In the past two years, there has been a large-scale phenomenon of 'closure and rent refund' of physical stores in many parts of the country. The impact of physical store closures on e-commerce is one aspect, but not the main reason. On the contrary, the Internet is a catalyst for the natural evolution of the physical industry and an important lever for the transformation and upgrading of traditional retail industry. Recently, at the special lecture on "The Status and Development of E-commerce" held by the Standing Committee of the National People's Congress, Vice Minister of Commerce Wang Bingnan said.

Wang Bingnan stated that the reasons for the closure of physical stores are multifaceted: firstly, weak consumption growth and rising operating costs. In recent years, macroeconomic downward pressure has increased and consumption growth has slowed down. The growth rate of the total retail sales of consumer goods in China has decreased year by year from 17.1% in 2011 to 10.4% in 2016. Enterprise revenue growth is slow, and operating costs are constantly rising. The average annual growth rate of store rent, which accounts for about 30% of the total cost, is over 20%, and the average annual growth rate of labor cost, which accounts for half of the total cost, is over 10%. The second is the extensive development of physical commerce. At the end of the last century, the physical retail industry in China, such as department stores and supermarkets, developed rapidly, causing many problems. In some regions, there are many physical stores that have been repeatedly constructed, with a severe surplus of commercial facilities, and a single service format and high degree of homogenization. Thirdly, the supply chain management capabilities of physical enterprises are insufficient. Physical stores often adopt management methods such as factory introduction, joint venture deduction, and rental counters, resulting in insufficient supply chain management capabilities, low level of branding, scale, organization, and informatization, lack of business characteristics, and failure to timely follow up on consumer changes. The fourth is the impact of online retail. Research institutions believe that 60% of online retail sales are transferred from offline to online, and 40% are new consumption. Based on this calculation, the online retail sales of physical goods in 2016 amounted to 4.2 trillion yuan, of which 2.5 trillion yuan was transferred from offline physical stores to online stores, which has had a significant impact on the operation of offline physical stores.

From this, it can be seen that the impact of e-commerce is not the main reason for physical store closures, "said Wang Bingnan. On the contrary, the Internet is a catalyst for the natural evolution of the entire physical industry and an important lever for the transformation and upgrading of traditional retail industry. Suning Group has also experienced a decline in its stores, but after conducting online and offline integration business, its stores increased from 1600 to 3600. In conjunction with online sales, various small and medium-sized stores have been established, promoting Suning to achieve full coverage in first to sixth tier cities.

In fact, the industry has sparked a trend of the Internet collaborating with the physical industry. On February 20th, Bailian Group reached a strategic partnership with Alibaba Group. In addition to Bailian, Alibaba has reached cooperation with traditional enterprises such as Yintai and Sanjiang Shopping through investment and strategic cooperation. Not only Alibaba, but other internet companies are also actively embracing new retail. Xiaomi, which started online, has made every effort to open offline stores, and Amazon has also acquired Whole Foods Supermarket for $13.7 billion.

Wang Bingnan said that in the next step, the Ministry of Commerce will vigorously implement the action plan of "Internet plus Circulation" and continue to promote online and offline interaction and integration. We will promote physical stores to increase the application of new technologies such as the Internet, big data, artificial intelligence, virtual reality, and reality enhancement, and actively adapt to the New Normal of the economy, new changes in the market, and new changes in consumption. Encourage online and offline cooperation, achieve resource integration, break scenario limitations, optimize consumption paths, establish direct, accurate, and real-time connections between consumers and goods and services based on data connectivity, carry out omnichannel marketing, and meet the comprehensive consumption needs of consumers. Improve the unified system and standards for online and offline applications, and strengthen the integrated supervision of online and offline. (Luan Guoxian)