To accelerate the implementation of structural reform of the supply side, facilitate consumption upgrade and the overall level of innovation and transformation in brick-and-mortar retail in China, since July 2015, the Ministry of Commerce has selected nine major cities to develop pilot reforms in domestic trade and circulation system and a variety of beneficial results have been achieved over the past year. On 11 November 2016, the General Office of the State Council issued its Opinions on Promoting Innovation and Transformation of Brick-And-Mortar Retail, marking a new approach to Chinese brick-and-mortar retail enterprises to aid them in accelerating structural adjustment, innovating in terms of development models, realizing crossover integrations and continuing to enhance supply capability and the efficiency of products and services. This document has become a great source of inspiration for brick-and-mortar retailers.

In order to review the experience of reform and to further promote innovation and transformation in brick-and-mortar retail, a “Retail Innovation and Transformation Summit” was held by the China Council for the Promotion of International Trade and Nanjing Municipal People’s Government in Nanjing on 21 December 2016. The summit gathered together more than 300 brick-and-mortar retail enterprises as well as representatives from politics, academia and research to study and discuss the direction and objectives of brick-and-mortar retail innovation and transformation, consider and explore the practical approaches to and the implementation of brick-and-mortar retail 4.0, and develop a new version of Chinese retail together.

Huang Lan, the deputy mayor of Nanjing, chaired the summit. Miao Ruilin, the mayor of Nanjing, gave a speech in which he fully affirmed the significance of the summit and introduced the achievements of Nanjing’s pilot reforms in domestic trade and circulation system. He said that brick-and-mortar retail development was facing unprecedented challenges and he was delighted to see some retailers actively planning their industry position and exploring new routes of transformation and innovation in brick-and-mortar retail. “For example, Sanpower Group actively ‘goes global and brings in’, links the Chinese market with global resources, promotes domestic and foreign trade integration and enhances the capabilities in international management.”

Mayor of Nanjing Miao Ruilin delivering a speech

The deputy director of the Department of Commerce of Jiangsu Province Sun Jin said in his speech that during the period of the 12th Five-Year Plan, Jiangsu Province continually ranked among the top provinces in the country in terms of the size of the consumer market and that the province has laid equal stress on going global and bringing in, and accelerated and promoted a deep integration of domestic and foreign trade. “House of Fraser’s opening today is a typical example of international cooperation in domestic trade and circulation.” Minister-Counsellor at the British Embassy in China Gareth Hoar said in his speech that House of Fraser integrates the refined interior design of the British retail sector and showcases British brands and shopping experiences to local consumers. He further noted that this model can be promoted in other cities in China. Chen Zhou, the vice chairman of the China Council for the Promotion of International Trade, praised Sanpower Group, Wangfujing Group and other brick-and-mortar retail enterprises for their fruitful trials and innovations. He believed that these enterprises provide a valuable experience for the whole industry.

The minister-Counsellor at the British Embassy in China Gareth Hoar delivering a speech

During the summit, Sanpower Group signed a strategic partnership agreement with Wangfujing Group. Senior vice president of Sanpower Group Yue Lei and vice president of Wangfujing Group Shang Xiping represented the two parties in signing the agreement. In the future, Sanpower Group and Wangfujing Group will cooperate in the areas of supply chain and business models and jointly promote the transformation of brick-and-mortar retail 4.0. House of Fraser China and China-Britain Business Council also agreed a strategic partnership, with CEO of HOF China Kong Jun and the president of the China region at the China-Britain Business Council signing the agreement. Hamleys Toys (Nanjing) Co. Ltd and Wangfujing Group further sealed a strategic partnership and the CEO of Hamleys China Joe Wong and the assistant president of Wangfujing Group Tian Huailiang added their signatures to the agreement. The signing ceremony was witnessed by the mayor of Nanjing Miao Ruilin, the vice chairman of the China Council for the Promotion of International Trade Chen Zhou, minister-counsellor at the British Embassy in China Mr Gareth Hoar, deputy director of the Department of Commerce of Jiangsu Province Sun Jin, deputy mayor of Nanjing Huang Lan, secretary-general of Nanjing Municipal People's Government Weng Guojiu, director general of Nanjing Bureau of Commerce Kong Qiuyun, chairman of Sanpower Group Yuan Yafei and chairman of Wangfujing Group Liu Yi.

Sanpower Group and Wangfujing Group signing a strategic partnership agreement

HOF China and China-Britain Business Council signing a strategic partnership agreement

Hamleys Toys (Nanjing) Co. Ltd and Wangfujing Group signing a strategic partnership agreement

Also during the summit, well-known entrepreneurs in the domestic brick-and-mortar retail sector, including the chairman of Wangfujing Group Liu Yi, the chairman of Golden Eagle International Retail Group Wang Heng and the chairman of Sanpower Group Yuan Yafei shared with attendees their thinking, explorations and practical attempts regarding innovation and transformation.

Yuan Yafei proposed the concept of “brick-and-mortar retail 4.0” and the his practical experience in the summit, which garnered strong interest from the attendees. It was also on the very day of the summit that the Orient Fraser department store opened, becoming a new benchmark for the innovation and transformation of Nanjing brick-and-mortar retail. The department store will act as both a measure of the economic integration and development of Chinese and British brick-and-mortar retail and a practical achievement in the transformation from the traditional concession-based operating model to new self-operated model and experience. The store therefore is a real-life example of the implementation of “brick-and-mortar retail 4.0”.

Chairman of Sanpower Group Yuan Yafei delivering a keynote speech

In his speech, Yuan Yafei argued that brick-and-mortar retail needs to pass through four stages, from 1.0 to 4.0, before the “winter of retail” ends and spring comes. Stage 1.0 is leasing concessions, where retailing means providing a venue for shopping only, whereas brick-and-mortar retail 4.0 builds on retail 2.0 (providing value from commodities) and retail 3.0 (providing value from the setting) and utilizes Internet-based methods, feeds in the strengths of resources in financial services and establishes precise services and ecological value chains. House of Fraser is the physical result of Sanpower’s vision for brick-and-mortar retail 4.0. Yuan Yafei shared his opinion that providing consumers with fair prices, diverse products, unique scene-based experiences and more valuable integrated services is the essence of brick-and-mortar retail transformation.

The chairman of Wangfujing Group Liu Yi shared the innovation approach taken at Wangfujing. Wangfujing mainly focuses on innovation and breakthroughs in the following areas: first, innovation in the business model. Second, determining the brand positioning and to whom to sell. Third, innovation in the planning model, in deciding what to sell. Fourth, innovation in the sales model, determining how to sell. Fifth, innovation in the organization and systematic reform, which includes establishing an omni-channel centre and goods resource centre that revolve around the end customer  and end products, strengthening integration of the two main resources and capabilities, as well as management control and overall improvements.

The chairman of Golden Eagle International Retail Group Wang Heng made a keynote speech titled “Experience in Retail Transformation”. He shared his belief that the concept of “new retail” is supported by information and makes multiple channels and “diverse development” a part of daily life. In addition to bringing together the strongest elements, brick-and-mortar retail should pay more attention to combining stronger and weaker elements, including the shared economy and entrepreneur platforms.

In the following roundtable forum, the conference delegates held a conversation on the themes of “Exploring Innovation and Transformation Models for Brick-And-Mortar Retail” and “Exploring ‘Brick-And-Mortar Retail 4.0’”. The words of each participant reflected the unremitting efforts made by Chinese brick-and-mortar retail enterprises to explore innovation and transformation. They also showed thought given to the analysis of the practical problems in China's brick-and-mortar retail sector by economists and observers from the financial media and a rational consideration of routes to innovation and transformation. They unanimously affirmed that Nanjing has made a number of fruitful attempts in piloting reforms in domestic trade and circulation system, which are worthy of being widely shared and learned from. The conference also believed that “brick-and-mortar retail 4.0” is an innovation approach to the reforms in domestic trade and circulation system. As long as brick-and-mortar retail enterprises in the country give full play to their advantages, actively build on available synergies and promote the supply side reform, faster, greater and newer achievements will be made while carrying forward the approach as laid out in the Opinions on Promoting Innovation and Transformation of Brick-And-Mortar Retail issued by the General Office of the State Council.

At the end, the summit issued a proposal actively responding to the Central Committee’s call, that aids the implementation of structural reform of the supply side and jointly promotes innovation and transformation in the brick-and-mortar retail sector. All brick-and-mortar retail enterprises and various brands should work together to create a regular series “Chinese shopping carnivals” each year. Consumers should be provided with good and reasonably priced goods and considerate services revolving around personalized scene-based experiences and truly increasing enjoyment in life.

The summit was attended by the deputy director of Trade Promotion Centre of China Council for the Promotion of International Trade Lou Junfeng, president of the China region at the China-Britain Business Council Kirk Wilson, president of the China Chain Store & Franchise Association Guo Geping, president of the China Commerce Association for General Merchandise Chu Xiuqi, director-general of the National Large Department Store Trade Federation Liu Yuehua, and president of the Commercial Real Estate Research Association at the China Real Estate Chamber of Commerce Wang Yongping, among others.