With hypermarkets closing one after another and member stores advancing slowly, is carrefour other option to break through?

With the closure of Carrefour Beijing Zhongguancun Square store, Carrefour's traditional hypermarket stores in China have been reduced to nearly 200. In the past four years, Carrefour has closed more than 80 stores, and with the addition of new stores, the total number of stores has decreased by nearly 60. In October 2021, Carrefour publicly stated that it would upgrade half of the country's hypermarkets to member stores. Now that half a year has passed, traditional hypermarkets continue to close, and the upgrade plan is slow. Industry analysts believe that Carrefour should solve the problem of its own business model, and then further consider the balanced layout of hypermarkets, member stores and other formats.

Traditional hypermarkets have closed one after another

On March 31, Carrefour's Beijing Zhongguancun store, once known as "Asia's largest supermarket", was officially closed. The store covers an area of 11,600 square meters and has been in business for 18 years. At the end of February this year, the last Carrefour company in Nanchang announced the closure of the store and clearance. According to the incomplete statistics of the Beijing News reporter, since 2022, Carrefour has closed a total of four traditional hypermarkets in Chongqing Shapingba Store, Guangzhou Wanguo Store, Beijing Zhongguancun Store and Nanchang Qingyunpu Store due to lease expiration, business adjustment, shopping mall upgrades and other issues.

In 2021, Carrefour will close more than 20 stores, and in the second half of the year, 7 hypermarkets, 8 convenience stores and 3 selected stores will be closed, involving Chengdu, Zhuhai, Jinan, Hangzhou, Nanchang and other cities. Among them, Carrefour Jinan Weijiazhuang store closed on August 5, which is Carrefour's last store in Jinan. Carrefour Chengdu Babao Street, the first store to enter the Chengdu market, closed on September 30, and has been in operation for 22 years.

According to the relevant reports of "Finance and Economics", Carrefour closed 20 stores in 2018, 17 stores in 2019, 20 stores in 2020, 20 stores in 2021, and 4 stores in 2022, the number of which has exceeded 80.

Wen Zhihong, partner of Hejun Consulting and head of chain operations, believes that the successive closure of Carrefour hypermarkets is not a problem faced by individual supermarkets, but a common problem faced by the entire domestic hypermarket industry. The fundamental reason is that the retail format of hypermarkets emphasizes core values such as low prices and one-stop shopping, and with the rise of e-commerce, the advantages of the above core values of hypermarkets are no longer obvious, so the operation is facing difficulties.

The progress of upgrading the club is slow

After realizing the decline of hypermarkets, Carrefour chose to get out of the business difficulties by transforming its clubs. On October 15, 2021, Carrefour CEO Tian Rui said that Carrefour plans to fully upgrade 100 of the 200 hypermarkets into paid membership stores in the next three years. The target user group is quality life users in 4 municipalities directly under the central government and 15 cities above the sub-provincial level, which will break the current situation of spending in member stores that drive tens of kilometers and take time to queue. Tian Rui once said that in Shanghai, for example, after 3 years, consumers will have a Carrefour club within 15 minutes of driving.

Up to now, Carrefour has been proposing the membership store plan for half a year, and the process of upgrading the membership store in traditional hypermarkets is slow. According to Carrefour, the number of Carrefour member stores is currently 2, all located in Shanghai. The first member store opened in late October 2021, transformed from the carrefour traditional supermarket on Chengshan Road in Pudong New Area, Shanghai, and the second member store opened in late December 2021 in The Qingpu District of Shanghai, also upgraded from the traditional hypermarket. Carrefour told the Beijing News that the third member store was originally scheduled to open in June this year, and the location was located in Jiading District, Shanghai, but the opening was tentatively postponed due to the epidemic.

In addition, on the first day of the opening of Carrefour's first member store, there were also a number of products out of stock, carrefour responded at that time that suppliers were pressured by competitors, resulting in some suppliers buying empty related goods, making it impossible for many member consumers to buy.

Wen Zhihong analyzed that the reason for the unsatisfactory progress of Carrefour clubs is that in addition to the impact of the epidemic, there are also problems in Carrefour's own operation. The transformation and transformation of the membership store involves many aspects of construction and adjustment, and Carrefour's parent company Suning is also facing a difficult operation situation, at which time it is difficult to invest more resources and energy to build the club.

Small and beautiful fresh food shop or a breakthrough

The industry believes that the club is not the only direction of traditional hypermarkets. Lai Yang, a member of the Expert Committee of the China Chamber of Commerce and chief expert of the Research Base of the Beijing International Business and Trade Center, said that although the current membership store format is hot, for the newly admitted member store players, from the perspective of cost and income, profitability will be a difficulty, "Whether the newly admitted enterprises can make characteristics in the membership store format and build a good chilled supply chain system is also a challenge." ”

Wen Zhihong also believes that after Carrefour was acquired by Suning, Suning also made some successful transformation work on hypermarkets, including the integration of online and offline omni-channels, and the implantation of some home appliances into hypermarkets. In addition, the cross-format combination with catering also brings a certain amount of passenger flow. Carrefour should summarize the various attempts and explorations made, and then further consider the balanced layout of hypermarkets, member stores and other formats. "For Carrefour, the membership store format is currently only a concept, and the hypermarket format has aged, in the case of both formats are not mature and stable, it is difficult to consider the balance and layout of Carrefour between the two formats, Carrefour should first solve its own business model problem."

Lai Yang pointed out that Carrefour's biggest problem now is that its own fresh business ability is weak, "packaged food, consumer goods, etc. are the strengths of Carrefour's traditional hypermarkets, and pricing has a competitive advantage." However, at present, consumers are becoming more and more inclined to fresh-based stores, and the weaknesses of their fresh operations are gradually exposed. Carrefour can focus on the layout of small areas of fresh stores. ”

Beijing News reporter Yu Guigui

Edited by Wang Lin Proofread by Liu Baoqing