In the mother-baby industry, integration has long been a topic of discussion. Many provinces are vigorously pushing forward with integration efforts. The reason for integration is straightforward: on one hand, low birth rates are leading to increasing saturation of mother-baby retail outlets, and on the other, as online channels rise, these outlets are gradually losing their channel advantages. Whether it’s “big fish-eating small fish” or “strong players merging with strong players,” the essence of this wave of integration initiated by mother-baby retailers is to expand scale, control more resources, and improve chances of survival and profit margins.
However, so far, compared to pharmacies and supermarkets, integration in the mother-baby sector has not made significant progress and mostly remains at a basic supply chain level.
So, what exactly makes mother-baby retail integration so difficult?
The business model of mother-baby shops is inherently difficult to standardize
In fact, many in the industry believe that mother-baby shops were able to break away from general supermarkets and become a separate business model because they cater to a scattered demand and provide in-depth services for “slow-moving” products.
This means that mother-baby shops operate under a different logic compared to pharmacies and supermarkets, which can be standardized and replicated, while the former lacks the potential for modularization and standardized replication.
This non-standardized, hard-to-replicate attribute determines that if mother-baby retailers want to integrate, they can only aim to close the loop on supply chain and retail system standardization in relatively fast-moving domains. This is why most current integration efforts in the mother-baby sector are focused on supply chains, particularly in the formula milk category.
But this task is still quite challenging. “On one hand, channel merchants face high barriers to create their private brands, with a narrow target audience and scattered needs; on the other hand, consumers do not have a high acceptance of private-label products. Hence, most of the current efforts are concentrated on cooperation with channel-specific products.”
However, as this practitioner sees it, channel-specific cooperation is still at a stage of negotiation between channel merchants and brand manufacturers. “This negotiation is currently based on mutual needs, but this state of need is constantly changing, so uniting to work on channel-specific products is a way out today, but whether it’s a long-term solution cannot be determined now.”
However, deep integration requires solid management empowerment, including digital transformation (store branding, systems, finance), and membership management upgrades. It is based on this need that a few SaaS providers are enjoying the dividends of the end-retail integration trend.
But the difficulty lies far beyond simply adopting a system. Relative to the system, “human” issues are the hardest to resolve. Many mother-baby retail practitioners who entered the industry during the lucrative times, who have witnessed the glory days and experienced high profits, now display several characteristics during the integration process:
- Affected by the macro environment, they lack fighting spirit and confidence.
- Their capabilities and age limit their willingness and ability to embrace and learn new things.
- Distrust without seeing results, disappointment due to unmet expectations, and conflicts of interest caused by profit sharing.
- After different chains merge, it is inevitable to face collisions of corporate cultures.
These issues are also hindering the progress of integration.
Indeed, in retail, one of the core paths to doing well indeed points to cost, efficiency, and scale. This philosophy has led to the current flurry of integration efforts. However, it cannot be denied that this path is lined with difficulties. Looking at the current integration efforts, it is a process and not a final state, and the ideal model for this path is still indeterminate. Yet, the point we can affirm now is, besides cost, scale, and efficiency, the core of good retail can also boil down to product and user experience.
As mother-baby shops start from the angle of user experience-based services or from the angle of expanding product offerings to meet user needs, they can still find selling points, such as the heavy service segments that many practitioners are currently exploring, or products that tap into emotional value or cater to the whole family.
After all, regardless of how the industry winds may shift, those stores that truly cater to consumers’ new psychological demands, new aesthetic pursuits, and new consumption patterns, and that can educate and guide consumers by their irreplaceable capabilities and maintain high customer loyalty, will still be the stores that survive the test of time.
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