Author: Furuhara
Source: Zhenghe Island
"The only constant in this world is change itself."
Self-revolution is a difficult and painful thing for entrepreneurs.
In the process of enterprise development, it is easy to form path dependence, and the proven successful model and development path can minimize the trial and error cost of the enterprise.
However, the external environment of the enterprise is constantly changing, the macro policy is changing, the needs of consumers are changing, the team is also changing, if the enterprise does not change, or adhere to the original model to the end, it is possible to encounter setbacks in the stormy waves of the market.
The larger the enterprise, the more difficult the transformation adjustment, including the world's top enterprises, are inevitably dependent on the development path, such as the inventor of the digital camera Kodak, the once-famous mobile phone overlord Nokia, have made major mistakes in corporate strategy.
As the "brother" of the domestic home furnishing chain industry, Red Star Macalline is also facing the problem of strategic adjustment in the market where the macro monetary policy is majorly adjusted and the domestic consumption structure has undergone major changes.
On March 31, Red Star Macalline, a well-known domestic home furnishing chain mall giant, announced its 2021 financial report, and the performance made the market bright, and a number of securities companies gave positive evaluations.
According to the data, in 2021, Red Star Macalline recorded revenue of 15.513 billion yuan, an increase of 8.97% year-on-year; net profit reached 2.047 billion yuan, an increase of 18.31% year-on-year; deduction of non-net profit reached 1.658 billion yuan, a year-on-year increase of 42.62%. In the same period, the cash flow generated by its operating activities also reached 5.381 billion yuan, an increase of 29.35% year-on-year.
In the past 2021, there have been many changes in the macro side of the economy, the epidemic is raging, and the monetary policy has undergone a major adjustment that has rarely been seen in many years, and Red Star Macalline, which has always been a heavy asset, has handed over a beautiful financial report in such an environment, which is impressive.
Among them, the most noteworthy are two financial indicators, the first is the further improvement of self-operated mall revenue, in 2021, Red Star Macalline's self-operated mall revenue increased by 21.1% year-on-year; the second is the decline in debt ratio, the asset-liability ratio in 2021 decreased by 3.7%, and interest-bearing liabilities fell by 6.3 billion yuan year-on-year.
This means that the financial situation of the company is getting healthier and healthier, and the level of profitability is getting stronger.
In such a difficult environment, how does Red Star Macalline do this? This has to start with the strategic adjustment of Red Star Macalline in 2020.
In 2021, Red Star Macalline launched a new strategy of "light assets, heavy operations, and reduced leverage". For Red Star Macalline, which has heavier assets, it is undoubtedly a self-transformation of the blade inward to "go heavy and meet the light".
For the home furnishing store industry, it is not easy to do this, because it requires enterprises to have higher efficiency, shorter operating cycles, and stronger business iteration capabilities. How to maintain the expansion of the business and achieve profitable growth while the assets become lighter is actually a test of the overall operational ability of the home store enterprise.
For Red Star Macalline, this strategic adjustment is actually adjusting the positioning of the enterprise. Red Star Macalline is no longer just a landlord, but a butler, i.e. not just renting out a storefront, but providing a one-stop solution for brands. From the perspective of consumers, it is based on consumer needs to provide more refined products and services.
The metamorphosis of an asset-light strategy
Asset-light is a kind of adjustment of the production factors of enterprises, the assets here refer to the hardware assets of the enterprise, the enterprise is not not paying attention to the assets, but the key production factors of the enterprise are adjusted to empower the operation ability of the merchant, and this ability actually needs to correspond to countless assets, such as talents, management, brands, etc., which are actually the assets of the enterprise.
Qiu Zhe, CEO and secretary of the board of directors of Red Star Macalline, believes that the company's goal of becoming lighter will be gradually achieved in the development process, which is more reflected in the increment of the project. She said that Red Star Macalline's new development projects in the future will be based on the model of asset-light cooperation.
According to Qiu Zhe, there are currently more than 300 projects in the reserve of Red Star Macalline, which will be gradually put into operation in the next 5-10 years. As for the self-operated stores, only 19 are in reserve or under construction, and will be completed in 3-5 years. Since 2021, Red Star Macalline has not added land for self-built projects.
The so-called "escrow shopping mall" is to provide comprehensive consulting and management services for partners, including shopping mall site selection consulting, construction consulting, shopping mall design and decoration consulting, investment opening, and daily operation and management of the partner's home decoration and furniture mall under the brand name of "Red Star Macalline".
Under this model, Red Star Macalline no longer needs to buy land and build itself, nor does it rely on rent collection to obtain income, but to provide services for partners to obtain income.
In the early stage of development, self-built shopping malls have great advantages in optimizing site selection and establishing industry thresholds, but after entering the stage of large-scale expansion, they will be limited by long time periods, large capital demand, and enterprises are prone to bear the burden of heavy assets, while the mode of entrusting and managing shopping malls is to directly empower the operation ability of Red Star Macalline through cooperation and then expand.
This represents the transformation of Red Star Macalline from a home furnishing chain brand to a service provider of the home furnishing format, the core value of the enterprise will be more prominent, and the core competitiveness will be further enhanced.
Qiu Zhe introduced that In 2021, Red Star Macalline will focus on building nine theme pavilions; building a regional no. 1 store; releasing eight regional raiders; deepening the "exhibition store alliance" of the three cities and five exhibitions; creating an innovative design alliance and M+ China's high-end interior design competition; strengthening the strict selection of "expert team + system guarantee + execution counseling" and so on.
Under the asset-light strategy, the team will focus on operational capabilities, which means that in the future, the proportion of operations and revenue contribution of the management mall in Red Star Macalline will be greatly improved, so as to achieve the goal of increasing profits and becoming lighter at the same time.
The premise of "asset light" is "heavy operation". If there is no strong operational capability, but only to reduce hardware assets, it may mean the loss of the core competitiveness of the enterprise. Asset-light and heavy operation are a set of combination strategies, the two are inseparable, is the adjustment of enterprise competitive factors.
An operational strategy is key
For Red Star Macalline, heavy operation means that enterprises no longer only pursue the occupancy rate of shops, but pay more attention to how to help cooperative merchants improve operational efficiency.
Under the guidance of this strategy, Red Star Macalline's business has developed from the commercial infrastructure of home furnishing enterprises to a high-quality service provider that empowers home furnishing enterprises and increases efficiency.
Relying on Red Star Macalline's many years of home market experience and insight into high-end consumer trends, Red Star Macalline has made full efforts at the operational end in recent years.
In 2021, Red Star Macalline upgraded the strategy of 9 theme pavilions to achieve full coverage of 9 categories of intelligent electrical appliances, international imports, design living rooms, high-end customization, soft furnishings, system doors and windows, boutique bathrooms, sleep life, and trendy furniture. Qiu Zhe said that the layout of the 9 major theme pavilions is driven by subdivided consumer demand, which is of great help to the reasonable guidance of the flow of people in the mall and the improvement of the occupancy rate.
Red Star Macalline also focuses on adjusting the structure of shopping mall categories.
Qiu Zhe introduced that as of the end of last year, there have been more than 300 category museums in different shopping malls. Through the adjustment of store status and category, the occupancy rate of shopping malls has been significantly improved, and the rental income of some No. 1 stores before and after the adjustment can increase by 10%-15%, while the adjustment of different floor category pavilions can also increase the occupancy rate by 3-5 points.
According to the financial report data, the occupancy rate of Red Star Macalline self-operated shopping malls increased from 92.1% in the previous year to 94.1%, and the occupancy rate of managed shopping malls increased from 90.7% to 91.4%.
Benefiting from the overall strategic adjustment, Red Star Macalline's store operation efficiency has improved significantly in 2021. By the end of 2021, its total operating area was 22,303,547.50 square meters, an increase of about 1% year-on-year. In 2021, the retail sales of shopping malls were 137.4 billion yuan, an increase of 27.2% year-on-year. The average improvement rate is much better than that of the same industry.
This successful prediction comes from Red Star Macalline's years of research on consumption data, which accurately grasps the consumption upgrading trend of first- and second-tier cities.
Red Star Macalline also accurately predicted the rise of the sinking market, began to lay out in third- and fourth-tier cities, and even appeared in counties with a population of 300,000 to 500,000, and it is still difficult to find a 50,000-square-meter home furnishing store.
Accurately predicting consumption trends is the embodiment of operational capabilities, and more important changes occur in the empowerment of cooperative merchants.
Red Star Macalline fully empowers cooperative merchants in terms of services, and consumers can obtain one-stop purchase of furniture, building materials, electrical appliances and professional-level standard services in the whole process of Red Star Macalline, which makes Red Star Macalline successfully become the birthplace of the city's home furnishing trend, the birthplace of high-end home aesthetic trends, and the top traffic entrance of the home furnishing industry.
In terms of marketing, Red Star Macalline brings together a variety of marketing resources to empower brands, plans and holds a large number of online and offline marketing activities, such as super category festival, super brand day, top brand selection, same city shopping, super face-to-face, home round table pie, home face-to-face, exploration, etc., these activities successfully brought traffic to brand owners and increased marketing efficiency.
The improvement of Red Star Macalline's operational capabilities has enabled merchants to enter Red Star Macalline not simply obtain the traffic and brand exposure opportunities of stores, but have selected partners with strong operational capabilities, and the two sides have worked together to provide consumers with high-value services, so as to achieve win-win market results.
In the strategy of re-operation, the positioning of enterprises is becoming clearer.
Red Star Macalline has become the capital of brand home furnishing enterprises, an enabler to help brand home furnishing enterprises better and faster link and serve consumers, or a helper to help home furnishing enterprises reduce costs and increase efficiency.
In terms of the strategic summary of Red Star Macalline's heavy operation, it is to always grasp the dynamic consumer demand, and build the empowerment ability for partners from the consumer demand, that is, the operation ability.
There is only one successful corporate strategy
Businesses are always subject to consumer sovereignty in the market. Consumers vote for good companies with their feet, they are deciding which companies can survive and develop, and they will also let some companies out of the market.
No matter which successful corporate strategy, it must be based on the ultimate goal of fully meeting and tapping consumer needs.
Red Star Macalline can hand over such beautiful financial statements in 2021, when the macro monetary policy environment has changed drastically and the epidemic is raging, which shows that China's mature entrepreneurs have deeply understood the true meaning of corporate success, that is, they continue to extend downwards and truly think about the development direction of enterprises from the perspective of consumers.
Reinforced cement is not the competitiveness of Red Star Macalline, and the operational ability is the key to the success of Red Star Macalline's strategy, because the operational ability is based on insight into consumer needs and the empowerment of brand home furnishing enterprises as its own responsibility, which is the real way for enterprises to win.
He is strong and strong, the breeze blows the hills, he crosses him, and the bright moon shines on the river.
This poem may explain the essence of the enterprise, that is, the enterprise is an institution that serves consumers, and entrepreneurs can only stick to a bright light in the waves of the market, that is, how to better serve consumers.
Red Star Macalline's strategic transformation was successful, but once again proved this basic principle.