A comparative study of the developments of city retail industries in UK and China Frank Feng 3 June 2009 Contents 1. Impression of the UK retail industry 2. Similarities and differences of China and the UK’s retail industries 3. Perceptions and thoughts 1、impression of the UK retail industry UK is a country about opening shops. ----Adam Smith UK’s retail industry is at a maturity stage. In cities, the retail industries have full range of products and functions, reasonable structures, nice atmosphere and good customer service. Therefore UK’s retail industry has become one of the most active and creative industries in the UK. 1、impression of the UK retail industry. a. b. c. d. e. Glass roofed shopping malls have become the symbol of city retail industries. It does not only give customers visual impact, but also provide leisure experience while they are shopping. The decoration in different shops is beautiful and trendy. It provides customers with a nice atmosphere as well as boosting their enthusiasm about shopping. Full range of products available to customers, including food, furniture, commodities and so on. The depth, width, and variety of product range provide customers with any type of selection. Many retail brands have their own branded products. This does not only reduce the cost of products, but can also attract more customers with reduced prices. UK has much more own branded products and China. Catalogue selling is a special type of retailer, for example Argos, can be learnt by Chinese business. This business model can reduce the intermediate transportation and handling, as well as maximizing the limited resources in city center areas. 2、Similarities and differences of China and the UK’s retail industries Similarities: a. Retail industry is an important element in economic development. It can boost spending, increase employment and energize markets. The role of retail industry has an increasing importance to the countries’ economic development. b. Globalization of markets, markets become more open. This enables the businesses to become more active, and adds international elements to cities. For example, in the UK, we have IKEA, Starbucks Coffee. In China, we have Tesco, B&Q. c. Fierce competition within markets, resulting businesses to experience hard times due to competition. 2、Similarities and differences of China and the UK’s retail industries Differences: UK a Relatively complete law from the government. e.g. safety of foods law in 1990 Competition law in 1998 China Relatively late legislation e.g. There are too many regional government policies, but lacking normative business laws on a national level 2、Similarities and differences of China and the UK’s retail industries Differences: UK b Moderate intervention from the government e.g. if a piece of land is to be used for business, it needs to be voted by local representatives. Safety on foods, government authorize large retail businesses to monitor foods China Direct intervention from the government e.g. government directly use the land for business government directly monitor foods 2、Similarities and differences of China and the UK’s retail industries Differences: UK c Industry associations have strong impact on industries, they have abilities to apply restrictions China Industry associations can be improved. They lack ability to apply restrictions. 2、Similarities and differences of China and the UK’s retail industries Differences: UK d Retail industry is at maturity stage e.g. unemployment rate at 2009 is 6.6%. 200,000 people unemployed, 3,000,000 people employed. Consumer market is relatively saturated. China Retail industry is at development stage Consumer market has a bright future. 2、Similarities and differences of China and the UK’s retail industries Differences: UK e Developments between cities are relatively balanced. China Developments between cities are at different stages, they vary largely and sometimes apporaching two extreme ends 3、Perceptions and thoughts Chinese Government level a. Government need to fasten the pace of legislation. There is need for a (relatively) complete and normative national business law to direct the development of retail industry. b. Need to create a plan for city retail business development as soon as possible. They need to take in account of the level of economic development, city population, consumer power to plan the city’s development scale, function, structure and layout, to make it more scientifically sound. c. Enhance the relationship between industry associations and governments. Encourage the industry associations to play a more important role in service and management. d. Development of retail industry needs to persist in the ‘Dos and Don’ts’ principle, we need to create retail businesses with multiple functions. However, on the other hand, we need to restrict the excess opening of retail businesses which would result in abusing spaces and breaking laws. e. Formalize the auditing procedures in the government, emphasize the function of hearings. 3、Perceptions and thoughts Chinese besiness level a. We can learn and use the glass roof design in shopping malls. Many existing shopping malls and areas in China can implement such designs to enhance the leisure functions in shopping malls. b. Retail brands, especially large businesses should develop more own branded products, and to increase their market share of own branded products. c. Encourage creative business models, for example implement the UK’s Argos model, and encourage online and ebusiness models. d. Correct targeting and positioning. Within the fierce competition market, businesses need to take in account of requirements of the consumer market, specialize in market sector, and position the business in a right segment to gain competitive advantage. e. Overseas expansion. Apart from expanding national market, there is also a need to expand international markets. 3、Perceptions and thoughts Suggestion for UK retail industry Government Level Moderately reduce the restrictions to retail industry and related industries. For example reduce the restrictions on the opening hours of shops. This will boost spending and make shopping more convenient for customers. Business level Encourage integrated and multi-functional retail businesses. Apart from expanding and building more shops, retails businesses can integrate leisure, entertainment and other creative functions.