Every time a hot review | the era of hypermarkets falls, but physical retail is far from the twilight years

Per commentator Chen Ting

Recently, the gradual tide of hypermarket formats has attracted the attention of the public. On August 15, the Weibo topic "Wal-Mart China has closed stores again" once climbed to the third position of hot search, and related reports said that from 2016 to 2020, Wal-Mart closed 80 stores in China in four years; and since 2021, the number of its stores closed has reached double digits.

Wal-Mart China's continuous store closures are not unique, in early August, Cr Vanguard officially withdrew from Hainan, in the first half of the year, Renrenle closed 19 stores in a row on the grounds of "continuous increase in operating losses, there is no hope of turning around losses", and earlier, the department store industry has also entered an adjustment period. For a time, there were voices saying that under the impact of the online, physical retail was losing to the times.

The author believes that the ebb and flow of the hypermarket era is excusable, but physical retail is far from the twilight years.

The ebb and flow of the hypermarket era is more related to the unsustainability of its own profit model. In the past, consumers had the need for "one-stop shopping", and hypermarkets used low-gross margin goods to attract consumers while relying on high-gross margin goods to make profits. Nowadays, with the popularity of online e-commerce, consumers are accustomed to online price comparisons, and the frequency of buying high-gross margin goods in hypermarkets is naturally getting lower and lower. At the same time, the high rents of hypermarkets have overwhelmed many retailers.

Some brick-and-mortar retailers have found a way to cope, and new formats with more potential are becoming new favorites. The author understands that while Wal-Mart China is speeding up the closure of hypermarket stores, wal-Mart China has recently upgraded its home mini program and renamed it "Wal-Mart Online Supermarket", providing "speed delivery" of more than 4,000 kinds of goods and "next-day delivery" services for more than 10,000 kinds of goods. At the same time, Walmart is accelerating the opening of its Sam's Club. Carrefour China also announced in early August that it would open more than 30 Carrefour member stores within five years by renovating existing hypermarkets.

In addition, with the rise of community e-commerce, the giant concentration of communities and fresh play is equivalent to intercepting traffic in the community, which does bring great pressure to the traditional hypermarkets that originally relied on fresh drainage. However, brick-and-mortar retailers are accelerating their digital transformation and multi-format layout, according to the "2020 China Top 100 Supermarkets" report released by the China Chain Store and Franchise Association at the end of July, in 2020, 60% of enterprises carried out community group business, and 70% of enterprises carried out online live broadcast business.

In terms of overall scale, the sales scale of China's top 100 supermarkets in 2020 was 968 billion yuan, an increase of 4.4% year-on-year, accounting for about 5.5% of the total retail sales of FMCG in the whole year; the total number of stores of the top 100 supermarket enterprises was 31,000, an increase of 7.4% over the previous year. Peeping leopard in the tube, this shows that whether online or offline, it is a scene that residents need for daily consumption.

However, brick-and-mortar retailers still need to be aware of the current situation. The author believes that with the increasingly diversified and personalized characteristics of residents' consumption demand, it is no longer the era of "one trick can eat the world" in the retail industry. In recent years, although the convergence and transformation of the retail industry has long been the trend of the times, hidden dangers still exist: first, the dazzling new formats may not be in a profitable and healthy state; second, whether physical retail can be reborn through simple digital transformation is still unknown.

In any case, only the change side has a new life, and the positive change of physical retail is far from the twilight years. In the final analysis, no matter how the format changes, only high quality and low price to meet consumer demand are the magic weapons for the retail industry to win. In addition, while focusing on the transformation of business formats to cope with fierce market competition, retailers must not forget that "integrity management" is the foundation of everything.

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