six steps brands need to follow to pull ahead of the competition as online, offline and logistics merge

  • marzo 14, 2018
  • min read

Press release

Big gains at stake for consumer products companies that act decisively, systematically in China’s era of New Retail


Bain & Company’s joint China e-commerce report with AliResearch identifies the six steps brands need to follow to pull ahead of the competition as online, offline and logistics merge

Beijing- March 14, 2018 – As Alibaba founder Jack Ma anticipated, China is setting the pace for the rest of the world when it comes to “New Retail” in which online, offline and logistics are merging to create a dynamic new retailing era.

While there are big gains at stake for consumer products companies that act decisively and systematically, others inevitably will lag behind. In its latest China e-commerce report, Embracing China’s New Retail, Bain & Company suggests there are six criteria that put some brands in a stronger competitive position to win in New Retail. According to Bain’s research, brands are undergoing three fundamental changes, and the way they respond is key to their success:

Consumers. People are no longer viewed only as consumers. The most forward-thinking brands also see them in the role of co-producers. As a result, brands have new missions, such as finding ways to stimulate consumer needs, identifying look-alike consumers and turning consumers into brand ambassadors who effectively cocreate the brand.

Merchandise. Products are advancing from commodities to become part of the consumption process and an integrated consumer experience. As the old business-to-consumer model evolves from the simple goal of meeting mass demand to a world of consumer-data-inspired personalized products and delivery, the best brands are determining how to integrate products into the overall customer experience: not only shopping but also learning about a product, using it, talking about it on social media and recommending it.

Stores. Stores have extended from online-only or offline-only into a seamless omnichannel consumer experience that’s fully integrated. Creating occasions beyond the constraints of time and location is among the new moves that winning brands are making to get ahead

“For brands hoping to sell in China, survival means moving equally fast to capture the future well ahead of their competitors – both incumbents and digitally savvy upstarts,” said Jason Ding, Bain & Company partner and report author. “It will not be enough merely to keep up. Brands will have to get ahead and help shape the vast changes, even as they completely overhaul the rules of engagement.”

Winning companies in China’s New Retail take a systematic approach that covers six well-defined steps:

Step 1: Identify new governance principles for a customer-centric model. The best brands redefine the relationship among consumers, merchandise and stores in a way that makes the most of their operations while strengthening such fundamentals as the operating model and ability to develop new technology.

Step 2: Develop new flexibility and efficiency in R&D and supply chains. New Retail is having a big effect on every corner of a brand’s operations. As consumer needs diversify, the potential consumer pool would shrink if existing R&D and supply chain strategies remain unchanged. Bain believes the best companies are transforming those operations to take advantage of retailing’s new realities, and making them more efficient in the process. These brands use real, comprehensive and timely understanding of consumers to optimize R&D and their supply chains.

Step 3: Reimagine marketing and consumer management for New Retail. New Retail changes the game in marketing and consumer management, too. The digital ecosystem that encompasses purchase, payment, delivery and all the other customer touchpoints provides the opportunity to reach consumers whenever and wherever they are online. That is why winning brands have extended the horizons for digital marketing. For them, online is not limited to a sales channel; rather, it becomes a consumer-centric closed loop for unlocking business potential.

Step 4: Modernize route-to-market and retail formats. New Retail is reinventing distribution and retail formats. Leading brands are replacing old and painful multilayered networks with streamlined electronic route-to-market (e-RTM) models that help them reduce costs with fewer levels, expand their coverage, and gain visibility into real-time inventory and sales data while improving point-of-sale and channel relationships.

These distribution changes are enabling leading brands to introduce retail formats that reduce communication costs while increasing SKU productivity. Consumer data allows them to create more targeted retail outlets for specific consumer segments, which helps brands optimize their communication costs by relying on tailored messaging for similar stores.

Step 5: Transform the organization and operating model for digital. Building a framework and operations around customers and data is critical for brands hoping to master New Retail. However, those big moves will not yield sufficient results without redesigning the organization to make full use of New Retail’s power. Winners understand the need to focus on organizing for data. As companies adapt their organizations to the changing needs of New Retail, it is critical that the organizational design reflects the company’s stage in its digital transformation

Step 6: Invest in new technology development. New technologies give brands the opportunity to boost their operational efficiency as they deliver a better customer experience.

Jing Jie, President of Tmall, said: “The center of innovation is now shifting. Business school students today are still learning about marketing, brand management, channel distribution and retail formats using the case studies of Western models. However, the most disruptive digital transformations in consumer products and retail are already happening in China, brought about by the rapid adoption of mobile technology, online marketplaces like Tmall, and the overall Alibaba ecosystem allowing brands to engage with consumers’ online, offline and everywhere in between.”

Editor's Note: To arrange an interview, contact Nicholas Worley at nicholas.worley@bain.com or +852 2978 8830


Acerca de Bain & Company

Bain & Company es una consultora global que ayuda a los generadores de cambio más ambiciosos del mundo a definir el futuro. A través de 65 oficinas en 40 países, trabajamos como un solo equipo junto a nuestros clientes para lograr resultados extraordinarios, superar a la competencia y redefinir las industrias. En 2022, cumplimos 25 años en América del Sur, trabajando en estrecha colaboración con empresas líderes en múltiples industrias, experiencia integrada y personalizada que complementamos con un vibrante ecosistema de innovación digital para ofrecer mejores resultados, más rápidos y duraderos.

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