In the case titled “How do dreams come true? The journey of Bubugao (Better Life) Group in smart retail”, Professor Peng Siqing and researcher Wang Zhuo describe how Bubugao Group (hereafter referred to as BBG) has been able to realise its vision of digitalising its services, with the help of smart retail.

1. A rising enterprise

In 1995, Wang Tian and his wife Zhang Haixia founded Xiangtan Bubugao Food Co Ltd, and established the Bubugao Chain Supermarket Co Ltd in December that same year. Riding on the waves of rapid development in China's retail market, BBG adopted the regional development strategy of focusing on small and medium-sized cities, concentrating their stores, operating both supermarkets and department stores, while expanding its reach across regions. In 2008, Better Life Commercial Chain Share Co Ltd, a subsidiary of BBG, was listed on Shenzhen Stock Exchange, becoming “the first IPO of Chinese private supermarket”. In 2019, BBG had a total of 629 stores of various retail formats, with annual sales of more than 41.5 billion yuan. BBG also celebrated the 25th anniversary of its founding in 2020.

2. Attempts at digital transformation

Facing competition in e-commerce, BBG established Better Life E-commerce Co Ltd in 2013, with the launch of its mall and cold-chain logistics services. This also marks its formal entry into the e-commerce market. In 2014, BBG upgraded its e-commerce services by building a new O+O platform named Smart Monkey, which aimed to extend coverage to both online and offline operations. In 2015, BBG further rolled out plans in the areas of fresh food and global retail platforms online. Unfortunately, these efforts did not bring about an increase of profits, as its online and offline businesses were unable to create synergy due to their independent operations.

3.Startingover andtaking cautious steps inits smart retail efforts

(a) Forging allianceswithleadingdigitalenterprises

In 2017, Wang Tiancame up with a proposal topromote digital transformationin collaborationwithleadingdigital enterprises,in order tobecome a data-drivensmart retail enterprisethat integrates online and offline operations.To achieve this, he alsorolled outa developmentalblueprinttopromote digitisation in three target areas:consumers,products and operations. In 2018,BBGestablished a comprehensive strategic partnership with Tencent and JD.COMto explore ways to promote the value and reshape the value chain of the retail industry,signifying the commencement of itssmart retail reform.

(b)Enrichingcustomer experience - digitalisation intransaction

In order totransformthe traditional retail business modelthat entailspassenger flowin the absence ofusers,BBGdecided topartner withTencenttoimprove itsphysicalstores. Starting with a goal to improveoffline experience,it also aims toestablish consumer awareness, andencourageconsumersto become onlinemembers. To this end,BBG has utilised WeChatmini programstocreate its own “BetterShopping”mini program, connecting eachstageoftheshopping process withitsonline system,henceforming a closed-loopin its services.As for its online platform, it has been able to direct users to its “Better Shopping” mini program through various channels such as its official WeChat account, vouchers in WeChat Pay, template messages,WeChat Groups,advertisements in WeChat Momentsand others, allowing potential customers to access its page from both internal and external sources.

(c)Improving operationalefficiencyof its stores: digitalisation inoperation

Dynamic employment: digitalisation in employment

In order to tackle the problems of fluctuations of employment demand as well as mismatches in job requirements,Peng Xiong, CIO of BBG, led a team to reorganize the posts, break down the work processes, clarify the job responsibilities and hourly salary, among other reformative actions. In this process, they have produced a standardized information system, where the above information will be reflected in the “Xiaobu Personnel Management” platform. Thus, the store manager can release the updated personnel information at any time according to the situation at the store, where the off-duty employees can opt to work at these shifts based on their schedule.

Optimization of processes: digitalisation in operations management

Since 2019, Peng Xiong has led the team to create an online store management system, realising digitalisation in operations management. Through this system, the person in charge will be able to receive information such as warnings on low inventories, loss reports, pricing references, popular product recommendations and others. Thus, employees should respond to such updates timely and input feedback by taking photos and ticking on the boxes.

Peng Xiong describes the set-up of this store management system in four steps: 1) digitalising all operational actions; 2) making sure that each action can be assessed according to performance indicators; 3) ensuring that each step is recorded and traceable; 4) integrating data analysis and optimising iterative procedures.

4.Howto realise thedream come true?BBG’smethod ofreform

The methods adopted inBBG’sdigital transformationaredecisivein determiningitssuccess. First,BBGattaches great importance toinvestment in R&D,hence ensuringthat its core system is always aligned to its current operations.Next, inits reformprocess,BBGalsoattempts to inducechanges to entire processesby focusing oncritical areas.In addition,BBGconstantly “seeks truth from facts” in the pilot process of digital transformation, and continuously improves its operation process through trials. Finally, to overcome the resistance to change due to the increase of staff workload,BBGhastirelesslysought topromoteimprovement in relations ofproduction, seeking to distribute benefits to employees to incentiviseand mobilise them.

5. “Infinite Game”

The sudden COVID-19 outbreak in 2020 has put BBG's digital transformation efforts to test. Nevertheless, owing to its existing foundations, BBG was able to tackle the needs that arose from the sudden pandemic outbreak. As it experienced a sharp drop in customers in its physical stores, BBG was able to provide services to consumers through three online promotion channels, namely “Better Home”, “Better Life Fresh” and live broadcasts.

In the book “Finite and Infinite Game” by James Carse, the author describes two kinds of games: a finite game played for the purpose of winning, and an infinite game played for the purpose of continuing the play. Whereas finite players play within boundaries, infinite players play with boundaries. Similar observations can also be made in BBG’s journey in digital transformation, where this process can be seen as an “infinite game”. Such a view is also echoed by Chairman Wang Tian at the Tencent global digital conference, where he likened the journey in digital transformation as a road in a dark tunnel: Although we are still in the middle of the tunnel, we are now able to see some light at the end. Therefore, as long as we press on, we can definitely reach the end of the tunnel and achieve our goals in digital transformation.