China's Retail Sector Between Changes And Challenges

Read Complete Research Material


China's Retail Sector Between Changes and Challenges

China's Retail Sector Between Changes and Challenges


Retailers were once effectively the passive recipients of products, allocated to stores by manufacturers in anticipation of demand. Today, retailers are the active designers and controllers of product supply in reaction to known customer demand. They control, organize and manage the supply chain from production to consumption. This is the essence of the retail logistics and supply chain transformation that has taken place. Times have changed and retail logistics has changed also. Retailers are the channel captains and set the pace in logistics. Having extended their channel control and focused on efficiency and effectiveness, retailers are now attempting to engender a more co-operative and collaborative stance in many aspects of logistics. They are recognizing that there are still gains to be made on standards and efficiency, but that these are probably only obtained as channel gains (that is, in association with manufacturers and logistics services providers) rather than at the single firm level.

1 Increased control over secondary distribution

Retailers have increased their control over secondary distribution (warehouse to shop) by channelling an increasing proportion of their supplies through distribution centres (DCs). In some sectors such as food this process is now virtually complete. British retailers exert much tighter control over the supply chain than their counterparts in most other countries. Their logistical operations are heavily dependent on information technology (IT), particularly the large integrated stock replenishment systems that control the movement and storage of an enormous number of separate products.

Restructured logistical systems

Retailers have reduced inventory and generally improved efficiency through for example the development of 'composite distribution' (the distribution of mixed temperature items through the same distribution centre and on the same vehicle) and centralization in specialist warehouses of slower moving stock. In the case of mixed retail businesses common stock rooms have been developed, where stock is shared across a number of stores, with demand deciding to which store it is allocated.

Adoption of 'Quick Response' (QR)

The aim has been to cut inventory levels and improve the speed of product flow. This has involved reducing order lead-time and moving to a more frequent delivery of smaller consignments both internally (between DC and shop) and externally (between supplier and DC). This has greatly increased both the rate of stock-turn and the amount of product being 'cross-docked', rather than stored at DCs.

Rationalization ...
Related Ads