Hema neighborhood suddenly contracted on a large scale

On April 1, Hema Neighborhood posted an announcement on the app's homepage saying that some sites would be suspended from April 3.

36Kr - Future Consumption learned that the withdrawal of Hema Neighborhood includes four cities of Beijing, Xi'an, Chengdu and Wuhan, hangzhou, Shanghai and Nanjing, except for some sites that are temporarily closed due to the impact of the epidemic, the rest of the original sites are still in normal business.

This is the second large-scale withdrawal of Hema Neighborhood after its rapid expansion in mid-2021, and on November 26 last year, Hema Neighborhood withdrew from Guangzhou, Shenzhen and Suzhou, and its coverage was reduced from 10 cities to 7 cities, and now it has dropped to 3 cities.

Earlier, Hou Yi said in an interview in July 2021 that the full profit cycle of Hema Neighborhood is expected to be three months to half a year. Today, the effect is less than expected.

The strategic withdrawal of Hema Neighborhood can alleviate the cost pressure under Hema's own profit and loss on the one hand; on the other hand, it means that its existing store model is not ideal and needs to be further optimized and adjusted.

Single-store losses are difficult to alleviate

At 4 p.m. on April 1, Xiao Wu, a clerk at the Hema Neighborhood Pick-up Site, suddenly received a meeting notice, and she was preparing to deliver to customers.

It was at the meeting that Xiao Wu received the news of the closure of the store in the whole city, the news came too suddenly, the node of the store was very urgent, it was too late to rush to surprise, Xiao Wu immediately began to deal with the relevant matters before the store was closed, to appease customers, clean up the storefront, and step up the processing of orders.

Consumers also feel very sudden about the withdrawal of the store, April 1 can still place orders normally, but in the morning they found that they had hung up the shutdown announcement, and were told that the goods purchased on April 1 needed to be picked up on April 2, and the goods in the APP were all displayed as out of stock.

Xiao Wu revealed the reason for the withdrawal of Hema Neighborhood to 36Kr - Future Consumption, the core is still a loss problem, according to Xiao Wu's understanding, all the Hema neighborhood stores she knows are currently in a state of loss.

In fact, in order to alleviate the loss problem, Hema Neighborhood just officially launched the delivery service on March 3, a month ago. When the user places an order on the APP the day before, he can choose to deliver it directly to his home the next day. Ideally, this could enhance the consumer experience.

However, according to Xiao Wu, after the increase in delivery to home services at her site, the single volume not only did not increase, but also fell by 20% to 40%. The reason is that the single store personnel in Hema Neighborhood are configured to work shifts of two employees, and only one employee works during each shift, and the delivery service in Hema Neighborhood is also undertaken by the store staff themselves.

In this way, on the one hand, there will be only one clerk in the neighborhood store to go out to deliver, and when the customer comes to pick up the goods, he finds that there is no one in the store, which reduces the delivery experience; on the other hand, the neighborhood clerk has to pick up the goods and deliver the goods, and the increase in workload makes the clerk distracted in the sales of new sales.

"Before, a large part of the orders came from the fact that we vigorously introduced the recent offers and activities for customers who came to pick up the goods, but now they are tired and unable to speak." Xiao Wu said.

It can be seen that delivery to home has not saved the loss problem of Hema neighborhood.

In addition to the loss of the store, Xiao Wu also learned that there are some suppliers who cancel cooperation. According to the self-media "Ingredient List", the suppliers responsible for pulling new suppliers for Hema Neighborhood have extended the payment time since October last year, and have been notified to stop pulling new ones on January 1. According to a Hema neighborhood land pusher, so far, there are still disputes over labor costs at the end of last year.

Xiao Wu said that the third factor that led to the withdrawal of Hema neighborhoods was that due to the impact of the recent wave of the epidemic, the warehouse could not be shipped, which directly led to the shortage of goods.

At the end of last year, Alibaba fully implemented diversified governance, and each department needed to operate independently and bear its own profits and losses. At this time, the strategic contraction of Hema Neighborhood can reduce the overall operating costs of Hema to a certain extent and reduce the pressure on Hema.

In the future, Hema Neighborhood may further optimize the store model in Hangzhou, Shanghai, Nanjing and other base cities to shorten the time for the break-even point of a single store; in addition, Hema Neighborhood will also pilot franchises in Shanghai on a small scale, and the franchise model may become the key point of Hema Neighborhood expansion.

The break-even point that is difficult to survive

When it first came out last May, Hou Yi called Hema Neighborhood "the most important strategy for the next decade." The reason is that "for the first time, I saw the opportunity of Hema expanding from serving urban consumers to serving consumers across the country." ”

Behind this represents the role of Hema Neighborhood in the entire Hema ecosystem - it is a small format that can break into the community level. Compared with hema fresh stores, Hema neighborhood only needs 3,000 regular customers to support a store.

This means that, under ideal conditions, Hema Neighborhood can penetrate deep into the residential areas of first-tier cities with sparse crowd density, as well as into some living circles with strong spending power in lower-tier cities.

However, small retail formats naturally have their drawbacks, that is, business data fluctuates greatly, it is difficult to control losses, and the ability to resist risks is weaker than that of large stores, especially stores with fresh products. Hema Neighborhood is trying to solve this problem through the "compromise innovation" in the model, so as to bring the distance between it and the consumers in the community extremely closer.

On the one hand, Hema Neighborhood adopts the same "same-day order next-day pick-up" model as community group buying, thereby reducing the loss of fresh goods and reducing operating costs; the opposite of this compromise is that the goods can be obtained the next day, reducing the consumer experience.

Not only that, Hema Neighborhood wants to "grasp with both hands" in many ways. For example, Hema has always been a firm "façade useful faction", and the drainage effect of physical stores is crucial in Hema fresh. Therefore, the location of Hema neighborhood is a bright face door with a large number of people, such as near the entrance and exit of the community, near the school, etc.

However, the role of the store in Hema Neighborhood is also a "compromise version". Different from hema fresh stores, the goods in the neighborhood do not provide on-site sales, consumers enter, see the goods can not be bought immediately home, but need to download the mobile phone APP, buy online, and then come to get it the next day. This reduces the role of stores on turnover to a certain extent.

The main competitiveness of Hema Neighborhood is its product strength. The store not only offers its own brand goods that are much cheaper than the big shops, but also offers aquatic seafood such as live fish and shrimp. In order to ensure the storage of goods and anti-channeling goods and other issues, Hema neighborhood can not borrow the space of the station and convenience store like the community group purchase, but must have its own storefront, which leads to the cost of the Hema neighborhood is more than one piece.

In the current self-operated stores, the area of a single store in Hema Neighborhood is about 100 square meters, and it is standard with two clerks, which can be said to have tried to minimize the cost.

However, in this way, Hema Neighborhood is facing cost pressure on the one hand, and it is not competitive in the rapid start of the early stage and the increase in order volume.

In the community near Xiao Wu, the above-mentioned Hema neighborhood clerk, residents quickly use the more convenient and fast fresh food platform such as daily fresh food, Dingdong to buy vegetables, and Meituan to buy vegetables, and orders are not in a hurry to pick up downstairs after purchasing in the community group buying group.

The community group buying site in the community is run by the owner of the commissary who has been here for many years, relying on the acquaintance relationship in the community, these leaders hold multiple WeChat groups, and the transaction traffic comes from social attributes. The specially recruited clerks in Hema Neighborhood often do not have such social resources in their hands, and the source of orders almost all depends on the natural traffic of the store, which obviously takes longer to accumulate enough orders to cover the cost.

Xiao Wu works in the neighborhood near the store, the number of residents is about 8,000 households, after nearly a year of operation, it has not yet reached breakeven. It can be seen that the new role of the store door is not ideal.

However, it is worth noting that the consumer feedback of Hema Neighborhood can be said to be the best in the next-day delivery model. The user reputation is good, after a long enough period of accumulation, precipitated a stable customer base, the model of Hema neighborhood is likely to be able to run through.

Unfortunately, due to the influence of internal and external factors, the current Hema has not chosen to continue to transfuse blood for more than 1500 neighborhood directly operated stores across the country to the time point of its profitability.

"Temporarily'tighten the belt of your pants.'" Hou Said so in an internal letter in January this year.