Source: Times Finance Author: Zhang Xuemei
Source: Hema official
The price war set off by Hema and Sam's is spreading to fresh food e-commerce and store channels.
At the end of July, Hema "Moving Mountain Price" was launched in Beijing and Shanghai, with discounts covering fruits, meat, poultry, eggs and milk, aquatic products, dairy baking, drinks and other categories. Sam's "fight" made this wave of confrontation particularly out of the loop. The two sides pulled prices on Internet celebrity items such as durian mille-feuille cake, and #Hema Sam's business war killed crazy#The entry in Sina's hot search has been read more than 130 million.
On August 21, Hema extended the "Moving Mountain Price" to 15 cities including Guangzhou, Hangzhou and Chengdu; On the 25th, the Hema X member store launched the "Moving Mountain Price" and buying and giving activities.
Meituan Grocery launched a "tug-of-war price" in Beijing, Shanghai and other cities, RT-Mart launched "no noisy price" in Shanghai, RT-Mart told Times Finance that the "no noisy price" offer was extended to more cities on August 25.
Tian Xin, who was in Guangzhou, told Times Finance that Sam needs to apply for a card, the amount is too large, although the price is not expensive according to the quantity, but the price reduction of Hema this time is very strong, the price of Swiss rolls has been reduced from 39.9 yuan to 26 yuan, "As a lover of mochi and Swiss rolls, I will support Hema and Sam to 'fight'." ”
The user overlap rate exceeds 40%, and Hema and Sam grab customers
This round of Hema and Sam's "price war" first started from Beijing and Shanghai, which are also the two cities with dense membership stores and fierce competition. In addition to Internet celebrity products such as durian mille-feuille cake, mooncakes, watermelons, eggs and other commodities are participating in this "price war".
Data show that since August, durian mille-feuille cake, sunshine rose green and other "moving mountain price" products have been listed in the best-selling list of Freshippo. Beijing and Shanghai, which were the first to ignite the war, have also become one of the cities with the highest average store sales.
A number of consumers told Times Finance that Freshippo's launch of the "Moving Mountain Price" successfully stimulated its consumption. A Beijing consumer said that after seeing the hot search of the price war between Hema and Sam on Weibo, he placed an order for Internet celebrity products such as durian mille-feuille and Swiss rolls on the Hema APP.
Source: Hema official
According to new retail expert Bao Yuezhong, this competition is more about marketing events around price wars. Merchants lowered prices, used media communication, and speculated on this event, driving the attention and communication efficiency of the two brands of Hema and Sam to further improve. "At present, it seems that Freshippo has seized this opportunity to expand the discount of a few items concentrated in Shanghai and Beijing to more categories and more cities, which can fully demonstrate Freshippo's price power advantage."
In fact, the competition between Hema and Sam is gradually heating up. As of June 2023, Freshippo has opened more than 300 Hema stores, 68 Hema outlet stores, and 9 Hema X member stores nationwide, while the number of Sam's China stores has reached 45. In May this year, Hema launched the 658 yuan Diamond Card, which is benchmarked against the Sam's Excellence Card, but the price is slightly lower than the 680 yuan Excellence Card.
In November 2021, Sam announced that it had more than 4 million paid membership users in China; At the end of last year, Sun Shuo, general manager of Hema X member store, revealed that the Hema system has nearly 3 million paying users across the country. However, the overlap between the two customer groups is high, and the data of the Yuehu iAPP shows that as of June this year, the overlap rate between Sam's and Freshippo users reached 43.1%.
In recent years, Sam has frequently permanently reduced the price of many products such as Swiss rolls, and in this case, Hema has also taken the route of discounting, and in more than one year, it has opened 68 fresh outlet stores.
A few days ago, Hou Yi, CEO of Freshippo, said in an interview with Lianshang.com, "If we (price war) can't compete with competitors, it means that consumers will choose others instead of us in the future." So our price power competition is not a day or two, but a long-term state. ”
Bao Yuezhong analyzed Times Finance and Economics, Hema wants to highlight the price advantage also faces many challenges, "The overall price advantage of Hema is not particularly obvious, but I think Hou Yi's idea or goal is correct, and he will pave the way for him to achieve price adjustment in the future by spreading the 'moving mountain price'." ”
Meituan joins price war, RT-Mart launches "no noisy price"
After Hema and Sam stirred up the atmosphere, Meituan Grocery and RT-Mart also joined the battle.
Meituan grocery has launched a "tug-of-war price" on the app, mainly based on its own brand like chef products, with the slogan "faster, better, lower price", suspected of benchmarking Hema "more, fresher, more affordable". The homophony of tug-of-war (box) has also been ridiculed by the outside world: Hema "moving mountain price" removes Sam, and Meituan "tug-of-war price" pulls out Hema . Although Hema refutes the rumor that "moving the mountain price" refers to the spirit of the fool to move the mountain, the popularity of the homophonic meme remains high.
It is reported that Meituan will carry out regular promotions in the middle of the month, and the "tug-of-war price" will only be launched in the two cities in the north; Another entrant, RT-Mart, has launched "no quarrel prices" in multi-city stores and online channels.
On August 18, RT-Mart launched "No Noisy" in the Shanghai area, which also seemed to shout the melee between Hema, Sam and Meituan. Times Finance compared prices and found that its mochi, croissants, fresh milk, salmon and other goods were priced lower than Sam's. RT-Mart told Times Finance that the "no noisy" offer has been extended from Shanghai to Nanjing, Suzhou, Wuxi, Nantong, Kunshan and other cities on August 25.
Source: RT-Mart official
As the first store to join the melee, RT-Mart has been actively seeking changes in recent years. On the one hand, RT-Mart launched paid membership stores in Yangzhou, Nanjing and Changzhou to compete head-to-head with Sam, and on the other hand, it built a supply chain, and on July 29 this year, RT-Mart upgraded its own brands "Runfa Workshop" and "Haomai" to promote the "differentiated commodity strategy".
This may be related to its performance. In FY2022, RT-Mart's parent company Sun Art Retail (06808. HK) recorded its first loss, with a loss attributable to owners of the company of 739 million yuan, down 133.9% from the same period last year. In fiscal 2023, the profit attributable to owners of the company turned into a profit, but the revenue during the period was 83.662 billion yuan, down 5.1% year-on-year, and continued to bottom out to a new low in nearly a decade.
RT-Mart's performance and transformation crisis are also common problems faced by stores. According to data released by the National Bureau of Statistics on August 15, from January to July, the retail sales of convenience stores, professional stores, brand stores and department stores in retail units above designated size increased by 7.5%, 4.5%, 3.5% and 8.2% respectively year-on-year, while only supermarket retail sales decreased by 0.5% year-on-year.
According to the list of the top 100 supermarkets released by CCFA in 2022, Carrefour and BBK have both withdrawn from the TOP10, Hema has entered the top 10 with 300 stores, and JD Qixian has ranked 35th on the list with 60 stores, and there is a trend of reshuffling the head enterprises of supermarkets.
Marketing expert Lu Shengzhen stressed to Times Finance that the price war is a sign that supermarkets have entered the stage of stock competition. After that, the price war will force the competition between brands to shift from the front-end to the back-end of the original product procurement, cooperation with upstream suppliers, warehouse and logistics system optimization and other factors, with sufficiently low price costs and operating costs to support high-quality and low-price terminal competition needs, thus forming a virtuous business operation cycle.
At the same time, he said: "This is bound to make consumers superimpose the price attention index on the basis of the value of goods, and the management costs and marketing costs that enterprises need to pay will be huge and irreversible." ”
Times Finance noticed that although it did not play homophonic terriers like RT-Mart, Yonghui Supermarket and China Resources Vanguard all launched price discount activities of varying degrees. This round of "price war" is also reminding supermarket enterprises that only by continuously improving commodity organization capabilities, supply chain operation capabilities and price power can they go further in the future competition.
(At the request of interviewees, Wen Nakada Xin is a pseudonym)