The transformation of traditional supermarkets is viewed: intensive closure of stores, opening of member stores, incubation of sub-brands

Chinese mainland the first Wal-Mart store recently closed, consumers went to the front door to take photos, some people said "reluctant to it." Founded in August 1996, the supermarket hypermarket represented the retail industry's sales miracle in the 1990s, and its closure is emotional.

The closure of retail giants does not mean the end of traditional supermarket hypermarkets, and the change in domestic consumer demand is driving traditional hypermarkets into a new stage of development. The Beijing News reporter noted that traditional supermarkets have experienced many explorations and presented different transformation "symptoms". At present, the transformation of member stores has become the profit code targeted by many traditional supermarket companies, and some analysts believe that not all traditional supermarkets can be transformed into member stores, and member stores are not the only way out for their transformation.

One of the phenomena: dense closures

For the first Wal-Mart Chinese mainland, Wal-Mart explained that due to the owner's overall upgrade of the property, the Wal-Mart store located in the Lakeview Garden on Honghu Road in Luohu District, Shenzhen will be closed from December 7, 2021. At the same time, wal-mart regularly reviews the performance of its stores to ensure continuous optimization of Wal-Mart's business, and opening or closing stores is a normal measure for the daily operation of the retail industry.

Relevant information shows that from 2016 to 2020, Walmart China closed about 80 stores. Since 2021, the pace of store closures has continued, and from January to November, hypermarkets in Beijing, Shanxi, Guangdong and other places have closed their stores. In addition to the Chinese mainland's first store in Shenzhen, the Wal-Mart Sanqiang Road branch in Taiyuan, Shanxi Province, also closed on December 7. Wal-Mart's official website customer service said that the store closed to optimize the commercial layout for enterprises.

Since the beginning of this year, Carrefour has also frequently reported the news of store closures. On September 30, the Chengdu Carrefour Babao Street store, which has been in operation for 22 years, is the first Carrefour store in Chengdu. On October 30, carrefour Changsha Shaoshan South Road, which had been in business for 13 years, closed its store, saying that it had stopped operating due to the strategic adjustment of the company's urban operations. On November 16, carrefour Hangzhou Yan'an Road South Yongjin Plaza store, which has been in business for 18 years, closed the store, and the announcement showed that due to the expiration of the contract between Hangzhou Yongjin store and the owner, Carrefour will also carry out strategic layout re-planning.

Yonghui mini store has also experienced the same wave of store closures in the past period of time. In the first half of 2020, Yonghui mini stores opened 16 new stores and closed 88 stores, as of the end of the mid-term reporting period, there were 458 mini stores, in the third quarter of 2020, 8 new mini stores opened and 61 stores closed, and as of the end of the third quarter, there were 405 mini stores. In Addition, Yonghui's high-quality fresh food supermarket super species is also caught in the rumor of store closure, in February this year, Yonghui supermarket officially denied that the super species will close all stores in the country except Fuzhou, saying that some of the closure of super species is a normal business adjustment.

On December 7, Wen Zhihong, partner of Hejun Consulting and head of chain operations, told the Beijing News reporter that enterprises should clearly understand the stage, development space and prospects of supermarkets, adjust according to the changes in the business circle and business pattern, if the store operation is difficult to sustain, it is necessary to close the store, which is also what many retail companies are currently doing, and optimize the layout of the store contraction.

Phenomenon 2: Transformation into a club

At the same time that traditional hypermarkets are closing, traditional supermarket companies seem to have found new profit codes.

Walmart's financial report shows that the performance of the second quarter of 2021 exceeded market expectations, with total revenue of $141.028 billion, an increase of 2.4% year-on-year, of which Sam's Club sales increased by 7.7% year-on-year, net e-commerce sales increased by 27%, membership fee income increased by 12.2%, and the total number of members hit a record high. Prior to this, Wal-Mart's performance in China was in a state of decline. According to Walmart's global third-quarter financial report, Sam's China achieved double-digit growth in comparable sales and membership in the quarter.

In November, Walmart's Sam's Club announced that the number of paid members in China had exceeded 4 million. At present, Sam operates 36 stores in 23 cities and covers most of the country through e-commerce platforms. According to its official website, sam will usher in 5 new stores in 2021, including the shanghai flagship store, and it is expected that by the end of 2022, sam will open and build 40-45 stores in China.

Sam's strong market performance may have become an "accelerator" for the transformation of traditional supermarkets in China.

On November 27, 2021, METRO announced that it will open 16 member stores in 8 cities: Beijing, Chengdu, Nanjing, Qingdao, Dalian, Wuxi, Changchun and Changzhou. The relevant person in charge of METRO exclusively responded to the Beijing News reporter that 16 member stores are transformed and upgraded on the basis of the original METRO stores, and all domestic stores will be transformed into member stores in the future.

METRO revealed that it will upgrade from the previous main service to B-end customers to the operating model of serving both B-end customers and C-end members. As of now, METRO has 99 stores in China, by the end of this year, the number of METRO Chinese mainland stores will increase to 101, of which 20 are member stores, if all turned into member stores, the number of METRO member stores will exceed 100.

Carrefour has also made frequent efforts in laying out the track of its member stores this year. In October this year, on the first experience day of Carrefour's first member store, Carrefour CEO Tian Rui publicly stated that Carrefour will open 100 member stores in China in the next three years. In August of this year, Carrefour is only planning to open more than 30 member stores in the Chinese market from 2021 to 2026. After only 2 months, the plan to open a membership store has changed from more than 30 stores in 5 years to 100 stores in 3 years, and the pace of layout has accelerated significantly.

The Beijing News reporter learned that the 100 member stores of Carrefour's future layout will be upgraded from the traditional 200 hypermarkets. This means that if the upgrade is fully realized, half of Carrefour's stores in China will become member stores.

In addition to the transformation of the retail giant, regional supermarket brand Jiajiayue will also open its first member store in Jinan in late December. It is understood that in line with other member stores, Jiajiayue will also launch Swiss rolls, small lime drinks and other Internet celebrity items, and set up a membership card mechanism, divided into individual members and corporate members.

Wen Zhihong believes that the transformation into a member store is currently the hot spot and focus of many head supermarket chains in China, but not all traditional supermarkets can be transformed into member stores, and member stores require high commodity management capabilities and mature supply chain systems.

The industry also pointed out that the transformation of traditional supermarkets into member stores requires a certain cost output, and can not have obvious effects in a short period of time, such as Wal-Mart, Carrefour and other head chain brands have a mature market foundation and supply chain system, and increasing or transforming member stores has inherent advantages. For some regional brands, if there is no product and price advantage, the transformation of the club will have great resistance.

Phenomenon 3: incubation of sub-brands

In fact, traditional hypermarkets have the advantage of convenience and have been opened in the central communities of some cities for many years, with a deep consumption base. Therefore, some supermarket brands will also spend more energy on supermarket upgrading.

In addition to testing the waters of the membership store format, Jiajiayue has tried to innovate the format many times, and in October this year, it opened its first discount store in Weifang, Shandong, and at the same time, Jiajiayue SPAR Greens Boutique Supermarket opened in Linyi Lanshan Qilu Wuyue Plaza.

In the past two years, the RT-Mart brand has gradually incubated innovative formats of RT-Mart and RT-Mart Super. According to the high-tech retail of RT-Mart's parent company, RT-Mart Super ushered in a period of concentrated store opening. In addition to the intensive opening of innovative formats, RT-Mart's traditional hypermarkets have also been continuously adjusted and transformed. On October 6 this year, the RT-Mart Longsha store in Qiqihar reopened after upgrading, and compared with before, the RT-Mart Longsha store added interactive experience venues and divided the store into three areas: department stores, groceries and fresh food.

In November this year, Zhu Xiaojing, president and CEO of Walmart China and vice president of the China Chain Store & Franchise Association, publicly stated that China's consumer market has become one of the largest in the world: one of the world's largest markets, the fastest growing, most digitally developed, the most competitive, the fastest business model, marketing means, and the fastest iteration of innovation. In the next 10 years, Walmart keywords will shift from coverage to customer acquisition and retention capabilities. In this transformation process, choices and trade-offs are particularly important.

Wen Zhihong agreed with Zhu Xiaojing's views and judgments on China's retail market, and said that the development and transformation of China's supermarket retail format should first start from the perspective of the development history of the retail industry. "At present, there are many domestic retail formats, each format is like the life cycle of people, the development cycle of the industry, with a stage, each format has a highlight moment, there are also recession periods." When new formats such as e-commerce, shopping malls, and even category stores rise rapidly, it is a kind of impact and disintegration for supermarkets, which means that supermarket formats are not easy to maintain the rapid growth of the past, but it does not mean that supermarkets have no value. ”

Beijing News reporter Yu Guigui

Edited by Wang Lin Proofread by Liu Baoqing