week black duck zero sum game.
Founded in 2006, Zhouhei duck is a brand of stewed duck, goose and vegetarian products. From the completion of the first round of financing of Tiantu capital led investment in 2010 to listing on the Hong Kong Stock Exchange in 2016, it took Zhou Heiya only six years. After listing, Zhou Heiya’s development shows a weak trend. Since 2018, its performance has declined for three consecutive years.
According to the financial report data, from 2018 to 2020, the revenue was 3.212 billion yuan, 3.186 billion yuan and 2.182 billion yuan respectively, with a year-on-year decrease of 1.15%, 0.79% and 31.5%. The net profit of Zhou Heiya was 540 million yuan, 407 million yuan and 151 million yuan respectively, with a year-on-year decrease of 29.1%, 24.56% and 62.9%.
The continuous decline in performance, Zhou black duck in the original position of the three giants in the decline. According to public data, in 2020, another company, Huangshanghuang, achieved an operating revenue of 2.436 billion yuan, a year-on-year increase of 15.09%, successfully surpassing Zhou Heiya and ranking second in the industry.
For three years, profits have been declining, and revenue has been regressing continuously. Instead of breaking through the No.1 position of Jue Wei and Lu Wei, Zhou Heiya has been overtaken by Huang Shanghuang. What’s the problem with Zhou Heiya, who was once sought after by the consumer market and favored by the capital market? Based on this, this article will start from Zhou Heiya’s “product positioning” and try to dismantle the thinking errors behind its logic.
Meanwhile, the total sales volume and purchase unit price of Zhou black duck declined. According to the data, the total weekly sales volume of black duck in 2020 was 25800 tons, down 28.13% from 35900 tons in 2019; And the average consumption of Zhou black duck per purchase order decreased from 62.18 yuan in 2019 to 60.67 yuan, a year-on-year decrease of 2.43%.
The reason for the poor performance of the black duck in the week of 2020 was attributed entirely to COVID-19’s sharp decline in passenger traffic and declining sales. But is that really the case?
It is true that Zhou Heiya, whose store is headquartered in Wuhan, has been greatly affected by the epidemic, and its performance has declined greatly. However, it can not be avoided that Zhou Heiya’s performance has declined for two consecutive years as early as 2020, before the decline in revenue and bleak data. How can the company explain this situation?
In xinmou’s view, the decline of Zhou Heiya’s revenue and profit has long been foreseen. Zhou Heiya, which is located in high-end leisure, is different from the other two giants in pricing, taste, packaging, consumption scenarios, marketing strategies and other aspects. It is this kind of positioning that limits Zhou Heiya’s development space, and makes Zhou Heiya feel constrained in gaining customers and opening stores. For this conclusion, the author will be discussed in detail later.
Therefore, as we can see, Huang Shanghuang, which was founded six years earlier than Zhou Heiya, has been in the limelight in the first few years of Zhou Heiya’s establishment. However, since 2017, the revenue gap between the two companies has been narrowing. By 2020, Huang Shanghuang has achieved a reverse in terms of revenue and net profit, and successfully promoted from “third brother” to “second brother”.
In addition, for Zhou Heiya, the competitors are not just “big brother” Jue Wei and the new “second brother” Huang Shanghuang.
According to the data, Juewei, Huangshanghuang and zhouheiya only account for about 15% of the total market share of the brine products industry in 2019, especially the combined market share of zhouheiya and Huangshanghuang only accounts for about 6%. This also means that it is not impossible to run one or two giants out of the remaining 85% of the market.
Zhou Heiya is in a dilemma because he can’t compete with the other two giants forward, but also faces the breakthrough of other brands at any time backward.
From the product packaging point of view, different from the other two bulk based, Zhou black duck based on food safety considerations, adopts the packaging method of locking fresh. The disadvantages of fresh packing are obvious. The fixed weight reduces the purchase flexibility of customers, and the price of fresh packing is significantly higher than that of bulk packing.
Take three famous duck necks as an example. According to the data, the unit price of Juewei and Huangshanghuang is 25-35 yuan per order, while that of Zhouhei duck is 40-60 yuan per order. Not only that, Zhou Heiya, who is high-end, is also significantly higher than the other two in terms of product pricing. The daily price of 32 yuan / 250 g is about 1.6 times that of Juewei and Huangshanghuang at 39.8 yuan / 500 g.
On the one hand, for a single individual, the available product types are limited, which limits consumers’ choice of consumption quantity; On the other hand, high price positioning also has a certain inhibitory effect on the per capita consumption of consumers. From these two aspects, we can see that Zhou Heiya’s high-end strategy not only does not bring greater competitiveness to the brand, but also makes the company fall into the dilemma of empty fame and no sales.
In terms of channel laying, before 2019, zhouheiya has been mainly in the direct marketing mode, and the number of direct marketing stores accounts for more than 90% of the total number of stores. In 2018, zhouheiya’s self operated stores accounted for 86.5%, online channels accounted for 9.4%, and distributors and other channels accounted for 4.1%. This means that the operation of the company basically depends on the direct stores.
Although the profit margin level of the direct mode is significantly higher than that of the franchise mode, and it has certain advantages in product quality control and store standard unification, the direct mode also limits the spread of the company scale.
Compared with the franchise mode, the direct store belongs to the asset oriented mode, which requires high capital and manpower for the company, and its expansion speed is far less than that of the franchise mode. By 2020, the total number of zhouheiya’s stores is 1755, while the number of Huangshanghuang’s stores in the same period has reached 4627, which is twice that of zhouheiya. And from the beginning of 16 years, Zhou Heiya’s store expansion showed a weak trend, and the speed of store expansion was also declining.
The expansion of stores is the first step to seize the minds of consumers. The larger the scope of brand expansion in the country, the higher the popularity of the brand, and the higher the priority of consumers for the same category of products. At present, zhouheiya’s stores are mainly distributed in the first and second tier cities, covering only 121 cities. Compared with 338 in Juewei and 220 in Huangshanghuang, zhouheiya still has a lot of space to sink.
Restricted by the positioning of high-end brands, Zhou Heiya can’t meet consumers’ expectations for high-quality and low-cost products by relying on quality. However, the direct store mode with high self-esteem limits store development and market sinking. The resulting gap in scale is also the main reason for Zhou Heiya’s continuous decline in performance and industry status.
Zhou Heiya, who wants to differentiate by “high-end” positioning, is actually trapped in his own logical trap.
In April of 19, Zhou Heiya went online to lock the fresh new packaging. Compared with the old packaging, the new packaging is smaller in weight. It seems that it is intended to meet a small number of customers’ shopping needs, so as to break through the limit of consumer consumption and enhance the competitiveness of products. But compared with online stores, the price of offline stores is significantly higher, and the company itself invests more in online marketing, so most consumers are more willing to shop online, and the number of consumers entering offline stores is decreasing year by year.
If the high cost of rent, labor and transportation can not be converted into the consumption rate of customers entering the store, no matter how large the online traffic is and how high the consumption is, it is also a kind of consumption and waste for the company itself.
Since the company released the franchise in 19 years, as of October 2020, the number of franchise stores has reached more than 500. The main forms of franchise include: franchise, single store trusteeship and employee creation. It is not difficult to see that Zhou Heiya’s self price reduction is intended to break through the management radius by transforming the franchise mode, alleviate the pressure brought by the rising operating costs of Direct stores, and improve the performance.
But according to the 2020 annual report, the result is not ideal. Data show that in 2020, the revenue of Zhou Heiya’s self operated stores is 1.4 billion yuan, while that of its franchise stores is only 140 million yuan, accounting for less than one tenth of the total revenue.
In fact, the reason why the franchise store’s revenue is lower than expected is very simple. Compared with the other two companies, Zhou Heiya’s franchise was opened up a little too late. When most of the prime locations and consumer markets were completely divided up, Zhou Heiya began to expand its stores. Naturally, there was no competition.
Secondly, because Zhou Heiya adopts the supply mode of central supply and national distribution, the construction of supply chain is very important for the development of sales. However, judging from the supply system of Zhouhei duck, there are only four production capacity bases in China, namely Wuhan in Hubei, Cangzhou in Hebei, Dongguan in Guangdong and Nantong in Jiangsu. The base in Chengdu, Sichuan, is still in production. If you look at Juewei food, it has more than 20 production bases in China, and even Huangshanghuang has six production bases.
The low production capacity brought by the supply chain shortage has hindered the expansion of stores, and from the consumer side, it often receives feedback from problems such as the product date is not fresh. The decentralized production base layout, large distribution radius and long average distribution time all lead to the performance of franchise stores far from expectations.
Because of this, Zhou Heiya’s joining requirement has dropped from the initial 5 million yuan of self owned funds to 300000 yuan in June 2020. The further lowering of the franchise threshold reflects Zhou Heiya’s embarrassment of trying to lower her figure and being beaten in the face by reality.
In the view of Zhou Fuyu, the founder of Zhou Heiya, “Zhou Heiya’s biggest opponent is himself”. But now, Zhou Heiya is in a dilemma. I don’t know whether Zhou Fuyu will keep the original argument.
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