Ignition Dimension (ID: chaintruth) original
Produced by Burning Finance
Author 丨 Feng Xiaoting
Editor 丨Rao Xiafei
Under the new wave of new crown pneumonia in Beijing, the number of personnel in the "hoarding army" has suddenly increased. On various social platforms, netizens have posted the record of "hoarding goods", and offline supermarkets have welcomed an endless stream of customers. Subsequently, major supermarkets have successively expressed "extended business hours".
"I haven't seen so many customers in a long time." A staff member of a Carrefour store in Beijing who witnessed the rush to buy on the night of April 24 told Burning Finance. However, at present, the store traffic has returned to the previous level, "the customer flow is very small, maybe it will close the store in the future." ”
"This commercial circle was very popular more than a decade ago, and the surrounding area is a scenic spot and a residential area, and the traffic is very large." But now there are many new supermarkets of all sizes around, and Carrefour is neither the only choice nor the best choice. The staff member pointed out.
Indeed, the staff member's speculation was justified. In the past one-stop shopping hypermarket model of the main era, large supermarkets only need to "lie" can easily enter the account, the advantage of full category, low price is enough to make the large supermarket within a radius of 5 kilometers there is no comparable entity, so as to rely on its own channel advantages, in a variety of names to require suppliers to make profits to further expand profit margins.
But since the rise of e-commerce and the development of local supermarkets, the advantages of the hypermarket model of cross-border hypermarkets have failed. In recent years, there have been news that the old hypermarket with a history of nearly 20 years has announced that it has closed down.
"There are two main reasons for the closure of traditional large supermarkets, one is poor performance, and the other is that the rent expires but there is no ability to renew." Industry insider Chang Chun told Burning Finance, "The large supermarket with 'one-stop shopping' as the highlight has long begun to fail, in more than a decade ago, hypermarkets can cover a five-kilometer radius of consumer groups, full variety, low price is the magic weapon, but after the impact of new formats such as e-commerce, O2O model, community group buying, etc., this advantage is about to disappear." ”
However, Changchun does not agree with the view that "the entity is going to die", in his view, the closure of individual supermarkets is only an inevitable part of the continuous change of supermarket formats, "the competition in the physical retail industry is still fierce, and traditional large supermarkets are gradually withdrawing from competition, but different types of supermarkets such as member supermarkets, boutique supermarkets, fresh supermarkets, and discount supermarkets are still the first choice for consumers to choose shopping." ”
As Chang Chun said, the supermarket format has not been weakened by the closure of many old stores such as Carrefour and Wal-Mart, on the contrary, as the scale of supermarkets has changed from large to small and supermarket positioning has been continuously subdivided, supermarkets can still capture the hearts of customers.
Hypermarkets are late
On the evening of April 24, the supermarket shelves were empty and crowded did not last long. Offline supermarkets have gradually resumed their former operating conditions.
"There are not many people in the supermarket, the meat and vegetables and fruit stalls are not very fresh, and the paper towels with discount promotions are not as cheap as the ones I bought online." Ms. Yang, who pushed the shopping cart up and down the Carrefour fangyuan store after work on Tuesday, still had only a few items in the shopping cart, "To be honest, there is nothing to buy." ”
In order to use up the balance of the shopping card issued by the unit for the New Year, Ms. Yang simply took a bucket of cooking oil and two bags of rice to check out, "My family lives on Zhichun Road, originally carrefour Zhongguancun store was the closest to my home, but last week I learned that the supermarket had been closed." In addition, I usually don't visit this kind of supermarket much, so I want to spend the shopping card as soon as possible, otherwise I will forget where to put the card after a period of time. ”
But seeing Carrefour's current "depression", Ms. Yang still feels a little sighing, in her impression, no matter when to go to Carrefour is full of people, the holiday promotion day is even more crowded, will not be like the current big supermarket staff than consumers.
For the Carrefour Zhongguancun store, which has officially closed on March 31, Ms. Yang is also very emotional, "I came to Beijing in 2006 to go to university, and when I was in college, I always loved and my roommate to run to the Carrefour Zhongguancun store. In my sophomore year, my family came to Beijing to find me, and I took them to this Sofool known as "Asia's largest" Carre. Later, after graduating and staying in Beijing, his first job unit was also in Zhongguancun, and he would go to Carrefour to visit when he had time to leave work at night. In those years, Carrefour Zhongguancun was my favorite supermarket. ”
In addition to the Carrefour Zhongguancun store, which is "the largest Lefour flagship store in Asia", which announced the closure of stores, since 2021, many Carrefour supermarkets have announced their closures.
According to the announcement released by Suning Tesco on February 11, since the second half of 2021, 7 hypermarkets, 8 convenience stores and 3 selected stores have been closed, and the number of stores at the end of the year has decreased compared with 2020. In 2021, Carrefour China's overall operating income fell by more than 10% year-on-year, so Suning Tesco made a goodwill impairment provision of about 1 billion yuan for Carrefour China at the end of 2021.
Since 2022, the pace of carrefour supermarket closures has continued to be frequent. The announced closures include carrefour Shapingba in Chongqing, Carrefour Wanguo in Guangzhou, Carrefour Shanghai Road in Nanchang, and Carrefour Zhongguancun in Beijing mentioned above. These closed Carrefour supermarkets have nearly 20-year-old stores.
In addition to Carrefour, large supermarket chains such as Wal-Mart, METRO, and Lotus, as well as local supermarkets such as Wumart and Yonghui, which entered the domestic market at the same time as Carrefour more than 20 years ago, have closed stores one after another.
Just as Carrefour's largest store in Asia announced its closure and caused many people to miss it, at the end of 2021, Wal-Mart's first store in China, Wal-Mart Shenzhen Honghu Store, announced that it would stop operating, which also attracted a lot of people's attention.
Jian Chen, who has been in the retail sector for many years, said that although it is clear that whether it is a Carrefour Zhongguancun store or a Wal-Mart Honghu store, it is only one or two of the hundreds of stores closed by these two companies in recent years, but they are still reluctant to close these two stores with historical value. "More than ten or twenty years ago, these multinational large supermarkets set foot in the commercial circles of large cities with the advantages of superior service, low price and complete variety, and everywhere they went, they all affected the living conditions of local merchants."
However, the hypermarket that shouted that "there are no competitors within a 5-kilometer radius" went downhill.
Supermarkets, which change from time to time
"To a large extent, in the mid-to-late 1990s, the expansion of commercial territory into large supermarket chains Chinese mainland, such as Carrefour and Walmart, actually promoted the progress of the entire retail market." Chen Jian recalls that when carrefour, the first large supermarket, entered China in 1995, it was also the beginning of the domestic retail industry, "Now it is difficult for young consumers to imagine what it would be like for home appliances to be purchased in department stores and grocery stores, respectively." ”
At that time, Carrefour, which had been practicing the "hypermarket model" for decades overseas, once landed, it marched all the way with forced momentum. Previously, consumers' impression of the shopping experience of the three-foot counter was further replaced by Carrefour under the convenience brought by one-stop shopping and the absolute advantage of category and price.
Later, as a new format, the "hypermarket model" began, and in the past 20 years, it has almost monopolized all offline traffic.
"It's no exaggeration to say 'benchmarking.'" Chen Jian told Burning Finance that in 2004, with the full opening of the supermarket industry to the outside world, large supermarkets embarked on a high-speed expansion path, and with the one-stop shopping experience gaining consumer recognition and favor, large supermarkets have become a model praised by everyone in the industry.
"On the one hand, suppliers of large supermarkets talk about being able to enter supermarket supply channels such as Carrefour, even if large companies use their channel advantages to continuously reduce prices on suppliers. On the other hand, many local private supermarkets have learned from companies such as Carrefour, and many followers have emerged at one time. ”
A number of multinational companies, such as Carrefour, which has an absolute say in the local retail industry, have also annexed some local retail companies during the period of rapid development.
Among them, the more typical is that in 2004, the British retailer TESCO Group acquired 50% of the equity of the Tesco supermarket chain; in 2016, the large US chain commercial group Purchasing Treasure purchased 80% of the equity of Hunan Jiarunduo Supermarket for 150 million yuan, becoming a strategic investor of the supermarket.
In 2007, Walmart acquired a 35% stake in Haoduo, founded by Taiwan-based Chengda Group, and actually controlled many more operations, and completed the acquisition in 2011; in 2009, Lotte Group of South Korea acquired The Chinese supermarket chain Times Retail for US$635 million; in 2010, Carrefour acquired Baolongcang, the earliest supermarket chain in Hebei.
It's just that the good times are not long, and the hypermarkets led by retail giants such as Carrefour have gradually become popular after more than a decade of highlight moments. And in 2012 ushered in a turning point in development.
In 2012, the "Analysis Report on the Operation Status of China's Chain Retail Enterprises" jointly released by the China Chain Store & Franchise Association and Deloitte showed that since the second half of 2011, especially since 2012, due to changes in the economic environment at home and abroad, chain retail enterprises have generally experienced obvious sales growth weakness or even negative growth. "At the same time, the cost of labor and rent continues to rise sharply, the profit margins of enterprises are constantly being compressed, many companies have issued profit warnings, the speed of opening stores has slowed down significantly, and the capital market has also frequently dived."
Carrefour China, which also generated sales of 45.1 billion yuan with 203 stores as the parent company in 2011, also entered a period of double decline in China's performance and profit in 2012. The rise of e-commerce and O2O at that time also brought earth-shaking changes to the retail industry.
At that time, in the discussion of the topic of "entity is not OK", offline supermarkets also began to explore online business. In 2012, Walmart completed the holding of the first online supermarket in China, No. 1 store, through a capital increase; in 2013, RT-Mart invested in the creation of AF-2C e-commerce website Feiniu.com. Although in actual operation, offline is still the main camp.
However, the impact of e-commerce on consumers' lifestyles is rapid and multifaceted, and the blow to the supply chain of offline supermarkets is undoubtedly huge. Also at this stage, the shortcomings of large foreign supermarkets in localization operation and management have gradually emerged, and they have not been able to make timely adjustments in the face of environmental changes, and have gradually declined, and have begun to sell assets or seek cooperation from local Internet companies.
In October 2013, China Resources Ventures (then parent company of CR Vanguard) announced that it would invest HK$22 billion to form a joint venture with Tesco China to take over TESCO's China business and complete a 100% acquisition of the company in 2020; in 2017, Alibaba Group invested about HK$22.4 billion, directly and indirectly held 36.16% of the shares of Gaoxin Retail, which owns two major brands, RT-Mart and Auchan, and increased its holdings in the latter in 2020.
From 2017 to 2018, Tencent invested in Yonghui, BBK, Carrefour and other enterprises. In June 2018, Walmart China and Tencent jointly announced the formal formation of a deep strategic partnership. During 2019, Suning Tesco and Wumart became the controlling shareholders of Carrefour China and METRO China respectively.
However, backgammon, which has joined hands with the two big factories of Tencent and JD.com, has not performed as well as it does in 2021. For the first time in the 14 years of listing, BBK's performance turned from profit to loss, and BBK's 2021 annual report showed a net loss attributable to shareholders of listed companies of 184 million yuan. Before the public disclosure of the loss news of BBK, the two shareholders, Linzhi Tencent and JD Bangneng, both made large reductions in advance.
It is not surprising that the drama of division and combination is often interpreted in the physical retail industry. However, it is worth noting that at this point, the multinational supermarket companies that were once popular, only Wal-Mart is still insisting on independent development in the domestic market.
Supermarkets are inseparable
Visiting the supermarket seems to be becoming less popular.
"It felt like going to the supermarket and not knowing what to buy. Buy fresh fruit can be ordered with fresh e-commerce APP, and other non-fresh goods can be considered for online shopping. After the 90s, Yiyi reflected to Burning Finance that if it were not for the limited logistics timeliness during the epidemic period, she would not have walked into the Wal-Mart supermarket, "mainly inconvenient, buying more and inconvenient to carry home, and in recent years, every e-commerce promotion will hoard a lot of daily necessities." ”
However, while all indications seem to suggest that "physical retail is unsustainable", the reality is that even if the hypermarket model declines, supermarkets are still the largest distribution channel for FMCG.
According to the report of the China Chain Store & Franchise Association, the current mainland supermarket format has formed a pattern of large supermarkets + supermarkets + community supermarkets. Large supermarkets and supermarkets occupy the core business circle, covering 5-20 km and 3-5 km of commercial circles, and community supermarkets are close to various residential areas, covering 1-3 km of commercial circles, filling gaps and sales weak areas. Each enterprise also allocates various types of stores with different sizes and functional positioning according to the characteristics of the city's business district and property.
Judging from the survey data of supermarkets, more and more new stores of physical supermarkets have been transformed into small community stores that mainly engage in fresh food, with an area ranging from two or three hundred square meters to one or two thousand square meters, with an average area of about 900 square meters. At present, 70% of the top 100 supermarket enterprise stores are small community stores.
In addition to the transformation of the scale of supermarkets from large to small, the positioning of supermarkets is also constantly refining.
Especially since 2020, due to the impact of the new crown epidemic and community group buying, as well as changes in consumer consumption habits and consumption behaviors, most of the physical supermarket formats have encountered the challenge of declining visitors.
In order to seek self-help, supermarket brands have begun to take countermeasures to meet the needs of different customer groups through the size of stores, the difference in the setting of commodity structure, the matching of decoration styles and supporting facilities.
Suning Tesco mentioned in the provision for carrefour impairment, "Carrefour China took the initiative to take measures to adjust its business operation strategy, further increase the adjustment and optimization of hypermarket business, and explore the development of its member store business." ”
CR Vanguard has launched innovative format brands such as Wanjia MART and Wanjia City according to factors such as disposable income, age and geography. Yonghui Supermarket said that "the company will continue to promote store upgrades, while ensuring the steady growth of warehousing stores, it will optimize and upgrade some Bravo stores, and attract more online and offline customers through the optimization of commodity structure, quality improvement and service upgrades." ”
At the end of 2021, Fat Donglai, an "alternative" local retail brand that dominates Henan, also revealed its future plans in the form of "Donglaige meeting record sharing", in addition to mentioning store adjustments, it also mentioned that it will lay out online e-commerce business in 2022 and combine online and physical stores.
Although each company has its own set of methodologies for dealing with internal and external conflicts, there is still no clear development path in front of your supermarket brands, and it is still up to each company to explore the true knowledge.
As Zhu Yue, a partner at CIC Insight Consulting, said, "Unlike most residents in Europe and the United States who live in the suburbs, going to supermarkets for mass-selling material procurement is its main shopping method, and China's retail format is accompanied by the advancement of urbanization, the improvement of residents' consumption level, and the application of new technologies." Today, offline retail formats that provide customers with a convenient and fast shopping experience and cost-effective products stand out. ”
Zhu Yue mentioned that traditional supermarket stores need to cater to consumers and carry out a change in business model, in the process of emerging a number of new supermarkets and hypermarket brands, such as Wal-Mart's high-end membership stores, Sam's Club has opened 27 stores in 20 cities across the country, with more than 4 million paid members, and is expected to have 40 to 45 open or under construction by the end of 2022. Another supermarket brand, Aldi, entered China in June 2019 and has opened 26 stores in Shanghai in more than two years.
While traditional hypermarkets are closed, the market still has the status quo of supermarket brands such as Costco, ALDI, Sam's Club and so on, which is enough to make the view that "physical retail is going to be finished" self-defeating. There is no shortage of consumers in a market that is still dynamic.
"The supermarket is not big, but the fruits and vegetables are fresh, the packaging code is also very neat, I will go to the supermarket two or three times a week, and buy enough dishes for two or three days each time." Diandian said that he likes to visit the boutique supermarket located near his home, "I think visiting the supermarket is a kind of enjoyment, may not consume much money, although the price of the boutique supermarket will be about 20% more expensive than the community group purchase or the vegetable market, but seeing clean, neatly packaged vegetables and fruits and a clean shopping environment, I also think it is worth it." ”
There are still many people who like to visit the supermarket in their leisure time like Diandian. The Douban group with 120,000 members "loves to visit the supermarket", and every day members post in the group to share what they have seen and heard in the supermarket. As the panel's profile writes, supermarkets are urban safe supply stations.
"Stable prices, regular shelves, a wide variety of goods: ...... Life is inseparable from visiting the supermarket, the supermarket is very inclusive, everyone can visit the supermarket, feel the peace of mind when pushing the shopping cart to take the goods, I visit the supermarket, so I am. ”
Resources:
"Supermarket Chain Operation Report (2021)", source: China Chain Store & Franchise Association
"After Joining the WTO, the Ups and Downs of Foreign Retail in China", Source: Interface News
*The caption and some of the illustrations in the text are from Visual China.
*In the text, Changqing, Chen Jian, and Diandian are pseudonyms
*Disclaimer: In no event shall the information herein or the opinions expressed herein constitute investment advice to any person.