The rules for retail aren’t the same here, as the ghosts of failed ventures that haunt China’s shopping districts can attest to. Are the rules changing, though- and are Plunkett’s a good guide?

Plunkett’s Four Keys to Successful Retailing

A High Value-High Quality Product Selection: Depth of selection is less important than a reasonably sized offering of products that the merchandiser has chosen because they consistently offer high value and quality.

This is a great, big maybe. Traditionally, successful retailers in China have offered a vast depth of selection. Take a look at leading electronics stores, for instance: Suning and Gome tend to offer a wide selection of very similar products from a variety of domestic and international brands. One reason for Best Buy’s failure in their foray into the Chinese market may have been that their selection depth was no greater than that of their domestic competitors; contrast with Germany’s Media Markt, whose new Chinese stores go for the most massive variety possible in hopes that they can win over Chinese consumers with a plethora of options. Go big, go deep – or go home.

Very Competitive Prices: The goal here is to give the consumer confidence that the store faithfully delivers everyday low prices – meanwhile, managing the firm so as to allow the owners a viable profit margin.

A traditional problem for big-box retailers in China has been that oftentimes their prices are actually higher than those on the Chinese street, where personal relationships give access to lower prices than even Wal-Mart’s vaunted buying power strategy can manage. However, this may be changing, as consumers become more concerned about standardization and reliability and proven brands like Carrefour offer an “instant relationship” to an increasingly mobile populous. If you’re new in town, a reliable brand name becomes the next best thing to personal trust.

Superior Service: In-store help, follow up service, problem-solving, installation and repairs offered easily and quickly- the ability to make returns and exchanges must be part of the package, with an absolute minimum of inconvenience to the consumer.

 While customer service may be famously poor in China, the demand is there (see my discussion here with Bill Dodson, which tackles this subject head on). This is obvious in everything from the flood of customers at the Huaihai Apple Store’s Genius Bar (where I faced an hour and a half wait last Sunday) to IKEA’s offerings, which include cheap delivery with assembly- a service that many IKEA customers in other markets only wish they could receive as they puzzle through the furniture company’s always elegant but not always helpful instructions. Customer service will be the new battleground of retail in China in the coming decade.

Seamless Integration of Bricks and Clicks: Successful firms will integrate their online endeavors with their physical presence in a manner that will provide the highest level of convenience to the customers.

While Taobao has run away with the online market, a seamless integration is yet to come to China in any way, shape or form. One problem dogging this integration is still the difficulty faced by many online payment systems, which still remain cumbersome and years behind their counterparts in the US (which need work as well, especially as concern the “micropayment” systems that will truly be necessary to make any such arrangements really work).

Whew! Too much to say for this space, and I hope you’re still with me- and if you haven’t picked up (or downloaded) Plunkett’s book, do so soon. Next time, we’ll move on to Chapter 3: Global Trade 2.0.