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Whether or not it is willing to be mythologized, the precedent of "retail + service industry" opened up by "it" in domestic supermarkets has indeed formed a harmonious triangle in the mall with high-quality goods, ultimate service and happy employees.
May 12, 2023
Source: New Retail Business Review
Author: Koala is a deer
With the recent 2022 financial reports of supermarket listed companies, their overall unoptimistic situation has once again appeared in front of everyone. Most enterprises are still mired in losses, and closing stores to help themselves has become the main rescue measure.
Yonghui Supermarket alone has lost the profits made in the previous four years in the past two years. In order to cope with changes in the market environment and consumption habits, supermarket enterprises continue to increase their exploration of new directions such as membership stores and discount stores.
How to attract customer flow? How to achieve consumption conversion of customer flow? How to bind passenger flow with high frequency?
By solving these problems, supermarket companies may be able to go further in a new direction.
This is probably a major reason why Fat Donglai frequently attracts attention from all walks of life.
Always popular because of "peculiar" services, known as the "business legend of fourth-tier cities", established for more than 20 years and has never stepped out of the boundaries of the local province... Fat Donglai's "maverick" in creating an offline service experience seems to be a key way to solve the above problems.
For example, not long ago, first the founder Yu Donglai angrily denounced the overtime culture, and then some consumers said on social media that they felt that the movie was too ugly after watching the movie at Fat Donglai Cinema, and ended up refunding half of the movie ticket money.
In this regard, Fat Donglai Cinema said that they do have this regulation, if you feel that the movie is ugly within 20 minutes of the end of the movie, you can refund half of the ticket price.
Source: Little Red Book
Every operation of Fat Donglai can always accurately poke the hearts of all living beings: it can not only think about the rights and interests of employees, but also pay for the interests of consumers.
Ma Yun, Lei Jun and others have personally gone to Xuchang, Henan Province to visit and learn from Fat Donglai. Lei Jun once said in Weibo: "Fat Donglai, retail in China has always been a god-like existence. Ma Yun said: "Fat Donglai is a mirror that can reflect the shortcomings of other enterprises. ”
Some say that no supermarket in China can replicate it; Others say that Fat Donglai himself cannot replicate himself anywhere else except Henan.
01.
Hiro Kitakami doesn't believe in emotions?
Fat Donglai can be called a "detail maniac", and its thoughtfulness of service has almost reached the level of "only you can't think of it, you can't do it without it".
For example, there are 7 types of shopping carts for customers, each with a specific function - the shopping cart for the elderly is equipped with a magnifying glass so that they can see the product and description clearly; Children's strollers carry small flags for parents to find. Another example is that there are disposable gloves for picking up goods in the fresh goods area, and disposable raincoats are prepared for customers on rainy days... There are too many details like this in Fat East.
In fact, such details do not add much cost, but they can firmly capture the user's psychology. The emotional value of "buying happily and reassuringly" has been sublimated in the service of Fat Donglai, forming an emotional bond between merchants and consumers.
Source: Fat Donglai
However, playing the emotional card is not useful everywhere, and there are many consumers who are not interested in the added value provided by supermarkets.
Rosie, who lives in Shanghai, is a post-90s girl who loves to go to the supermarket, and one of her hobbies is to search for a variety of supermarket goodies online or offline. Freshippo, Dingtone, ALDI, as long as it is a well-known fresh e-commerce or supermarket new products, Rosie is interested in personally doing the evaluation.
Rosie admits that every time she goes to the supermarket, she "purposefully takes the checkout and leaves", and does not care too much about how good the service of the merchant is:
"Shanghai's supermarkets, whether it is the service level or the shopping environment, are basically the same. Besides, the pace of work and life is too fast, and I won't spend too much time in the supermarket, let alone care about these details. ”
And, for services, Rosie has her own understanding:
"In supermarkets, the most important thing is to see whether the goods sold are good or not, and service can only be regarded as the icing on the cake. I always believe that merchants have limited energy and limited resources. If you spend your mind on service, it will be difficult to use 100% of your strength in product selection and quality control. Moreover, this limited energy and resources will become more prominent after merchants expand to first-tier cities. ”
As the fame of Fat Donglai grows, the call for "petition" Fat Donglai to come out of Henan is getting louder and louder. However, local fans in Henan do not think so.
On the Little Red Book, there are not a few people who do not want Fat East to open up territory. Local people in Henan have expressed concern that the resources allocated by Beijing, Shanghai and Guangzhou will crowd out the Henan region, and the quality of services and goods will not keep up.
Fat Donglai, who has always grasped both products and services, if it really enters the north, Shanghai and Guangzhou, will it care about one or the other? How will Yu Donglai weigh the distribution of resources between his base camp Henan and other regions?
In fact, Yu Donglai has long given his own answer.
02.
Why not go out of Henan?
In 2019, Yu Donglai publicly said that Fat Donglai will do what it can, and it is enough to serve several areas of Xuchang, and will not blindly expand and lose quality. This has not changed to this day.
The reasons behind Fat Donglai's delay in marching into Beijing, Shanghai and Guangzhou are multi-layered.
First of all, in the supermarket retail sector, the fierce competition in Beijing, Shanghai and Guangzhou is obviously several levels higher than that in Henan.
Living in Shanghai, where there are many supermarkets, Rosie loves to watch "fairy fighting".
"In fact, most supermarkets in Shanghai now sell goods, the overall cost performance is still good, after all, the pressure of competition is there. Freshippo, Sam, Costco... What kind of supermarket don't have it. If you're selling something that's not good enough, or if the price is inflated, someone else will turn around and go elsewhere. ”
Indeed, in the local retail industry, the brand positioning is relatively high, so the product premium is high. But this law will disappear once it reaches first-tier cities.
"There is a must-buy list of fat donglai on the Internet, and I specially went to see it. Like taro mashed mochi cake, garlic baguette, popping cake, there are too many similar products in Shanghai. How delicious Fat Donglai can be, I think it needs to be re-evaluated.
As for clothes disinfectant, dish soap, I can't understand even more, unless the goods that bloom everywhere are particularly easy to use or particularly cheap, is it really necessary to go to Fat East to buy them? ”
When it comes to price, we have to mention the issue of cost.
Counting up, not to mention the boundaries outside Henan, even Zhengzhou, the capital of Henan Province, has not yet opened a fat east. In this regard, Yu Donglai's explanation is very straightforward:
Compared with Xuchang, Zhengzhou's store costs, employee benefits and other comprehensive costs are much higher, Zhengzhou's housing prices are high, and the salary level given by Fat Donglai is not competitive in Zhengzhou, so it is not suitable for copying.
In Xuchang, Fat Donglai has established a perfect supply chain and realized one-stop services in storage, distribution and other links.
But after stepping out of Henan's boundaries and coming to first-tier cities, can Fat Donglai's supply chain advantage continue to be maintained? This requires a big question mark.
Moreover, in order to maintain such an advantage, how much human, material and financial resources will need to be expended will be an account that needs to be painstakingly calculated.
Finally, among the corporate characteristics of Fat Donglai, "people" is the most scarce element.
The service characteristics of Fat Donglai need employees to run throughout. Once the expansion radius of Fat Donglai expands, the corresponding unpredictability will also increase.
For example, Fat Donglai recently announced that it will delegate the right to erase zero to employees, not only to further improve the consumer experience, but also to enhance the sense of responsibility of employees. However, if such authority is fully spread to the whole country, it is easy to cause uncontrollability.
Source: Qilu Evening News Weibo
Frequent mopping, helping customers carry goods, and making professional product introductions for customers are all requirements put forward by Fat Donglai to employees. But it's all based on employees having enough autonomy.
Fat Donglai's salary level has always been the highest in Henan's retail industry. High salaries and benefits can attract the best employees, so as to implement high-quality services to the end.
Employees' autonomy stems from a sense of belonging, which is endowed by corporate culture. Although revenue is not the be-all of a company's culture, it is an important part of it. Because if it is difficult to recruit excellent employees, their competitiveness will not be effectively played.
Similarly, the problem of "people" also fell on Yu Donglai.
Fat Donglai was established from scratch by Donglai, and its corporate culture is closely related to Yu Donglai's personal temperament, once expanded, it is inevitable to need hierarchical management, this corporate culture is difficult to inherit, and it is difficult to grasp victory.
03.
What if you can't get out of Henan?
Although Fat Donglai, who punched Carrefour and kicked Wal-Mart in Henan, is known as the "Haidilao of retail", it does not want to be "wanton" like Haidilao.
In 2012, Fat Donglai suddenly stopped its expansion in a state of overwhelming strength, and within half a year, closed 16 stores that were still profitable. Quietly, guarding a small territory, this persistence is more than twenty years.
In the eyes of some venture capitalists, Fat Donglai, which has never gone out of Henan, is a typical regional enterprise and is not replicable. However, this does not mean that Fat Donglai is not popular with investors.
Fat Donglai is very good at making money.
In other words, if Fat Donglai does not have the need for financing, it naturally does not need others to invest money.
Although Fat Donglai has not announced its operation, according to Liu Dong, a former executive of Fat Donglai, in 2020, the average gross profit margin of Fat Donglai Supermarket is about 30%. Horizontal comparison, the gross profit margin of Yonghui Supermarket in 2020 is 21.37%, and the gross profit margin of Fat Donglai is also the first tier in the industry.
Taking the Fat Donglai Life Square supermarket as an example, the sales of the 23,000-square-meter supermarket in 2021 will be 410 million yuan, and the ping efficiency will reach 17,826 yuan, which even exceeds the average level of domestic first-line high-end supermarkets (14,106 yuan).
Fat Donglai Supermarket, picture source network
This profitable company sometimes disdains to make money.
In 2021, Fat Donglai directly announced the cost price of goods and adjusted some product price tags, and disclosed the gross profit margin of self-operated products in its public description: the maximum initial gross profit margin is 20%, and it is not allowed to exceed 25% in the future.
All these seemingly strange, but deeply popular company cultures are due to Donglai's advanced business philosophy.
Fat Donglai began to operate in the "self-operated + self-picking" model very early. Food, beverage, tea, seasoning, home and other categories have implemented the self-operation strategy to the end, and the high cost performance of the self-operated brand has formed a large differentiation, which not only increases the gross profit margin, but also opens up the brand awareness.
As early as 1999, Yu Donglai followed the foreign retail industry at that time and proposed the bold concept of "return if you are not satisfied". Imagine a groundbreaking move in an age that has not yet entered the millennium. As a result, Fat Donglai encountered a wave of malicious returns "as expected".
But Yu Donglai still persevered.
Today, it's not just online retail that has achieved a comprehensive seven-day no-reason return, but also the concept of returning goods if you are not satisfied in supermarkets such as Freshippo.
Yu Donglai, who was a millennial pre-millennium, still has advanced business acumen, and standing in 2023, Yu Donglai, who does not choose to expand, naturally has his ideas.
Some people may say that Fat Donglai can't go out of Henan, not Yu Donglai's active choice, but a helpless move. In fact, active or passive is not so important.
Let's ask, a national chain supermarket, a regional retail leader, which is better or worse, itself has no fixed number. In Donglai's heart, it is understandable that he does not like fast business, but only likes stable business.
The consumer can always choose his favorite supermarket, whether it is because of the service or the product; Whether it's because of the culture, or because of the boss, these are all part of a business.
At the moment, every part of Fat Donglai seems to have a place in the retail market.
Whether Yu Donglai is willing to be mythologized or not, his advanced concept has indeed opened up a precedent for domestic supermarkets "retail + service industry". High-quality goods, ultimate service, and happy employees have formed a harmonious triangle in the shopping mall of Fat Donglai.
However, such an advantage needs to be added to a category: in the Henan base camp.
Xu Changren said that only on Tuesday, Xuchang did not have a traffic jam, because Fat Donglai was closed on the day.
So dare to ask, what is the harm if Fat East does not go out of Henan?
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