China's "most profitable" supermarket, this time "losing" a big deal!

Jiang Dongwen of the investor network

2024-06-02 21:54Posted in Beijing, creators in the field of science and technology

The giants have gone down the mountain, the past has come to an end, and the former supermarket king has been abandoned?

I haven't closed a store in 19 years!

Every time you open a store, you can only make money and not lose money;

The performance of a single store once surpassed Wal-Mart and Carrefour by more than 2 times;

That's right, it is RT-Mart, once known as the "most profitable supermarket", the former "supermarket brother", which rarely meets opponents in the field of supermarkets and is known as the "supermarket myth" by the outside world!

In the past, as competition in the retail industry continues to intensify, the myth of RT-Mart has finally been shattered.

This year's RT-Mart not only ushered in the largest wave of centralized store closures in 28 years, but also went from a profit to a huge loss of nearly 2 billion!

In fact, this is not only the end of an old supermarket, but also a realistic portrayal of the great changes in the retail industry.

Supermarkets, a once glorious industry, are now facing many difficulties, Wal-Mart, Yonghui, Wumart, RT-Mart and other supermarket giants are not having a good time, either losing money or on the way to close stores.

Can the mass closure of traditional hypermarkets and the turn to membership stores in an attempt to become China's version of Costco and Sam's Club become a lifesaver for RT-Mart?

01

Many years ago, going to the supermarket was still a pastime after dinner, but now only the elderly can be seen in the supermarket.

If you want to say that the supermarket that was often visited at that time, RT-Mart was definitely on the list, always crowded and lively.

However, time has passed, and today's RT-Mart has long been a matter of people, and the glory of the crowds in the past is not only gone, but also fell into the quagmire of losses after turning losses into profits last year!

Recently, Sun Art Retail (hereinafter referred to as "RT-Mart"), the parent company of RT-Mart, disclosed its 2024 financial year performance report for the year ended March 31.

According to the financial report, the company achieved revenue of 72.567 billion yuan, a year-on-year decrease of 13.3%; The annual loss amounted to 1.668 billion yuan, a year-on-year decrease of 2238.5%, and a profit of 78 million yuan in the same period last year.

RT-Mart's revenue has been declining for many years, and its losses are also expanding, and after a loss of 826 million yuan in fiscal 2022, it will finally turn a profit in 2023, but it will be beaten back to its original shape in 2024.

It is worth mentioning that 1.668 billion is also the largest loss since RT-Mart went public in 2011.

According to the financial report, RT-Mart's retail sales of goods decreased by 11.104 billion yuan compared with fiscal 2023, a year-on-year decrease of 13.8%.

RT-Mart's explanation is that the business contraction, rational consumption under the decline of customer unit price, in fact, the most fatal is the "closure of stores"!

According to the financial report, during the reporting period, the company closed 20 hypermarkets. As of the end of March 2024, the company has 472 hypermarkets, 32 medium-sized supermarkets and 3 M member stores.

Under the influence of store closures and personnel optimization, the number of employees in the company decreased by more than 20,000, and as a result, RT-Mart's business performance was still not improved. Same-store sales growth, the most important indicator of the retail industry, has been declining for more than a decade, with the latest annual level at -6.6%.

RT-Mart founder Huang Mingduan once sighed, "I won all my opponents, but I lost to the times; When the times abandon you, you won't even say goodbye. ”

One sentence describes the current predicament of RT-Mart and its parent company.

02

Looking back at RT-Mart's glorious history, it took only 12 years to become the retail champion of mainland China in just 12 years since it entered the Chinese mainland market.

RT-Mart has almost no rivals in the supermarket field to defeat it, and it has set a record of not closing stores for 19 years, which is a "god" in domestic supermarkets.

If the "working emperor" in the mainland of the mainland is Martin Lau, Zhang Xiaolong, and Fang Hongbo of the Midea Group of Tencent, and the working emperor of Hong Kong is Huo Jianning under Li Ka-shing, then Huang Mingduan is the "working emperor" of Taiwan, China.

In fact, Huang Mingduan is not the actual controller of RT-Mart, and RT-Mart was only a company under Taiwan Runtai Group before.

Yin Yanliang, president of Runtai Group, is Huang Mingduan's classmate and his Bole.

In order to repay Yin Yanliang's insight and talent, Huang Mingduan spent 20 years to make RT-Mart, which has brought nearly 15 billion yuan in returns to Runtai Group.

Therefore, we usually equate Huang Mingduan with the founder of RT-Mart and the builder of RT-Mart's retail empire.

In August 1996, Runtai Group established RT-Mart Distribution Co., Ltd., which was the predecessor of RT-Mart.

In 1997, on the old factory building of Runtai Textile Pingzhen Factory, RT-Mart's first store "Pingzhen Store" was opened.

In July of the same year, RT-Mart entered the mainland market and opened the first large-scale modern supermarket completely designed, planned, operated and managed by Chinese on the Huangpu River in Shanghai.

03

With the business philosophy of "fresh, cheap, comfortable and convenient", and a deep understanding of the local market, RT-Mart quickly occupied the mainland market like a dandelion, and gradually became the most familiar Chinese supermarket chain brand to consumers.

In less than three years, RT-Mart's revenue exceeded 24 billion yuan, ranking among the top three supermarkets in China in one fell swoop.

After the 2008 Beijing Olympic Games, China's economic development entered the fast lane, and RT-Mart's annual revenue growth soared to more than 30% for two consecutive years!

In 2010, RT-Mart surpassed Carrefour and Wal-Mart for the first time with sales of 40.4 billion yuan, ranking first in supermarket sales in the Chinese market, becoming a veritable "king of supermarkets".

A retail company that has only been established for more than ten years has long made Wal-Mart, the "world's first" retail supermarket, relegated to the position of "China's second" in the Chinese market.

RT-Mart's strength at that time can be imagined, every store is a business district, everywhere is the focus, Dugu has not met an opponent for several years, otherwise how would it have achieved a proud record of not closing a store for 19 years.

In 2011, RT-Mart's parent company, Sun Art Retail, successfully landed on the Hong Kong Stock Exchange, and at its peak, Sun Art Retail's share price reached a maximum of HK$13.4, with a total market value of HK$127.8 billion, making it known as the "most profitable supermarket" in China.

Unfortunately, with the rise of e-commerce and the change of consumer shopping habits, under the vicious competition in the industry, the first round of bankruptcy of the supermarket chain industry began, the disappearance of local head brands such as Xinyijia, and the farewell of many weak foreign-funded supermarkets to the Chinese market, RT-Mart gradually began to feel a little powerless.

Since 2013, RT-Mart's revenue has declined for the first time, which is a bolt from the blue for RT-Mart, which was once in full swing.

Since then, RT-Mart's average annual growth rate has plummeted, RT-Mart's popularity has been declining, its profits have been decreasing, and its passenger flow has become less and less.

Sun Art's performance in 2019 shows that the total revenue for the year was 101.868 billion yuan and the net profit was 2.834 billion yuan.

As of 2022, its total annual revenue will be 88.134 billion yuan, down 5.7% year-on-year, and its net profit loss will be 826 million yuan, down 136.01% year-on-year from 2021.

04

In order to recover the decline, RT-Mart has also tried various self-help measures, such as launching its own e-commerce platform "Feiniu.com" and increasing membership marketing, but it seems to have little effect.

In the first two years, RT-Mart made the strategic decision to "restructure hypermarkets", renovating and upgrading a number of old stores and opening new ones, which also led to the loss pressure of Sun Art Retail to a certain extent.

From the frequent closure of traditional hypermarkets such as Wal-Mart and Renrenle, it can be seen that the sunset trend of this business can be seen.

It has to be said that the situation is out of control, and the retail model of offline hypermarkets is being abandoned by the times. In the face of low-price competition in e-commerce, the price advantage of hypermarkets is no longer there.

At the same time, the rise of new retail formats such as community group buying, front-end warehouses, and membership-based supermarkets has further reduced RT-Mart's market share.

In the larger context, store closures are the norm in the retail industry. However, the aging of the hypermarket format, the decline in efficiency, and the urgent need for innovation in business models are common challenges for the entire retail industry.

Of course, this is not a decline in traditional supermarkets.

Kazuo Inamori once said, "Depression is actually the best opportunity for growth." ”

He believes that the recession period is the best time for enterprises to experience their minds and accumulate experience. Behind every crisis is a deep reflection on the nature of business and the selection and planning of future paths.

For local supermarket companies, taking advantage of this new challenge, they are constantly adjusting their posture and striving to seize the certainty of the future through self-innovation.

Let there be no supermarket in the world that is difficult to open!

As the "top stream" player in the retail industry, Fat Donglai has walked out of his own supermarket road, with the concept of "culture first, business second" and continuous service innovation, from shelves equipped with objects to meticulous staff care, the main "love and freedom" corporate culture in the industry.

The popularity of "phenomenal" has gradually made Fat Donglai an industry benchmark, and Yu Donglai has become more and more like "Ma Yun" back then.

Jack Ma also spoke highly of Fat Donglai: it has triggered new thinking for Chinese retailers and is a flag for Chinese companies.

The key value of Fat Donglai is that it has completely liberated the productivity of employees, and because it has been supported by high-quality employees from the heart, the refined management measures promoted by Fat Donglai can be implemented 100%, while in other enterprises may not even be 60%.

Lei Jun once said after visiting Fat Donglai on the spot: Fat Donglai is a "god" in China's retail industry!

Of course, Fat Donglai is not a god, but when you walk into Fat Donglai Supermarket, you can really feel: this is what God feels like!

For traditional supermarkets, the key to transformation is to grasp the needs of consumers.

As Zhu Xiaojing, President and CEO of Walmart China, said, the core of the transformation of the hypermarket format is to return to the customer and refocus on the consumer.

In fact, doing retail is very simple, the same price is better than the price, the same price is better than the quality, and the same quality depends on the service!

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