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  • Retail 4.0, an Easy-to-understand Approach to Seizing Opportunities over Competitors

    19 December 2016
    S.Point, Member Firm (China)

    01 Question

    The retail industry has entered the 4.0 era. The concept of retail 4.0 is about omni-channel retail experiences. The whole industry has reached the consensus that with the retail 4.0 revolution, the brands must break the boundaries between the physical and virtual, and integrate service experience of various channels such as stores, online channels and social networks to gain higher commercial profits through an innovative model.

    The retail industry has gone through more than one hundred years of development. In 1916, the first supermarket emerged in the United States that used innovative elements such as open shelves, price tags and checkout counters to break the traditional grocery store experience and open the era of retail 1.0. Then, Carrefour, WAL-MART and other retail giants emerged and expanded the size of supermarkets to form supermarket chains and the era of retail 2.0. After that, the retail industry began to stagnate, and it wasn't until the emergence of e-commerce in 1990s that we ushered in retail 3.0.

    Supermarket is the typical retail 2.0

    How to change? That is the challenge every retail brand is facing, and the health care product brand of a domestic large traditional Chinese medicine enterprise is no exception. For a brand selling health care products, the traditional counter retail experience is too outdated. And only by transforming health care products from "mild luxuries" to "mass consumer goods" can a larger market space be opened up.

    S.LAB and the brand are working together to find a retail 4.0 solution. Through the innovation of retail experience and product lines (not just drugs, but the expansion to the concept of "one health"), S.LAB intends to find a market segment and help the brand smoothly transit to the retail 4.0 system. But retail 4.0 is a general concept, and the seamless connection of omni-channel retail experiences is not easy. S.LAB strategists need to find a starting point and present the brand value and positioning in retail experience in an easy-to-understand approach to find more opportunities.

    02 Insight

    People orientation becomes S.LAB's starting point. The strategists need to solve a few problems. Who may be the target consumers of this brand? What kind of experience they may need? And how to meet their expectations? The strategists divide the people into 6 groups from dimensions such as age, health behavior and psychological preferences. They intend to start from a sufficiently large group of people, then segment them into smaller groups, gain insights through in-depth study, grasp the core elements and find possibilities. This is the so-called "easy-to-understand" approach.

    Only in-depth study leads to insight. In the groups of young people, S.LAB strategists have found that some young people are in the "target formation" stage as they will use some apps related to health and body function, or pay attention to their health by purchasing hardware devices such as smart bracelets. There are also the so-called “happy groups” who may prefer experience. They prefer to prepare and produce their own health care products and are fond of the fresh and interesting experience.

    03 Solution

    These insights provide a valuable way of thinking for future design of retail 4.0-based experience solutions and product line innovation. Omni-channel retail experiences require considering different consumer groups' purchase preferences and methods from different channels and integrating their consumption habit of "One Health" into such preferences and methods. Only with thorough and delicate insights can the best effects of the ultimate solution be ensured. Currently the project is still in progress, and S.LAB strategists are constantly using design thinking and innovative ways to explore more opportunities of retail 4.0.

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