Just seven months after opening, Beijing Hema X Member Jianguo Road Store announced that it would cease operations on May 31.
The special feature of Hema X Member Jianguo Road Store is that it is located in the CBD area of Beijing, adjacent to the top SKP shopping mall in Beijing, surrounded by Wanda Plaza, New World Department Store and other supermarkets and high-end office buildings, Walmart has been operating at this site for 16 years, and in October 2023, when the Hema X Club "took over", it was thought that it could attract a large number of users with the most spending power in Beijing.
Why was such an iconic X Club store closed so quickly after only 7 months? On May 17, the first financial reporter visited the store. An employee told reporters that the main reason for the closure was that "there is not so much passenger flow, and if you don't make money, you lose money." "
As of press time, Hema has not made an official response to the reason for the closure. Another person close to Hema told reporters that the closure of the store is not a problem of business format and operation.
Why is the Hema X Club closed? Is the paid membership store still a suitable format for Hema in the future? Behind the closure of an X member store, it is worth paying more attention to whether it contains Hema Fortune's choice for the future.
When the store is closed
According to the announcement of the Hema APP, before the official cessation of offline business on May 31, the Jianguo Road store of Beijing Hema × members will stop placing orders on the online APP from May 30, 2024 (some delivery areas will be switched to the distribution of Beijing Hema x Member World Flower Shop), and the reason for the closure shown in the announcement is "business adjustment".
In fact, the reporter learned from the offline store staff that before the official closure of the store, the store's fresh food, fruits, baking, cooked food and other new categories every day will be closed on the evening of May 20.
In the shelf area of beverages and daily necessities, there have been traces of not being new for a long time. The reporter noticed that although a nearly ten-meter-long beverage container was full, there were actually only six or seven SKUs, and some goods in the freezing area showed clearance prices, while empty shelves had appeared in the detergent area.
In addition, the above-mentioned employees told reporters that as early as February this year, the employees of the store had left many one after another.
Snack shops around Hema stores will also be affected, with a stall owner telling reporters that his shop will be closed for at least 10 days after Hema closes. On the one hand, the closure of Hema will reduce the number of users on this floor of the mall, and on the other hand, the stall owners have heard that a new supermarket is about to settle in, and it is inconvenient to open a store during the renovation of the new supermarket.
Approaching the lunch break, the first financial reporter came to the store and found that there were only about 20 consumers entering the store, which made the store with a business area of more than 19,000 square meters seem even more empty and deserted. Among the customers are some elderly people and couples hanging out, and although it is located in the core business district, there are not many people dressed as office workers.
At the same time, the reporter noticed that in the shelf area, the production date of some milk, snacks and other products is still in October 2023, and the sales of some goods are not smooth.
"When it first opened, there were activities, and it was crowded. Now I feel that there are more staff than customers, the big supermarket is empty, and there is no need to queue up for tasting. In April this year, a consumer commented on the Dianping section of the store.
A consumer who often visits the store told the first financial reporter that when it first opened, the store had a rich variety of products, fresh goods, a variety of tastings, and free strollers, etc., and there were many people. However, the amount of goods in the membership store is too large, and it cannot fully match the shopping needs of CBD customers. A few months ago, it was clear to him that the store was deserted due to the decrease in customer traffic.
Some consumers also mentioned that the store's goods are good and fresh, but the packaging is too big to eat and waste, and the price is too high.
Nowadays, many consumers who come to the store have learned the news of the store closure in advance, and whether there are discounts and what to do after the membership card are the questions they are most concerned about.
Some consumers are concerned that after the store closes, will Hema open a new X Club store in Beijing? In this regard, the store staff said that they were not sure, and the reporter learned that some employees may be transferred to other Hema fresh stores in Beijing after the store is closed, but they have not received a notice of the new store opening plan.
Where is the payment model headed?
X Club was once seen as the second growth curve outside of the Hema Fresh business. Among them, Hema Fresh emphasizes the user's "home" experience to a large extent, while the X membership store emphasizes the user's "in-store" offline experience. Behind the membership system is actually consumption stratification, especially for middle and high-income consumers.
Now what makes some Hema members puzzled is that in the Hema X member Jianguo Road store, the membership code is no longer required to enter the store, and the first financial reporter was also told at the checkout that no Hema member can also buy goods in the store.
A Hema member told reporters that this made her feel that the Hema membership had lost its meaning, and some of the experience was "deprived".
Recently, there have been some fluctuations in Freshippo's membership operation strategy. In December 2023, Hema adjusted its membership policy and stopped opening new paid members. On April 18, Hema announced the resumption of membership management and increased membership rights, making the industry believe that Hema has returned to the track of attaching importance to membership business.
According to public information, as of the end of 2022, the scale of paid members of Hema is close to 3 million, and the annual membership fee alone can contribute 588 million yuan to Hema in revenue. However, as an important part of the paid membership experience, the operation of the Hema X membership store remains to be seen.
According to the information of the Hema APP, at present, Hema has a total of 9 X member stores in Beijing, Nanjing and Shanghai, and the Shanghai Hema X member Zhenru store has ceased business from March 31, 2024, in preparation for the relocation to the new flagship store of the Hema × member store - Taopu flagship store in Putuo District, which will open in the second half of the year.
This means that after the closure of the Hema X member Jianguo Road store, for a period of time, there will be only 7 Hema stores across the country to serve millions of paying users. At the same time, it is worth noting that the soon-to-be-closed Hema X member Jianguo Road store is also the latest X member store to open.
In January 2023, Hou Yi, the founder of Freshippo, announced that Freshippo's main business Hema Xiansheng would be profitable, but so far, Hema has not announced a full profit. This means that other formats, including Hema X Membership Stores, Outlet Stores, Black Label Stores, etc., may have dragged down the overall profitability of Freshippo, among which the balance between cost and profitability of X Membership Stores, which occupies a large area and has high rental costs, has always been a problem.
"The closure of stores is usually related to its operating conditions, and Hema has recently made management adjustments, and it is necessary to observe whether its business strategy will be adjusted." Zhang Yi, CEO and chief analyst of iiMedia Consulting Group, told the first financial reporter that on the whole, the model of warehouse membership has been verified in brands such as Sam's and Costco, and in his opinion, X membership store will still be a direction for Hema in the future, but in terms of products, services and marketing, Hema is still more following the above brands, and how to optimize and innovate is what Hema needs to consider.
Behind the warehouse membership store, the competition is still goods, services, and supply chains, but in fact, there are no absolute barriers to each product.
In the future, it remains to be seen how the format of Hema paid membership stores will develop. Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, said that at this stage, he did not see that Hema had a particularly clear layout and plan for the paid membership store format. He believes that whether the Hema X membership stores will increase or shrink in the future may have a lot to do with the operation of the existing main business formats of Freshippo.
In his opinion, at present, the Hema X membership store is opened against Sam's, and it is aimed at middle- and high-income groups, and there is not much difference from the main format of Hema Xiansheng. It is not particularly clear whether the Hema X Club is based on the goal of profitability or other goals, which is the main reason why the Hema X Club is still in the exploratory stage.
"Will Hema continue to operate in multiple formats and be able to achieve profitability at scale? Hema still has a lot of strategic direction to solve, and only after clarifying the strategic development direction can the development direction of paid membership stores be clarified. Zhuang Shuai said.
(This article is from Yicai)