PwC: End-to-end value chain digitisation is the next retail disruption

Shanghai, 28 November 2018 - PwC today issued the report China’s next retail disruption: End-to-end value chain digitization. The report says that China’s retail industry is facing a new turning point due to the digital impact. Only improvement throughout the value chain will be able to drive the revolution of New Retail.

PwC estimates that China’s overall retail market will reach US$6.77 trillion in 2019, of which e-commerce retail sales will be US$1.25 trillion, up 9% and 21% respectively over the previous year. More recently, a spokesman for the Ministry of Commerce disclosed at a regular press conference on November 15 that, as monitored by the Ministry of Commerce, national online retail transactions on the Singles Day (November 11) in 2018 hit a new record high of more than 300 billion yuan, up about 27% year on year.

Jennifer Ye, PwC China Consumer Markets Leader, said: “China’s e-commerce sector has posted remarkable achievements as it drives global development. Chinese Internet giants are leveraging their own capital and technological advantages to create retail ecosystems, while consolidating offline spaces and upstream and downstream industries to maximize their competitive edges. In the future, end-to-end value chain digitisation will be the key trend in New Retail.”

The Chinese retail market has chalked up explosive digital growth. According to the latest data released by the National Bureau of Statistics, China’s online retail sales amounted to 7.0539 trillion yuan from January to October, up 25.5% year on year. Among them, the online retail sales of physical goods hit 5.4141 trillion yuan, marking an increase of 26.7%, or 17.5 percentage points higher than the growth pace of total retail sales of consumer goods. The online retail sales accounted for 17.5% of the total retail sales, an increase of 3.5 percentage points over the same period last year.

If Digital Retail such as e-commerce channels and digital marketing is leading the market, then we are definitely moving toward a New Retail era that we will see end-to-end digitisation of the value chain. PwC said in the report that New Retail involves an operation model that puts consumers at the centre. Apart from front-end marketing and sales channels, brands need to realize full stack digitisation covering product development, supply chain, procurement and production in a bid to use data to reach smarter and faster business decisions and boost market impact.

Data plays a key part in the decision-making process in the New Retail segment. The report showed that Chinese consumers are much more willing to share data and have high expectations they will receive a personalised experience because of it. A total of 59% of the Chinese respondents in the report survey said that they are “happy for a retailer to identify when I am nearby and send me personalised offers,” while 61% of the Chinese respondents said that “I am comfortable for a retailer to monitor my shopping patterns and purchases.” In comparison, only 29% and 34% of the American respondents agreed with the above statements respectively.

Chinese consumers are willing to embrace changes, but they are also constantly changing and becoming pickier. The report pays special attention to the consumption behavior of millennials, and found that the post 80s and post 90s consumers demand shopping experience that is both entertaining and practical, instead of just “the combination of in-store experience and digital app.” Meanwhile, in the past 12 months, 52% of Chinese consumers spent more on experience (such as travel, dining out and activities) than last year, compared with 26% in the United States.

Phil Lai, PwC China Consulting Director, said: “Chinese Internet giants are at the centre of Digital Retail, and they are also pioneers in the New Retail era. Meanwhile, if traditional enterprises want to navigate through the revolution, they must achieve end-to-end digitisation, ranging from front-end marketing and sales channels to back-stage product development and supply chain. We are still in the early stage of New Retail, and development of digital capabilities requires sufficient resources, more patience and tolerance for profitability.”



Note to editors:

The report - China’s next retail disruption: End-to-end value chain digitisation - builds on the survey findings of PwC’s Global Consumer Insights Survey 2018. Find out more about PwC’s Global Consumer Insights Survey 2018:


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