KPMG and the China Chain Store & Franchise Association identifies the top 50 high-growth retailtech enterprises in China that strive to advance digitalisation, intelligence and integration. As new technologies represented by big data, cloud computing, artificial intelligence, blockchain and mobile internet, become more widely used, the research analyses the far-reaching impact brought by these technologies and identifies new drivers for innovation by addressing industry pain points, innovating models and raising efficiency.
The inaugural China Leading Retailtech 50 report focuses on leading enterprises specialising in seven retailtech sectors: digital terminal touchpoints, consumer operations, full-link business middle platforms, data middle platforms and data intelligence, digital supply chain, digital management and intelligent technologies. Using the KPMG proprietary Startup Insight Platform (SIP) and a team of experts, leading enterprises are selected through quantitative analysis on six different aspects including the team, technology, product, market, business model and funding.
The report is published against a backdrop of China’s commerce evolving from a “consumption dividend” economy to a “digital and intelligent innovation” economy. The industrial ecosystem has been evolving from single-node costing and efficiency enhancement to full-scale reshaping and growth. Digital technologies have led to the full-link digital transformation of the commercial ecosystem, from the one-way business efficiency enhancement to the value enhancement of full-link factors, from retail internet to ecosystem internet, and from digital transformation to digital and intelligent empowerment.
Kevin Peng, Secretary-General of the China Chain Store & Franchise Association, says: “The Association and KPMG have worked together to release the list of China’s leading 50 retailtech enterprises, after spending six months studying the founding team of candidate enterprises on a one-by-one basis over six criteria, namely: technology and business model innovation; empowering reform of the traditional retail sectors; financial health; valuation and capital market recognition; target market acceptance and potentials under market segmentation; team capabilities and corporate innovation mechanism; and business model innovation and sustainability. At the end, a total of 64 representative retailtech enterprises were shortlisted, including 50 leading enterprises and 14 emerging enterprises. We hope that this list can offer some references to chain stores and retail brands so that their digital transformation journey can be smoother and more successful.”
Jessie Qian, Partner, Head of Consumer and Retail, KPMG China, says: “The retailtech industry is treading the same path of evolution as China’s commerce, the two have formed a synergy for mutual growth. Enterprises in technological innovation and retail industries have worked hard to accumulate a wealth of technological applications and real-life cases, which can serve as role model for enterprises building their own digital capabilities.”
This year, the judging committee comprises of KPMG partners and industry experts, who reviewed the candidates together with executives from leading retail enterprises, investors specialising in retail investments, and technological experts and academia.
The report covers a statistical analysis of the 64 leading companies that are selected from multiple perspectives, including core business distribution, geographical distribution, and team size distribution. The following were observed:
- At present, consumer technology applications are more concentrated on the front-end interaction with consumers, marketing and transactions, and consumer operation and smart technology companies account for the highest proportion of the listed companies;
- Consumer technology companies are generally smaller in size. Eighty percent of the shortlisted companies this year have no more than 600 employees, and most of them have no more than 300 employees;
- Eighty percent of the companies identified are concentrated in the Beijing–Tianjin–Hebei region and the Yangtze River Delta. An abundance of high-quality university resources and huge retail consumer market demand have cultivated and gathered the most valuable talents for consumer technology companies and also provided broad room for development;
- Technological innovation is an important factor for retailtech companies to stand out. In nearly 60% of shortlisted companies, technical personnel accounts for more than 60% of their human resources;
- In the entire retailtech field, there are not only companies that have been cultivating their transformation for many years, but also new forces that are emerging. In this year’s report, companies were divided into those that have been established for more than 5 years and less than 5 years each account for nearly 50%.
Philip Ng, Partner, Head of Technology, KPMG China, identifies five areas of concern for the industry after interviewing and analysing retailtech enterprises: “Firstly, technological applications have been focused on the interaction with consumers, marketing and transaction processes at the front end, but innovation in technological application is inadequate at the supply chain end considering the vast potential for innovation in that area. Secondly, technological applications have been mainly concentrated in changing the business and operating models of retail enterprises, while the changes in the digital model of human resources and financial management are not enough. Thirdly, there is more innovation in application and commerce compared to innovation in technologies. Fourthly, technologies are applied to simply encourage customers in using products, while consumers are actually looking for retailers to enhance their digital capabilities by integrating business optimisation, organisational change, and ecosystem links with products. Lastly, while innovative enterprises are working hard to create differentiated solutions in the same area, there are still many homogeneous solutions competing with each other.”
Michael Mao, Partner, Advisory Head of Consumer and Retail Sector, KPMG China adds: “The retail industry is innovating and reforming in the face of digitalisation as consumers are changing their lifestyle. New retail technologies and the retail businesses are increasingly integrated, as new consumption needs are being explored and new operational models are emerging. During the transformation, retailtech enterprises, especially start-ups have played an indispensable role and they are upgrading themselves when engaging with their end-users. Many technological enterprises have evolved from software vendors of a single solution to business partners working with their end-users to develop solutions tailored for specific scenarios, others not only provide technical support for hardware and software, but also assist retail enterprises in integrating technological transformation at the IT level with internal reform and optimisation of organisational structure.”