China Food

Why can’t the 100 billion market accommodate the old brand cake when it loses money, closes stores and goes bankrupt?


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cake roll to new retail?
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Cake is becoming a high growth category.
According to youzan data, the market scale of China’s baking industry will reach 235.8 billion yuan in 2020, and is expected to continue to grow at a rate of about 7% in the next five years. Among its subdivided categories, cake achieved a scale of 97.3 billion yuan with a market share of 41%, ranking first.
source: youzan
Unfortunately, driven by the strong growth rate of the market, we have seen many old enterprises close their stores and exit frequently.
First, Christine, the “first baking stock”, lost money for 8 consecutive years; Then the Shanghai cake chain brand yizhiduo closed more than 30 stores overnight; Donghai Tang, one of the largest chain baking brands in Guangzhou, fell into the crisis of closing its stores.
All this seems to be attributed to the epidemic. However, it is worth noting that the trend of closing stores in this industry began as early as 2014.
In Shanghai this year, more than 300 restaurants were closed every day, including cake stores. When the rent of offline stores rose sharply, even Christine closed 100 stores in 2014.
Christine’s current situation is just a microcosm of the traditional cake industry, and more brands are quietly declining. What is exposed behind this is a common pain point in the cake industry.

Market development can not pull brand growth?

Generally speaking, traditional cake shops have two business models;
One is the central factory + distribution mode, that is, after the central factory centrally produces products, they are distributed to each store. Christina and the first mock exam have been using this model to solve the problem of product scale, standardization and quality control, but the freshness of products is greatly reduced.
The second is the front store and back factory mode, that is, the semi-finished products made by the factory are distributed to the stores and sold after on-site processing.
Compared with the former, the latter can directly understand consumers’ preferences and provide higher quality products, but at the same time, it has higher requirements for the quality of store employees and high operating costs.
It is worth noting that these two models seem irrelevant. In fact, the final performance depends on the store.
However, the coverage of stores is limited, the consumption frequency of cake categories is insufficient, and the ceiling of single store income is visible to the naked eye. To quickly expand the scale of revenue, expanding stores has become the key.
Just as Christine had more than 1000 stores at her peak, yizhiduo seized the Shanghai subway stores and distributed 105 stores in the subway in a short time.
But even so, the fixed cost of a single store and the loss towards maturity have become a great burden for the brand. Expanding Stores – high costs – closing stores at a loss – expanding stores again has formed a vicious circle in this industry.
The complete store replication model is not an effective revenue increase strategy. Even if the same business model is copied to IKEA all over the world, it is inseparable from the innovation of operation model.
Compared with the extensive operation of China’s traditional retail enterprises, IKEA reflects the differentiated operation advantages.
Different from the traditional pure home trading place, IKEA creates a shopping atmosphere of lifestyle, increasing consumers’ experience time and additional consumption in the store.
For example, the concept of “shopping experience” advocated by IKEA attracts customers to visit IKEA stores, not only to look at the furniture, but also to eat in its restaurants. Such as the famous Swedish meatballs and free refills of coffee, taking children into special game rooms, walking through maze like floors, etc.
In this way, IKEA has achieved great differentiation from online shopping, attracting more and more consumers to patronize frequently. IKEA has about 3000 new products every year. Consumers will make new discoveries every time they go to the store, and they will buy many things outside the plan. “Impulse purchase” accounts for most of its sales.
However, IKEA’s business model innovation is rarely seen in domestic retail, especially in the cake industry. There are only two options for this industry:
First, reengineer the operation mode under the traditional store mode to improve the floor efficiency.
Second, overthrow the traditional business model and cut off the dependence on store operation.
Is it business model innovation to cut down stores?
When the original business model enters slow development or rigidity, enterprises may be imitated or improved by other participants in the market at a faster speed through business model innovation at any time.
Therefore, before the failure of the original business model, enterprises need business model innovation and seek the “second growth curve” of the business model.
The same is true of the cake industry.
In the case of rising store rents, the rise of catering o2o business model has brought new opportunities to the cake industry.
At that time, when Christine and other traditional brands adhered to the business model and adhered to past advantages, small and medium-sized brands such as 21cake and happy cake were rising with the help of the Internet.
21cake official website
Among the brands that take advantage of the Internet to rise, 21cake can be regarded as a precedent.
As early as 2004, Yao Lei founded 21cake, an online cake brand.
10 years later, when most restaurants still focus on the front-end service when exploring the o2o mode, the advanced 21cake not only establishes the front-end mall website, but also starts from the supply system and builds its own distribution system to realize the efficient operation of “the last kilometer”.
As a result, 21cake has created a new business model in the cake industry, with no store at the front end, centralized cold chain distribution at the middle end and large-scale production at the back-end central factory.
On this basis, consumers can complete cake selection and order online, and finally complete the commercial closed loop of offline delivery through supply chain transportation.
In addition to going to stores to avoid high physical store costs and improve industrial efficiency, relying on the Internet can also quickly grasp industry trends, user portraits and other information, and have more time and energy to develop new products to meet market demand.
The advantages are obvious, and this model is hot soon. Especially after 2014, the Internet cake brand is gaining momentum.
In 2014, under the trend of the Internet, yuan Huohong, the founder of happy cake, decisively cut down 45 stores and sales points of China Resources Vanguard and focused on online cake.
Admittedly, compared with traditional brands, the Internet cake brand has the advantages of lower cost and wider coverage, but the lack of offline stores is bound to lead to the lack of offline key traffic. At the same time, the lack of direct access to users has also become a common pain point in the Internet cake industry.
New retail idea of online and offline integration
When the flow bonus disappears, new retail becomes a common choice.
Especially with the high cost of online traffic, it is a good choice to use Internet technology to reconstruct the traditional retail people and goods yard and realize the integration of online and offline retail stores.
As Wu Xiaobo said, the baking industry will be the bridgehead for the transformation of catering brands in consumption upgrading.
As early as 2017, seeing the trend of new retail, 21cake settled in HEMA F2 convenience store to test the water of new retail; Later pandas did not take the cake, but also quickly broke through with the help of the new retail wave.
Even the happy cake, which went online from offline in the early years, returned offline in 2018 and landed in physical stores. Now it has settled in more than 300 cities.
happy cake store
Different from the early stores, happy cakes that go back offline tend to be new retail.
On the one hand, online and offline double connectivity is realized through data.
At present, happy pastry stores support both online and offline purchases, and provide distribution services three kilometers around. In this way, it not only enlarges the business scope of stores, but also improves economic benefits.
On the other hand, create scenario consumption.
Different from the main online cakes, the happy cake store also includes bread, pastries, drinks and other products in addition to cakes, which is committed to creating a diversified consumption scene.
Of course, the layout of offline stores can not bypass the problem of store rent.
To this end, Happy Cake adopts the business strategy of “city partner” to reduce the cost of opening a store. One city and one partner, in this process, happy cake is responsible for supplying 60% of the raw materials for cake making, as well as providing a series of support such as site selection and decoration, cake baking training, logistics, marketing, quality control and after-sales.
Finally, this strategy not only effectively improves the speed of store expansion, but also ensures the standardized operation of the brand.
According to statistics, each store of happy pastry can bring at least 10000 online customers. All this is inseparable from the digital business system that happy cake is proud of.
The feature of full chain digitization can not only automate the production, sales and inventory at the sales end and reduce losses, but also accurately market and increase the repurchase rate at the client. In terms of products, it is based on big data to adjust product tastes and research and promote new products.
Today, the new retail happy pastry is also favored by capital. According to the data of aiqicha, happy cake has recently obtained RMB 100 million financing, and the investors are Asian business capital, Chunjian capital and Fushan investment.
The new round of market feedback of happy cake has verified the success of the new retail playing method.
picture source / Aiqi search
Write at the end
From offline Stores – o2o catering mode – new retail stores, the growth of happy cake has run through the development track of the whole cake industry. This is precisely the second innovation of enterprises facing changes in the external situation.
In the Book Reshaping the business model, it is said that only by constantly reshaping themselves, entering the next life cycle from one life cycle, and jumping from one S-shaped curve to another, can enterprises maintain their advantages in the market.
figure source: reshaping the business model
Today, apple is undoubtedly the best case of business model innovation.
Nokia, as a symbol of the times, has been called an excellent enterprise that has reshaped itself for many times. Its industry changed from paper production to rubber, then to cable and Telecom Tower, finally entered the mobile phone industry, and achieved the best performance of occupying the first share of mobile phone market for 15 consecutive years.
But it is such an enterprise that finally failed to jump onto the new S-shaped curve because it stopped.
Therefore, when the original business model no longer has advantages, managers have the courage to innovate the business model is an important factor for enterprise growth. Whether yuan Wenhong of happy cake or Yao Lei of 21cake, they have undoubtedly seized the opportunity to innovate the business model again and again under the change of the external environment.
Nowadays, the cake industry has already attracted many tea brands such as Naixue. Under the new retail trend, what kind of innovation and growth will the promising 21cake and happy pastry bring?
We’ll see!
Author: Mu Jiujiu; Source: shenkrypton new consumption (ID: xinshangye 2016), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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