Image source @ Visual China
Wen 丨 Value Institute
With the precision marketing of "not selling overnight meat" and reducing the price once half an hour after 7 o'clock, the small butcher shop Qian Dama, which originated in Dongguan, Guangdong Province, has become a chain community fresh brand that has spread all over the country, and the number of stores has increased explosively. But like many retail consumer enterprises, under the combined influence of the epidemic and many other unfavorable factors, Aunt Qian has also hit the growth ceiling.
A few days ago, the Beijing News, Interface News and other reports said that a number of stores in the Beijing area of Aunt Qian announced the closure, and its franchise business in the Beijing area was also suspended. Subsequently, Aunt Qian also made an official response to the incident:
"After joint discussion and evaluation with franchisees, we decided to suspend the business of local stores. The Beijing market has its particularities, we underestimate the difficulty of the Beijing market, but also underestimate the beijing market high housing rents brought to the business pressure of enterprises. The single-day passenger flow of the store has not reached the expected level, and more investment is needed if it continues to develop. After a comprehensive assessment by the company, we plan to devote more resources to a relatively stable and mature market. ”
(Picture from Aunt Qian's official WeChat)
In the past few years, the rise of fresh retail formats in the community, Aunt Qian should be credited. But the problems accumulated in the process of crazy expansion erupted in a concentrated manner, or let it swallow a bitter wine. The business of community fresh retail is not easy to do, and the loss of the money aunt in Beijing may be just one of the epitomes.
An average of 143 stores are opened every month, and Aunt Qian wants to "pay off debts" for crazy expansion
There is no doubt that Aunt Qian's defeat in Beijing was to pay off the debt for the crazy expansion before this.
In 2012, Qian Dama, who originated in Dongguan, Guangdong Province, has launched a three-stage expansion plan in the past few years with the blessing of the open franchise system and capital.
The first phase is to expand in Guangdong, especially in the Pearl River Delta region, on a self-operated model three years before opening. The second stage began in 2015, when Aunt Qian, who had opened 30 directly operated stores, opened the franchise system and introduced external investment in order to accelerate the pace of expansion. In the same year, the 13 million angel round of financing participated in by Hejun Capital was in place, and the warehousing and sorting centers in Dongguan, Zhongshan and Guangzhou were put in place, and the speed of opening stores achieved a leap forward. By the end of 2019, Aunt Qian had opened 1,500 stores, and the proportion of franchised stores was as high as nearly 90%.
In 2020, Aunt Qian's expansion entered the third stage - out of the base camp of South China and north to develop. According to media statistics, since the second half of 2020, Aunt Qian has opened an average of 143 stores per month, planting battle flags in central and northern China. The data of the Beijing News statistics shows that. In July last year, the official data released by Aunt Qian showed that the number of its stores nationwide had exceeded 3,500.
Being able to complete round after round of crazy expansion in just a few years, Aunt Qian's business model certainly has its own unique features. According to the Institute of Value, the most important success stories can be summed up in two points.
The first is to adopt an extremely streamlined SKU model and control the number of SKUs through strict selection.
Previously, community fresh brands such as Yipin Fresh and Baoneng Fresh, SKUs were generally around 1,000, and the community fresh e-commerce and community group buying platform SKUs that began to grow barbarically after the epidemic were as high as 2,000+. But Aunt Qian is different, its SKU has been maintained in the range of 300-500 for a long time, the ingredients selected are basic models, and a large number of cost-effective agricultural products have been introduced.
There are two advantages of maintaining a low SKU: one is to reduce procurement, transportation, warehousing costs, compress the return cycle of franchisees, and facilitate large-scale expansion; the other is to reduce the difficulty of managing suppliers and control their own operating costs. According to the statistics of Yiou Think Tank, the closure rate of Qian Dama's franchise stores in the past few years has been at a low level in the industry, which is the best evidence.
Secondly, Aunt Qian's supply chain management level has also kept up with the pace of store expansion.
At present, Aunt Qian uses a set of "T+2" supply chain management model: the store manager and the group headquarters will analyze the overall consumption volume and then submit the order order, and the fresh ingredients will be delivered to the store the next day. The self-built warehousing and distribution system is a major guarantee of timeliness and safety: from the supplier's food procurement, processing, to the later sorting, packaging money aunt is processed through the self-built warehousing and logistics system, to maximize the speed of transportation and food safety.
In addition, the highly stable, systematic and process-oriented supply chain has also achieved the goal of reducing inventory for Aunt Qian. In the view of the Value Research Institute, Aunt Qian most dares to play the loud slogan of "no overnight meat", which is due to the low inventory pressure brought about by the strong supply chain.
(Image from UNsplash)
In addition to the crazy expansion, Aunt Qian is also very successful in the capital market. According to the data of Tianyancha, since its establishment, Aunt Qian has completed 6 rounds of financing, and in addition to the aforementioned Hejun Capital in the shareholder list, there are also predators such as Gaorong Capital and Cornerstone Capital. In the second half of last year, Aunt Qian once reported the news that she was about to go to Hong Kong for an IPO, and the industry valued it at 25 billion yuan.
What is the concept of 25 billion? We can make a horizontal comparison: several fresh e-commerce platforms that have successfully IPO have a current market value of about 6 billion yuan per day, and Dingdong buys vegetables for about 12 billion yuan; among the competitors who have not yet been listed, The current valuation of Pupu Supermarket, which just completed a new round of financing led by IDG Capital at the end of last year, is only about 5 billion.
If the time stays at this moment, we can boldly say that whether in the field of fresh retail in the online or offline community, compared with other brands horizontally, Aunt Qian can be called the top brand.
However, the harsh reality of the defeat of Beijing has unveiled the various drawbacks behind Aunt Qian's crazy expansion: the difference in the concept of consumption between the north and the south, the pressure caused by the franchise model on business management and cost control, and the defects in the supply chain and food hygiene and safety.
Faced with a valuation of up to 25 billion yuan and the ardent expectations of the capital market, Aunt Qian seems to be overwhelmed.
Low gross profit superimposed on high cost, franchisees have long been overwhelmed
In fact, long before the defeat of Beijing, the side effects of Aunt Qian's low SKU model and the rapid expansion of stores have gradually emerged.
On the one hand, it is a large number of franchised stores that complain about low gross profit and low profit margins.
CCTV Finance had earlier reported the news that the owners of many franchised stores in Shanghai had lost money to transfer stores, and some franchisees broke the news to the media that they had lost 400,000 yuan a year when they opened stores. The Value Institute believes that the reason for this situation is mainly because the low SKU determines that the sales ceiling will not be too high, and the strategy of discounted sales after 7 o'clock has also suppressed the sales profit of the store to a certain extent.
In view of this, Aunt Qian has been interested in cost compression in supply logistics, purchase costs, store rents and other links. Taking the Beijing market as an example, in addition to the sporadic layout of Chaoyang District, the main stores are concentrated in Rent Depressions such as Tongzhou, Daxing and Yanjiao.
But unfortunately, the labor cost in Beijing is also much higher than that in South China and Central China. And because Aunt Qian's store opening speed in the Beijing area has been slow, unable to form a scale advantage, no open visibility, resulting in a sharp increase in supply chain pressure, most franchised stores still feel unsustainable.
On the other hand, the restrictions on Aunt Qian's "Northern Expedition Plan" imposed by the differences in consumption and diet between the north and the south are also very obvious.
According to the data checked by the Value Research Institute, the profitability rate of Qian Dama's stores in South China is more than 90%, which is 10%-20% higher than that of stores in other regions.
In the final analysis, consumers in the south and the north have fundamental differences in their consumption concepts of fresh goods. The former attaches the most importance to a "fresh" word, especially in Guangdong, the base camp of Aunt Qian, and daily shopping for fresh vegetables is the consumption habit of locals into the blood. But in the north, hoarding vegetables is the trend. Especially in Beijing, where the pace of life is faster, buying vegetables every day can even be called a "waste of time".
Of course, it is not only Aunt Qian who is mired in the mire. Since the second half of last year, many retail tracks, including fresh e-commerce and community fresh group buying, have collectively "entered the winter", and the entire fresh retail market is facing great challenges.
On January 7, some media broke the news that the Beijing headquarters of the Shihui Regiment went to the building, and the security guard downstairs said that at least a dozen people came to the door every day to collect the arrears, including a large number of grid warehouse operators. As early as the second half of last year, Caijing magazine reported that the Shihui group carried out a surprisingly large-scale layoff, and the number of employees was reduced from more than 10,000 at its peak to hundreds.
When things developed into this situation, the decay of the Ten Leagues was inevitable. For Aunt Qian, the thunderstorm of the Ten Hui Group sounded an alarm bell for her: although community group buying and community fresh retail are not the same track, the two platforms have encountered some similar problems.
First, overemphasize the speed of expansion and indulge in horse racing. After receiving $750 million in financing led by Ali in March last year, Shihui Tuan began to increase subsidies and grab customers with Meituan, Didi and Pinduoduo, because only by maintaining the growth of scale can we persuade capital to continue to transfuse blood, and then continue to burn money to obtain customers, forming an insoluble dead cycle.
Secondly, both have their own difficulties in cost control. The supply chain foundation of emerging community group buying platforms such as Shihui Tuan is weak, and the requirements for cold chain logistics and supply management of fresh commodities are extremely high, resulting in increasing investment in the platform and diluting cost-effectiveness.
In fact, Aunt Qian, who is rooted in the physical retail format, has done a better job than the Ten Huituan in supply chain management, but she still has no strength. Especially after the large-scale entry into the North China market, the logistics and procurement supply chain built in Guangdong has become beyond reach, and Aunt Qian needs to build a new commodity supply chain, and the upfront input cost can be described as huge.
Third, the retail business with community-based customers, short radius and low retention has always had the disadvantage of unstable repurchase rate. As mentioned above, Aunt Qian returned home in Beijing this time, largely because she could not rely on too few SKUs to retain customers. In addition, according to the analysis of the customer flow and cost of Aunt Qian's stores, if a community store wants to achieve breakeven, the settled community must reach at least 1500 households and above, and intensive store opening may also cause the dilemma of diverting each other and robbing each other of business.
All in all, the two words community and fresh food are put together, revealing the atmosphere of burning money. The Ten HuiTuan had already fallen, and Aunt Qian could not remain indifferent.
However, for the future of the community fresh retail market, the Value Institute believes that there is no need to be too pessimistic - the market potential is still there, and the trough of Aunt Qian does not mean that the entire industry collapses.
According to iResearch's report, since 2019, the transaction scale of the mainland fresh retail market has maintained an average annual growth rate of about 40%, which is double the growth rate of 20% in the entire retail industry. iResearch expects that by the end of this year, the total transaction scale of the fresh market will exceed 700 billion yuan, and the community fresh retail format will also maintain a good growth rate.
In front of Aunt Qian is a gold digging holy land with a scale of more than 700 billion yuan, and the future is still promising. But whether it can solve many of the troubles in front of it depends on its own ability.
Aunt Qian breaks through the keywords: smart, sinking
In the view of the Value Research Institute, Aunt Qian wants to get rid of the current predicament by grasping two key words: intelligent & digital upgrading, and opening up the sinking market.
On the one hand, digital & intelligent upgrading is an inevitable choice for all offline retail brands. The Value Institute believes that improving the level of digital intelligence can bring at least two direct benefits: reducing labor costs and reducing the loss of goods.
Previously, when Aunt Qian's Shanghai store was transferred at a loss, there were franchisees complaining to the media about the high labor cost and the difficulty of recruiting store managers, division divisions and salesmen. It is reported that due to the long business hours, fresh goods have to be completed before the peak consumption period in the morning and put on the shelves, and the Qian Dama store has extremely high requirements for personnel. On the other hand, it is precisely because there are many differences in personnel management and commodity transportation, and the friction between franchisees and Qian Dama's headquarters has never been broken.
In order to solve these problems, Aunt Qian made many attempts. One of the projects worth noting is the unmanned intelligent retail cabinet "Cai Bar" that has been rolled out in guangzhou and Shenzhen in the two first-tier cities.
The data shows that with the help of RFID, electronic price tags, face recognition and other high-tech high-tech implementation of 24-hour unmanned intelligent operation, single point investment is only 120,000, the gross profit margin is as high as 15% - as a comparison, the initial investment of a Qian aunt franchise store is generally about 300,000.
On the other hand, the level of digital intelligence in Aunt Qian's supply chain is also constantly improving. In November last year, Aunt Qian's Hefei Evergrande Central Plaza store completed its second opening. The key to this upgrade is to improve the digital intelligence level of stores: with the help of services such as smart orders provided by advanced systems such as SAP, the SKUs and supply quantities of stores have been dynamically adjusted.
All in all, like the rational expansion mentioned earlier, improving the level of digital intelligence is also an extremely important means for Aunt Qian to compress costs and reduce losses.
On the other hand, the sinking market is a piece of jade to be tapped in the fresh retail industry, with growth potential that cannot be ignored.
According to the information reviewed by the Institute of Value, Aunt Qian has been stationed in more than 30 cities across the country. From the perspective of urban distribution, in addition to the base camp in South China, especially in Guangdong, which covers almost all lines, other areas are mainly laid out in first- and second-tier cities.
The expansion direction of Aunt Qian is understandable: first, if the supply chain has not yet been built and perfected, if it goes deep into the broader sinking market, it is easy to increase the cost of warehousing and logistics, which is more than worth the loss; secondly, the community atmosphere in first- and second-tier cities is stronger, and the popularity of the concept of half-hour living circle and consumer recognition of community fresh retail stores are also higher, which is more conducive to brand development.
But the actual situation tells Aunt Qian that the effect of expanding north is not satisfactory, and it may be a direction worth considering based on the sinking of South China.
According to the statistics of iResearch Consulting, the main consumer of fresh products in the county is the hostess of a family of three. Among them, the proportion of county housewives who buy fresh food 3-5 times a week is 44.2%, the proportion of county housewives who buy 2-3 times a week is 25.1%, and the proportion of fresh goods that need to be purchased every day is also 22%. In addition, in the statistics of the single time spent on the purchase of fresh goods, more than 70% of county consumers gave answers of less than 30 minutes.
All of the above data show that the short-radius community retail model that Aunt Qian is best at has the foundation to take root in the sinking market.
(Image courtesy of iResearch)
It is reported that in the second half of last year, Aunt Qian began to test the new franchise store type in Jiangmen, Zhuhai and Zhongshan, compressing the upfront input cost to about 150,000, which is 50% lower than that of conventional stores. It can be seen that Aunt Qian has consciously lowered the threshold for joining and the upfront investment cost to prepare for entering the sinking market.
If the purpose of adjusting the expansion strategy and improving the level of digital intelligence is to reduce expenditure, opening up the sinking market is the key to Qian's open source plan. Only by doing a good job of open source and throttling can Aunt Qian return to the right track.
Write at the end
In September last year, when CCTV named Aunt Qian and questioned her passing on the pressure of profitability to franchisees, causing the latter to face a huge cost burden, the industry's singing and declining voice continued to heat up. But since then, Aunt Qian has not stopped the pace of expansion and continued to open stores in a big way, which has finally led to the current situation.
From another point of view, the defeat of Beijing is not necessarily all bad for Aunt Qian: at least it can provide a cold thinking opportunity.
As mentioned above, after many tracks such as community group buying and fresh e-commerce have fallen into the cold winter, Aunt Qian's community fresh retail business is certainly not as easy to do as before, and all kinds of capital are also tightening their faucets. But if the previous crazy store opening is to prove its fission expansion model to capital, in order to attract more new investment, now Aunt Qian should think about how to achieve benign operation without capital support.
All in all, there is still room for growth in the community fresh market, and Aunt Qian wants to break through again, first of all, she must do herself well.