"Two-sided" child king

Text | Xinyan, author | Ye Jing, editor| Sang Mingqiang

As the "king of market value" of the A-share maternal and infant retail brand, the controversy over the child king has never stopped.

After 12 years of long-distance running on the road of entrepreneurship, the average area of the child Wang single store is more than 2500 square meters, compared with the traditional small retail stores of maternal and infant products, it pays more attention to the operation of user relations, similar to the "goods + services + social" operating model of Arkaga in Japan, and establishes a closed loop of "store - online interaction - new retail marketing".

Most of the controversy over the child king in the outside world stays at the level of "bloody listing": it has experienced a cumulative loss of 1.026 billion yuan from 2014 to 2016, and was once called the "loss king" by the outside world, coupled with the fact that it was briefly listed on the New Third Board and delisted due to financing and other issues, the child king has a bumpy road. In recent years, the child king has had a slow revenue growth rate, a general gross profit margin, a continuous decline in ping efficiency, and quality problems were frequently named by consumers.

The favorable policy has accelerated the prosperity of the mother and baby market to a certain extent, the players of the track are increasing, and the child king also mentioned in the prospectus of the second listing that it will expand 300 offline stores in the next three years, as the top stream of the domestic mother and baby track, the child king has once again been pulled back to the public vision. To this end, this article we will mainly discuss:

Compared with traditional mother and baby shops, what is special about the child king model?

The child king who firmly believes in the "big store model", is the position of the first list stable?

How many "child kings" can be accommodated in the domestic mother and baby track?

Child King's A-side

Founded in 2009, The first store opened in Nanjing Jianye Wanda, with an operating area of 8,000 square meters.

The following year, the boy Wang began to go out of Jiangsu, expanding to the surrounding Anhui region, and entering the southwest market the following year. From 2012 to 2016, the development of Child King entered an accelerated period: after obtaining a large amount of financing, Child King launched the micro-mall service account, and officially launched the online and offline omni-channel strategic layout, and the number of stores nationwide also exceeded 100.

In 2016, the valuation of the child king has reached 10 billion, and the market has expanded to 1/2 of the country,000 provinces, becoming the first stock of maternal and infant retail on the new third board.

After 2017, Kid King began to pilot the paid membership system, launched a paid black gold PLUS membership, and completed the secondary listing this year. From the perspective of business model, most of the domestic mother and baby stores are mostly distributed in pedestrian streets, department stores, supermarkets, near residential areas, the goods sold are mainly based on maternal and infant products, and will also provide bathing, haircuts, swimming and other services for babies.

"With an average area of about 2,500 square meters, a large comprehensive shopping mall with a site, providing a variety of goods and digital service projects, The Child King's store is not only selling goods, but also a venue for offline activities."

Under the background of the endless concepts of new retail, smart retail and boundless retail, the experience economy of child Wang Bet: Taking the child King Nanjing Jianye Wanda store as an example, after the reload last year, five new commodity areas such as the pregnant mother's supplies area and the family milk drink special area were added, and the pregnancy experience room and the growth star space were two service sections; in the sixth generation of smart stores in Suzhou Longhu, the child king reconstructed the experience scene, service content and user relationship, providing an omni-channel experience mode of scanning code purchase and store speed delivery.

Deep cultivation of private domain traffic and commoditization of services are the biggest characteristics that distinguish Child King from other mother and baby enterprises.

In this process, the membership system is its maximum buff bonus. As we all know, the membership system is a common means for enterprises to implement user management and dig deep into the commercial value of users, users enjoy privileges and services at the same time, but also provide long-term stable cash flow for enterprises, then, how is the membership strategy of the child king played?

After field research, Xinyan summarized the three ways of playing the child king: the natural customer flow conversion of the store, the staff pushing to the target user, and the recommendation or participation in offline activities by the outside world.

From the moment you step into the Kid King store, you have been targeted by the shopping guide, even if it is "casual shopping", the enthusiastic clerk will ask from time to time, "What do you need?" Pro is a member of our family? "If not, they will also try to develop you into a member, improve their KPIs, and the process is relatively simple: scan the code to add, fill in the information, and complete the purchase for one dollar."

In how to build a private domain traffic pool, the child King has a lot of experience. It is understood that 80% of the store staff of Child King are certified parenting teachers, with parenting consultants as a link, establishing dense consumer contacts, by providing help and solving parenting problems for customers, and quickly establishing a good relationship of trust and emotional foundation with customers.

We have noticed that in 2018, Kid King updated the membership system and launched a black gold PLUS member that is common online and offline. Although it is the same as the Amazon Prime membership system, providing customers with additional rights and interests services, the latter does not grade for customers, but actively enriches the rights and interests of members, the former is to provide different services according to different levels of customers, consumers can enjoy cash coupons, full discount coupons, limited gift boxes, parenting services and other differentiated rights and interests by purchasing pregnancy cards and growth cards.

According to public information, as of 2020, the number of child king black gold PLUS members has reached nearly 800,000, which is 3.5 times higher than the shopping frequency of ordinary members for half a year, and the membership fee charged by the company accounts for half of the proportion of maternal and infant services. Compared with "barbershops" and "gyms" that attract cards by letting customers experience first, the child king's first-pay-after-enjoy model can be traced back to the earliest Sam's membership system, which is a strategy of conservatism and potential.

But the problem is that the child king seems to be too focused on pulling new and ignoring the retention problem at the operational level.

The B side of the child king

For the child king at this stage, its first task is to prove itself.

From the perspective of the competitive landscape of offline channels, The Child King does not occupy an absolute advantage in market share. In addition to a small number of leading enterprises, the domestic mother and baby offline channels are mainly small and medium-sized chain stores and individual stores, the competition pattern is relatively scattered, according to Huatai Securities research data: to the child king last year 7.386 billion yuan of commodity sales scale and about 2 trillion yuan of maternal and baby goods market size to calculate, the child king market share is only 0.37%.

According to the data of the same period last year, the unlisted Baby Island has more than 9,000 "direct sales + franchise + partner stores" in the country, and leyou, which is also not listed, has also opened more than 700 "direct sales + franchise stores" in China, both of which far exceed the 434 direct stores of The Child King in terms of quantity.

The weak monetization ability of value-added services is also a thorny problem for the child king at present. This is reflected in the "goods + services + social" model failed to meet expectations, single profit projects, serious partiality, according to its prospectus, in terms of revenue, maternal and infant commodities are still the main force, accounting for 93.17% of the total main business income; the corresponding as a gross profit margin of more than 90% of the maternal and infant service business income, only hovering between 2% and 3%.

Specific to the business income, from 2017 to 2020, the income contribution brought by maternal and infant products to the child king remained between 85% and 95%, of which milk powder revenue accounted for about 60%, but for the milk powder commodity category, major brands also have multiple sales channels, and the competitive advantage of the child king is not obvious.

Compared with similar baby-friendly rooms, although the revenue of the child king has always been 2-3 times that of the former, in terms of performance in the past two years, the comprehensive gross profit margin of all kinds of products in the baby room is higher than that of the child king, and even in the single dimension of the main commodity milk powder, the child king has an average low baby room of nearly 3 percentage points for three consecutive years. Back to Pingguo, although the number of Ziwang stores continues to expand, the revenue of single stores has shown a contraction trend.

In the past few years, the asset-liability ratio of the child king is much higher than the average level of the baby-friendly room and the industry, which means that relying solely on capital pull, for the child king, in the case of a single profit is not dominant, the product replicability is high, it is tantamount to eating food.

Baby King has positioned itself as an omni-channel service provider for mothers and babies, and in recent years, it has indeed strengthened the omni-channel integration strategy and established an operating model of "boundless + precision + digital + service", but the proportion of online sales is less than 10%. According to the New Eye survey, taking the activities during the Double Twelve Period as an example, ten cases of canned baby milk powder of different brands were randomly selected, and by comparing the comprehensive e-commerce such as the Child King APP, Jingdong Self-operated, Tmall, vipshop and so on, it was found that whether it was from the price concession or the sales volume of goods, the Child King was inferior.

Under the trend of large-scale commodities such as milk powder and diapers shifting to e-commerce, the online and offline revenue of the child king is difficult to maintain stability, which also shows to a certain extent that the child king urgently needs to do a good job in adding and subtracting business.

The "Variables" of the Maternal and Infant Market

Since 1990, the domestic maternal and infant market is no longer a barbaric growth, and the market size has exceeded one trillion yuan, entering a period of integration. The main feature of this period is that the competition between online and offline channels has gradually become white-hot, and channels have become the core of seizing the market.

Maternal and infant products, has always been just needed, taking milk powder as an example, from the supply side, more high-end milk powder brand marketing, milk source protection, strict quality control, formula upgrade means that the cost and price rise. On the consumer side, the transformation of maternal and infant consumer groups to young groups has enhanced consumer brand and quality awareness, supporting their willingness to pay a high premium for large brands and high-quality milk powder.

However, the high-end of maternal and infant products does not mean that the consumption objects are concentrated in high-income groups.

According to the "2020 Maternal and Infant Consumption Insight Report", the monthly childcare cost of maternal and infant families is about 5200 yuan, while the cost of childcare in low-income families has not been significantly reduced, which also reflects the strong willingness of mothers and babies to consume. Online production of maternal and infant products is the trend, but the unique offline channels of the scene drainage is also difficult to replace, the child king positioning in the high-end, the location of the store is also concentrated in large comprehensive shopping malls, although there is an e-commerce platform blessing, but for the sinking market, consumers can not buy or not is still debatable.

Child King has not bothered with the structure and design of the store: from the sixth generation of smart stores in Suzhou Longhu Times Tianjie Store", which reduces product display and increases interactive space, to the G9 generation store "Omni-channel Mother and Baby & Parent-child Family Experience Hall" in Raffles City, Chongqing, which expands stores, updates business models, and diversifies the multiple operations of experience, which is the same as Starbucks' "third space" concept, but the final effect has yet to be verified by the market.

According to domestic consumption habits, people are more inclined to mother and baby institutions with high professionalism and specificity in consumption decision-making.

In the case of confinement centers, for example, guidance including full-cycle nursing, rehabilitation planning, postpartum recovery, infant care, parenting knowledge, etc., as well as other specific supporting services based on the individual needs of the mother. Although the confinement center started late, it has also established a relatively complete service system, expanded nationwide through direct operation and franchise models, and even sunk to lower-tier cities, in contrast, the practical process of the child king is not ideal, and the performance of maternal and infant services accounting for 2% of the total revenue is not prominent.

In fact, there are not many categories involved in the children's own brand, but it is difficult to shake the big brand in terms of quality and popularity. For the current child king, perhaps we should first solve the problem of brand mechanism, product, online and offline imbalance, carry out original capital accumulation, enhance consumer favorability, and expand the matter can be put aside for the time being.