In 2016, the Chinese retail industry was encountered with tremendous challenges. Against a backdrop of consumption upgrade, many enterprises boldly pursued innovation and transformation. On 4th November, 2016, the China National Retail Conference was convened in Suzhou, focusing on the ways which retail enterprises may adopt to promote consumption upgrade and trans-business cooperation. Yuan Yafei, Chairman of Sanpower Group, was invited to deliver a keynote speech of “Define Future with Future—Exploring Ways of the Retail Industry Transformation in the Internet Era”, during which he unveiled the secrets underlying the transformation of the retail industry.

He straightforwardly pointed out the predicament of the retail industry, which had entered into a slack period. “But why would that happen considering the increasing population and stronger spending power?” According to his analysis, the technological revolution fundamentally shifted product and business models. However, the supply didn’t keep pace with the changes of consumption needs and neither did the innovation of business models catch up with product and technological changes. “The Supply-side Structural Reform initiated by the Central Government aims to tackle the key problem. Whoever misses this opportunity will fail to witness China’s consumption upgrade as well as the coming of a great era.” He added that social development and investment rapidly expanded the scale and amount of retail channels, but the uncontrollable growth backfired, retreating customers while stifling the industry. “At last, the advent of the Internet, especially that of the mobile Internet undeniably renders people harness pockets of time to go online shopping, which largely impacts offline retail.”

Despite the impact of the Internet on offline retail, Yuan Yafei thought that the first step of industrial transformation was to put the Internet in perspective. “The Internet is a technique or means, just like the high-speed rail or airplane. In the future, there will be no incompatible distinction between the online and offline, omni-channel is the trend in the development of retail industry.” He said that though in recent years, offline retail was robbed of the market share by E-commerce, nowadays the advantages of E-commerce had vanished. “Many online retailers spend 100-odd yuan or even more to woo a customer. Added on the cost of logistics, it is much pricier than offline retail.”

In the USA, E-commerce was known to account for less than 9% of the total retail sales in 2015. Yuan Yafei made a bold forecast: Even if it displays its full potential, E-commerce will at most account for 30 percent of the total sales. “E-commerce deals with piecemeal rigid demands. Whereas, what is the most typical of men is their social attribute. In light of higher spiritual needs of the humans, the offline retail, which satisfies those needs, is inclined to be advantageous down the road.”

But how should offline retail be properly handled? Yuan Yafei pointed out, “The turnaround of offline retail should first enter into the stage of integration and then omni-channel.” He briefed the audience about Sanpower’s acquisitions of Brookstone, a novelty brand in the USA with a set of unique measures and logic, and House of Fraser (thereinafter referred to as HOF) of the UK which possesses scores of house brands and a buyers system lasting for hundreds of years. “These acquisitions are our commitments to ‘define future with future’. Though we don’t know what future will be like, through purchasing foreign advanced stuff, we are bringing our own future into being here in China.”

According to Yuan Yafei, after the acquired Brookstone settled in Nanjing this New Year’s Day, it has kept on expanding and now it can be found in hub cities like Beijing, Shanghai and Suzhou. Meanwhile, the first store of HOF will be established this year at Xinjiekou, Nanjing with its up-to-date Commerce 4.0 integrating house brands, buyer system, scene-based sales, O2O and finance.

Yuan said, “In future’s business patterns, the Internet, products and stores will all belong to techniques or means. Core assets of the retail industry will rest with data. But only those data that can be traced, analyzed and contacted has real values.”

To credit his innovative attempts and efforts to overall advance the retail industry, CCFA has conferred on Yuan Yafei the title of “Person of the Year of the Chinese Chain Industry” during the National Retail Conference of 2016.

The conference also saw the setup of China Retail Techniques Innovation Center after the signing of contract by Sanpower Group, Intel, Accenture, Oracle and CCFA. The Innovation Center is intended to conduct research on the management and technology trend while accelerate the implementation of related techniques.