the wind of the membership manufacturer’s supermarket is getting stronger and stronger.
Since the popularity of cassava and roast chicken in the little red book, Sam’s supermarket, which has been dormant in China for more than 30 years, has finally entered the public’s field of vision, followed by the blowout of domestic membership supermarkets: as a typical paid membership supermarket, Sam’s club stores are expected to open 40-50 in China by 2022; Costco, the brother of the Chinese mainland, has opened its second stores in mainland China in Suzhou.
At the same time, domestic supermarkets are also carrying out drastic reforms.
Hou Yi (president of HEMA) threatened to “open 10 new x member stores this year”. Later, Tian Rui (CEO of Carrefour China) revealed that Carrefour member stores will expand the national layout and plan to expand 100 paid member stores in the next three years. With the membership storage track suddenly becoming crowded, the first problem in this scuffle is the supply side.
In October this year, a microblog of Carrefour’s member store presented the competition of all parties. It wrote in the microblog that on the day of opening, Carrefour’s Chinese member store was pressured by competitors, and suppliers bought back and bought out related goods, making many member consumers unable to buy. Later, hemax member store also said that the store had suffered a similar situation for a long time.
In addition to the problem of “one out of two” in supermarket supply, the membership fee has been criticized by the outside world. Xinmou observed that if Sam supermarket is queried on the search platform, entries such as “agent purchase” and “member one-day card” will appear frequently. Various problems directly point to the “acclimatization” of membership supermarkets in China. Therefore, this article will mainly discuss:
To this end, this article will mainly discuss:
The origin and development of double membership warehouse supermarket; Compared with ordinary supermarkets, what is the difference between membership supermarkets? Do we really need “membership business super”?
The past and present life of membership
Time goes back to the United States in the 1960s.
After World War II, the United States ushered in the first wave of baby boomers and entered the golden period of development. The gross national product increased from 523.3 billion US dollars in 1961 to 1063.4 billion US dollars in 1971. The scale of the middle class in the United States has expanded unprecedentedly, followed by the improvement of residents’ purchasing power. The closely related retail industry has also driven into the fast lane during this period.
Since the 1940s, the American supermarket industry has expanded rapidly. The proportion of supermarket channels in the sales of daily necessities and groceries has increased from 10% to 70%. The most popular supermarket is the discount supermarket. Wal Mart, the big brother of the business supermarket, is firmly seated in the throne of the industry.
With the increase of American population, the city began to expand from the center to the outside. At this time, the suburbs of the United States were developed, and the membership warehouse supermarket appeared when the daily grocery retail of the supermarket was close to saturation. It should be noted that the membership warehouse supermarket at this time is also similar to discount supermarkets and high-end organic food supermarkets, but as a subdivided field under the supermarket format at that time, it occupied a small part of the market.
As we all know, most of the well-known member warehouse supermarkets were born in the 1980s. At that time, the United States was in a serious stagflation stage, with high unemployment and inflation. Under the background of this era, most consumers were price sensitive, and low-cost and high-quality goods naturally became the main shopping demands.
Figure: American supermarkets expanded rapidly from 1940s to 1960s (source: Sino Thai Securities Research)
Looking back on the development history of Costco, the first member warehouse supermarket, you will find that at the beginning of its birth, member warehouse did not carry the label of middle class and petty bourgeoisie.
Costco’s predecessor is the price club established by sol and Robert price in Santiago in 1976. It is the first new member store for commercial buyers. Generally speaking, it is the wholesale market of commercial supermarket enterprises. It is the same as Metro supermarket originated in Germany. It mainly serves enterprise users.
Later, the founders of Costco found that many non enterprise consumers would also buy price club products by means of order matching. However, until 1980, after price club was listed, the founders decided to establish a new membership storage enterprise and decided to open it to ordinary consumers. The membership fee was lower than that of enterprise users. This enterprise was later Costco.
Low price is not the secret of membership warehousing.
After the crisis, the consumption concept of the American middle class has also changed. Consumers do not care about the membership fee as the consumption threshold, but care about the high quality of the goods they buy. At the same time, the consumption scene in the United States has also changed: living areas are becoming more and more scattered, the number of multi population families is increasing, and the pace of work and life is becoming faster and faster.
This also explains why most Americans are used to driving their pick-up trucks to the suburbs on weekends and going into the supermarket to buy household goods for a week. The packaging of warehouse member stores is also growing together with the super large refrigerator of American families. In constant iteration, the warehouse member supermarket has its current appearance and is becoming more and more popular in developed countries in Europe and America.
When we focus on the current domestic membership warehouse supermarket, we will find that the situation is very different from that abroad. Take Sam’s member supermarket, which first laid out the Chinese market, as an example. Sam, who opened a store in 1996, has served only a small number of middle-class people or returnees in China’s first tier cities in the past 20 years. Many people have not even heard of the name, let alone pay for membership fees.
It was not until 2020 that Sam became a punch in place with his online Red notes on the grass planting platform that Sam really entered the public’s vision, which was significantly different from the way that membership supermarkets became famous in the United States. Now the popular domestic Sam’s club store is more like a product catalyzed by the network, while Metro without “online Red gene” is much weaker.
In the view of insiders, “the exposure brought by the network is not a good thing. A large number of agent purchases and single card sales on the network platform have interfered with its original membership ecology to a certain extent. The punch card consumption brought by the network heat and the membership manufacturers who have always attached importance to long-term user value have also formed a conflict, which has buried hidden dangers for the expansion of membership in China.”
The domestic membership system can be divided into three types: single track paid membership system, double track paid membership system and free membership system.
The two track paid membership system widely exists in China’s e-commerce industry. The most famous is JD’s membership system. Ordinary users can consume on JD’s platform, but JD plus members will have more rights: free door-to-door returns and other additional services, that is, we are familiar with the “spend money to buy privilege”; RT mart, as a traditional Chinese supermarket, mostly adopts the free membership system. Consumers can apply for membership cards free of charge. The points accumulated through shopping can be used to exchange gifts and services. In the development of free members, in order to retain members, many supermarkets will also lower the price of some commodities, and then call them member special prices to attract consumers.
Whether dual track paid members or free members, the user stickiness is far lower than that of single track members.
The reason behind this is very simple: for membership warehouse supermarkets such as Sam’s club and Costco, their membership fees are used as passes for consumers to enter the supermarket for consumption. Consumers may not be able to consume because of the low price brought by free members, but they will regret the waste of membership fees caused by not entering the supermarket. This is what we often call loss aversion: People’s sensitivity to loss and gain is asymmetric, and the pain in the face of loss is much greater than the happiness in the face of gain.
The transformation of the membership system of supermarkets is actually a manifestation of the gradual transformation of the consumer market from “product-centered” to “consumer demand-centered”. The value of membership supermarkets on the long-term value of consumers often makes them pay more attention to products and channels.
The business model of monorail paid membership supermarket is to attract passenger flow through low-cost and high-quality goods, and rely on membership fees to obtain main profits. In other words: the foundation of membership system is that it no longer relies on price difference to obtain profits like traditional supermarkets, but as a service provider of paying members, it screens higher quality products in a strictly selected way, reduces consumers’ concerns about quality and shortens decision-making time. Therefore, most of the loyal customers of the membership supermarket are people who are willing to spend money on time or convenience.
In xinmou’s view, the membership warehouse supermarket itself is no longer a supermarket, but a service company. The membership fee charged is actually a ticket to the store. It replaces you to hire global buyers to select low-cost and high-quality products and build a warehouse for you. You can safely choose the goods you want and every penny you spend here, All represent a trust, and they take this trust to serve more people to earn service fees.
conflict between consumption habits and mechanism
The membership supermarket has a good landing in some areas, but it does not mean that it is the optimal solution for the evolution of business supermarkets in the future.
Let’s start with a set of data: as early as 2018, the number of middle-income groups in China exceeded 400 million for the first time, accounting for 31% of China’s total population. Although the number of the middle class has increased, it is mostly concentrated in the first and second tier cities, but the rent in these cities is not low. If they go out of the first and second tier cities and enter the sinking market, how many families can support a consumption of more than 1000 yuan at a time.
In other words, how many people in China are willing to pay for this service.
From the perspective of private consumption structure, the proportion of service consumption in domestic private consumption is much lower than that in developed countries. For a simple example, services and goods account for 50% of domestic private consumption, while American service consumption accounts for 70% of private consumption. Therefore, although people’s consumption ability is constantly improving, in terms of the current consumption structure, the consumption awareness of paying for services still needs to be cultivated, and it is unknown how many middle-class people are willing to pay for members all year round.
According to the domestic consumption habits, fruits and vegetables need to be fresh, without the storage habits of the United States. At the same time, because most of the domestic are small families, the large packaging of warehouse supermarkets will inevitably cause unnecessary waste, which itself violates the Chinese people’s consumption concept of thrift. In addition, Chinese people live relatively intensively, the logistics itself is relatively developed, and it is very convenient to buy life nearby. In addition, China’s small commodity wholesale market is perfect. For consumers who buy goods in batches, the wholesale market and e-commerce platform are enough to meet their needs.
A detail that can not be ignored is that the development of the supermarket industry has always been inseparable from the balance between supply and demand.
Taking community group buying as an example, this is a species that does not exist in foreign countries, but China is booming, incubating players such as prosperity, preference and Ding Dong shopping. This is because community group buying institutionalizes the habit according to the consumption habits of Chinese people, while the membership supermarket is on the contrary. It is trying to cultivate a new consumption habit by using the mechanism. Therefore, naturally, the market education cost of the latter is much higher than that of the former, and it is obvious that the former has a smoother landing, and the audience of community group buying in China is also wider.
Everyone will have their own answer to the question of whether there is a need for membership supermarkets. However, it is certain that the current savage growth of membership supermarkets must not be the optimal solution for the transformation of traditional Chinese supermarkets. It is worth looking forward to the birth of more retail formats suitable for China.
Author: Ruan Xue; Source: xinmou (ID: xinmouls), reprint authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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