Rethinking “New Retail” in China
iShelf — A New Cloud-Native Solution for Retail
A blog post by Li Xu and Laura Marwood
The “New Retail” Boom in China
In the past few years, China has demonstrated its ability to innovate through unique shopping experiences. China, as the worldwide digital leader, is among the most forward-thinking countries for retail and e-commerce solutions. And the reason is simple. Today, 50% the global e-commerce sales are generated in China. In China, new retail stores allow their customers to try on clothes virtually and pay via facial recognition; you can watch 3D ads of luxury cars with you in the driver’s seat and a QR code for immediate purchase; you can use touch screen to order your meal in a restaurant. Let’s face it — with a move to more customer-centric, interactive and sensory retail experiences, static stores are a thing of the past, and China is without doubt the most innovative and lucrative market for the retail shopping experience.
“Tomorrow’s supermarket can’t just be a place to shop but a place to live
where you like to spend time.” Thierry Garnier, CEO of Carrefour in China
Riding the Innovation Wave
In SAP S/4HANA Consumer Industries Cloud, we are fascinated by the “New Retail” transformation, and our colleagues in Shanghai have been working closely with well-known Chinese apparel companies to solve their main pain points: how do you effectively plan, allocate and arrange products in retail stores?
The two co-innovation customers we are working with each generate billions RMB sales revenue every year and have multiple retail stores across the country. Yet a lot of their processes are holding them back. For example, they still rely on Excel for manual planning purposes. They make important decisions on intuitions, rather than facts and data, and rely highly on key stakeholders’ area expertise. The internal planning and in-store execution process is often disconnected, the data is scattered, meaning they don’t have real-time visibility on the sales and stock situation; planning cycles are long, and they are not able to quickly react to developments on the store frontline.
The Solution
To address these challenges, the SAP S/4HANA Consumer Industries Cloud Shanghai team designed a new, unified cloud-native solution — iShelf — which leverages artificial intelligence for retailers to arrange the right products in the right amount in the right place, improving availability, accelerating inventory turnover, and optimizing sales. The aim of this solution is to offer an end-to-end merchandising and spacing planning solution that will allow customers to accurately forecast, and connect the dots from planning to execution.
The solution also leverages machine learning and data science to produce the demand forecast, taking into consideration of factors like sales trend, seasonality, sales peak and promotions. It also integrate with our current merchandising and assortment planning solutions, and provides store specific planogram optimization recommendations based on the demand forecast and allocation plan. It also integrates with cameras and RFID technologies to trigger“out-of-stock“ warnings, quickly locate the shelf and product in question, and recommends the fastest and most economic replenishment options.
The People
The iShelf project team is comprised of members of PM, UX, Data Scientist and Engineering from SAP S/4HANA Consumer Industries Cloud in Shanghai, and, as a team, they jumped at the opportunity to take on this innovation challenge, and address real-world customer pain points in the local market. Customer centricity is always at the forefront of their minds on our innovation journey. We continuously ideate, prototype, validate and evolve our deliverables with customers to make sure we do the right thing that creates genuine value for them.
