Private supermarket chains, farewell in progress

Zebra consumption Xu Ji

The transfer of actual control of Hongqi chain has finally settled. Not surprisingly, Sichuan State-owned Assets Commercial Investment Co., Ltd. acquired a 6.91% stake in Cao Shiru's family and a 10% stake in Yonghui Supermarket, becoming the new owner of the southwest supermarket.

At the beginning of this year, the founder of BBK, Wang Cao, lost control of the listed company due to the unresolved liquidity crisis and the introduction of state-owned assets to bail out.

Because of poor management, everyone was unable to get out of trouble, so they had to transfer the control of the listed company to Xi'an state-owned assets.

Earlier, Yonghui Supermarket attracted a number of giants such as Dairy International, Tencent, and JD.com, and the founder Zhang Xuansong lost control. In the past two years, he has continued to reduce his holdings, and his shareholding ratio has been repeatedly reduced.

So far, the private supermarket chain giants have changed camps. Most of the founding generations chose to retreat bravely. Only the giants of Wumart, Jiajiayue and Meiyijia are still holding on, waiting for the next outlet.

Start

There may be many people who don't know that the supermarket, which "looks old", has only been in the Chinese market for 30 years.

In 1990, Humen Town, Dongguan, Guangdong, close to Hong Kong and Macao, gave birth to China's first supermarket chain, Meijia Supermarket, which opened the prelude to domestic chain operation.

In the north, the new format of supermarket chains has sprouted in a more unexpected way.

In 1994, Zhang Wenzhong, a postdoctoral fellow in systems engineering at Stanford University, who had worked in the central government, returned to Beijing to start a business and launched a MIS system and POS machine with independent intellectual property rights - management and cash register system, which was a key turning point for traditional grocery stores to modern supermarkets.

However, no one wants to use this advanced technology. In order to promote his own system, Zhang Wenzhong founded the first Wumart supermarket in Beijing and entered the retail industry by accident.

In those years, supermarket chains have taken root in major cities, with a dazzling array of goods, self-selected shopping models, and high-quality services, which have refreshed consumers and gradually formed a market atmosphere.

By 1995, China's supermarket chain industry ushered in a big wave. Foreign-funded supermarket giants are vying to enter the Chinese market, and domestic private supermarket chains have sprung up one after another in the past year.

At the beginning of that year, after years of preparation, Carrefour opened its first store in China in Beijing. This forced Walmart to speed up its entry into the Chinese market and settled in Shenzhen the following year.

In the same year, Li Binlan, who was later known as the "Iron Lady", left the Wanjia chain, the predecessor of China Resources Vanguard, and founded a new Wanjia in Shenzhen.

Wang Peihuan, the helmsman of Weihai Sugar & Liquor Station, opened the first Weihai Sugar & Liquor Station supermarket - it wasn't until 2001 that the name of the Times was changed to "Jiajiayue" (603708. SH）。

Zhang Xuansong, a young man from Fujian who didn't finish high school, got involved in shopping malls through beer agents after crawling at the bottom for many years, and also opened Yonghui Supermarket (601933. SH) was formerly known as "Gule Weili" supermarket.

"Entrepreneur" Wang Cao, after graduating from Xiangtan Commercial School, entered the food industry and was promoted to the business section chief of a state-owned enterprise at the age of 24. At that time, he found that the supermarket format that had been developing rapidly in coastal cities had not yet been set foot in Xiangtan, so he resigned decisively, and his wife scraped together 50,000 yuan to open the first backgammon (002251. SZ), which is also the first self-selected supermarket in Hunan.

In the years that followed, the entrepreneurial atmosphere of the supermarket chain remained unabated. In 1996, He Jinming resigned as general manager of the Shenzhen Metal Exchange and opened the first Renle (002336. SZ) supermarket. After 37 days of staying at Carrefour, he found the secret to success, "Their (Carrefour's) promotion strategy changes once a day, and I change it twice and three times a day."

It was also in 1996 that Cao Shiru's state-owned wholesale company opened its first community supermarket in Chengdu. Four years later, Hongqi Chain (002697. SZ) restructuring, and senior executive Cao Shiru led the MBO and became the actual controller.

In 1997, based on Meijia Supermarket, the originator of the industry, Ye Zhijian, the helmsman of Dongguan Sugar and Liquor Group, founded Meiyijia convenience store.

Over the past 30 years, the supermarket chain industry has experienced ups and downs. All the ups and downs began with the grand opening at the end of the century.

Hsiung-hsien

Chinese supermarket chain brands have sprung up like mushrooms after a rain, and after several years of gestation, they have quickly entered a golden age in the industry.

At that time, China's economy began to take off, residents' spending power improved, and the consumer market began to be active under the all-round pull of demand and supply.

In 2000, the list of the top 100 chains released by the China Chain Store & Franchise Association was dominated by state-owned enterprises, and Lianhua Supermarket and Agricultural and Industrial Supermarket ranked among the top five on behalf of the supermarket chain sector, and foreign and private brands began to emerge.

Ten years later, the pattern of the top 100 chain lists has undergone great changes, and the supermarket sector has made a great leap forward, and there has been a situation where state-owned, foreign-funded and private enterprises are divided into three worlds. Bailian (Lianhua), China Resources Vanguard, RT-Mart, Carrefour, Wal-Mart, Wumart, Zhongbai, Xinyijia, Haoyouduo and Yonghui are among the top 10 supermarkets.

Later, with the impact of e-commerce, as well as the intensification of competition and rising costs in hypermarkets, the supermarket chain industry entered the first round of large-scale elimination and consolidation.

The last time the new top 10 appeared in the top 10 list was in 2013. From 2014 to 2015, 14 stores were closed, and the annual sales revenue shrank by 3 billion in two years, and finally disappeared from the top 100 list in 2016. In 2017, Xinyijia started bankruptcy liquidation.

The collapse of the new best has sparked heated discussions, and the agricultural and industrial supermarkets have quietly disappeared from the retail world. More brands have been merged in the process of big fish eating small fish and big fish eating big fish, Walmart has acquired a lot of good things, Tesco has been merged by China Resources Vanguard, and so on.

During this period, most of the private supermarket chains started a round of independent growth against the trend and gradually developed into major players in the market.

After Yonghui Supermarket went public in 2010, the number of stores increased nearly 10 times in 10 years. At the same time, it started large-scale capital operation, raised the Zhongbai Group, joined hands with Lianhua Supermarket and Hongqi Chain, and invested in a large number of supply chain companies to form a unique "Yonghui system" in the retail industry.

Wumart's path is similar, on the one hand, it strengthens its store layout in the northern market, especially in Beijing, and on the other hand, it forms the "Wumart Department" by controlling Xinhua Department Store, acquiring Metro China, and incubating multi-point Dmall.

BBK, Hongqi Chain, and Jiajiayue also made great progress during this period. BBK supermarkets are almost open one by one, and the pride of the founder Wang is overflowing: "Seize the outlet, the money is actually very easy to make." ”

In the list of the top 100 chain stores in 2020, Yonghui became the supermarket leader, Wumart, BBK, Jiajiayue and Meiyijia were all selected as the top 10 in the sector, and private brands accounted for half of the top 10 supermarket chains.

At that time, although the supermarket chain industry as a whole was full of challenges, private supermarkets had their own unique skills.

First of all, they are all deeply involved in the region. Wumart is mainly in the north and has an unshakable position in Beijing; Meiyijia is mainly in the southern market and has only begun to move north in recent years; Yonghui mainly attacked Fujian and Chongqing in the early days; BBK, Jiajiayue and Hongqi chains are typical regional supermarkets, with in-depth layout in Hunan, Shandong (Yanwei area) and Sichuan (Chengdu market) respectively.

The advantage of regional supermarkets is that they can improve operational efficiency, brand influence and service capabilities through intensive store opening in the local market, and avoid the costs and risks of cross-regional operations.

Hongqi chain focuses on 5 minutes to the store, 5 minutes to buy, and 5 minutes to home. Therefore, the happy life of Chengdu people should have a credit for the red flag chain. Cao Shiru is also affectionately called "Cao Xiao" by Chengdu citizens.

Secondly, private supermarket chains are more flexible. Unlike foreign and state-owned assets that prefer the hypermarket model, private supermarkets have more abundant store types, most of which adopt a combination of regional large stores + community small stores, and Hongqi chain is directly positioned as a convenience supermarket.

In addition, during this period, fresh food has become the key point for many private supermarket chains to maintain growth and high profitability. Among them, Jiajiayue fresh food accounts for more than 60%, and the larger Yonghui supermarket is stable at about 40%, which is called "Yonghui in the south and Jiajiayue in the north".

告别

Thirty years in the east of the river, thirty years in the west of the river. Even the private supermarket chain giants, which were particularly eye-catching in the past few years, have begun to withdraw.

In 2019, He Jinming transferred the controlling stake of Renrenle to Qujiang Culture, retired as the second shareholder, and the actual controller of the listed company was changed to the Management Committee of Xi'an Qujiang New Area.

Renrenle started in Shenzhen, and later shifted its business focus to Xi'an, with a large number of assets in Shaanxi, and Xi'an state-owned assets actually acquired a local supermarket.

Transferring the company he founded, He Jinming was also very helpless. Renrenle attracts consumers with low prices and promotions all year round, and everyone is happy with shoppers, but the boss is very worried. The company's gross profit margin is at the bottom of the supermarket chain sector all year round, and it continues to lose money. If there is no one to rescue it, it may be delisted.

Yonghui Supermarket, as the former "light of China's retail", has been favored by capital giants such as Dairy International, Tencent, Jingdong, etc., the founder as early as 2014 to sell the position of the largest shareholder, later, Zhang Xuansong brothers dissolved the relationship of concerted actors, gave up the status of the actual controller.

With the help of capital, the company has become the flag-bearer of the new retail business in the private supermarket chain with the "Yonghui system" as the foundation. It has successively launched new retail businesses such as Super Species, Yonghui Life, and Yonghui Daojia.

However, with the substantial failure of the new retail exploration, Yonghui Supermarket suffered a heavy blow, with its business shrinking, falling into losses, and its market value under pressure. Founder Zhang Xuansong continued to reduce his holdings, and his personal shareholding ratio has dropped to 8.72%.

Under the temptation of opportunities in industries such as e-commerce and new retail, Yonghui Supermarket is not the only one that has paid tuition fees. Big-name private supermarket chains have basically invested, but in the end, they have all tasted the difference. This period was called "the lost five years" by Wang Fill.

The growth and profitability of traditional businesses are poor, and the development of new businesses is not smooth, and if they encounter external pressure, there is only one way to exit.

At the beginning of 2023, Wang Chu transferred a controlling stake in BBK to Xiangtan Industrial Investment, and Xiangtan State-owned Assets became the actual controller. The reason is that the giant commercial projects invested by BBK have encountered a liquidity crisis due to industry countercyclicals and financial policies. At present, the company is in the process of reorganization.

The foreign giants Carrefour and Metro have not yet been sold to Chinese companies; Sun Art Retail (RT-Mart) was brought under Alibaba's umbrella, and its founder Huang Mingduan left behind the classic words: When the times abandon you, you will not even say goodbye.

Originally, among the thousands of horses in the chain supermarket chains, the Hongqi chain was one of the leaders. The business continued to develop, with stable performance, and healthy cash flow, debt ratio and cash reserves.

Even so, the "Iron Lady" Cao Shiru also chose to retreat bravely.

On December 21, Hongqi Chain announced that the actual controller Cao Shiru and his son Cao Zengjun transferred a total of 6.91% of the company's shares to Sichuan Commercial Investment for a consideration of 552 million yuan, and gave up the voting rights of the remaining 20.72% of the shares within the abstention period. At the same time, Yonghui Supermarket, the company's second largest shareholder, also transferred 10% of the shares of Hongqi Chain to Sichuan Commercial Investment Investment. So far, the controlling shareholder of the company has been changed to Sichuan Commercial Investment, and the actual controller has been changed to Sichuan State-owned Assets Supervision and Administration Commission.

Prior to this, the Cao Shiru family had cashed out billions of yuan in the past transfer of shares and reductions, and it was a proper big winner.

Giving up the company that he led with his own hands, for Cao Shiru, there may be no other reason, he is really tired.

In the supermarket chain industry, with the existing business model, even if it is a top student Hongqi chain, there is huge growth and profitability pressure. In the first three quarters of 2023, the company's operating income was 7.641 billion yuan, a year-on-year increase of 0.89%, and the net profit attributable to the parent company increased by 13.99% year-on-year to 407 million yuan (including investment income of nearly 100 million yuan). This performance is quite good, but it is still not easy compared to other industries.

As for the exploration of new business, after the new retail page was turned over, everyone focused on member supermarkets and instant retail. However, the threshold for member supermarkets is very high, and there are high requirements for the supply chain and membership operation capabilities, and there is only one Costco so far, and instant retail has to face the dimensionality reduction of Internet giants Meituan, Alibaba, JD.com and even Douyin. Recently, Meituan Maicai changed its name to Little Elephant Supermarket, which means that it is menacing.

So far, among the private supermarket chain giants, only Wumart and Jiajiayue are still sticking to it. Of course, they also have their own pressures. Jiajiayue's growth and profitability myth may not be sustainable, and as for Wumart, the listing progress of the two companies, Wumart Technology (Wumart Business + Metro China) and Dmall, is not going well.

For Cao Shiru and other private supermarket chain creators, it may be difficult to wait for the next outlet of the industry, so it is better to give way to stronger capital parties and let them lead their "children" through the cycle.