With the advent of the storm, retail has always stood in the front line of the impact of the market.
Wal Mart, the largest retailer in the United States, reported less than expected results in the first quarter. Its net profit fell by 25% year-on-year. Its share price immediately suffered a heavy fall, falling by 11%, directly hitting the largest one-day decline of Wal Mart, and the total market value evaporated by about 310billion yuan.
The familiar retailer has faced unprecedented difficulties in the past year. According to relevant statistics, Wal Mart closed nearly 30 hypermarkets in China in 2021. Even the first Wal Mart in the mainland, Shenzhen Honghu Wal Mart, which has been open for 25 years, and Beijing Chaoyang Wal Mart, which has been open for 15 years, are closed.
Not only Wal Mart, but also more and more hypermarkets are facing the problem of withdrawal in recent years. Shenzhen Carrefour Meilin store, which has been open for 22 years, closed down at the beginning of May due to the expiration of the lease; Carrefour Asia flagship store, the “largest supermarket in Asia”, which has been open in Zhongguancun for more than 20 years, closed in March this year; In addition, Carrefour Shapingba store, which has been operating for 16 years, Carrefour Wanguo store, which has been operating for 20 years, and Carrefour Shanghai Road store in Nanchang are all closed this year… According to statistics, Carrefour has closed 80 stores in China in just four years from 2018 to 2022; Among them, there are 23 less in 2021.
Metro Wanquanhe supermarket, which has been operating for 16 years, also closed in April of the same year. RT mart, Yonghui supermarket, Lianhua supermarket and China Resources Vanguard also closed some stores. According to the statistics of titanium media app, 19 listed supermarkets closed more than 800 stores in 2021, while Lianhua supermarket took the lead with 249 stores. (for details, see titanium media app’s previous report, “still can’t see the inflection point: the net profit of 19 listed companies fell by more than 80%, and 806 stores were closed in one year”)
What on earth caused large supermarkets to close their stores? Does closing the store necessarily mean the loss of development opportunities? When God closes a window, where does the other door of the supermarket open?
Withdrawal of foreign business supermarkets, and transformation pains of large business supermarkets
“At present, large supermarkets are in the transition period, and closing down and transformation has become a phenomenon in the industry.” When talking about the current phenomenon of over closed stores of large businesses, Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian consulting, told titanium media app.
In his opinion, the closure of large supermarkets is essentially the survival of the fittest in market competition, especially for foreign-funded retail enterprises, which are not easy in the current domestic competitive environment.
In recent years, Carrefour sold its 4.8 billion yuan to Suning Tesco and withdrew from the Chinese market. Tesco, the largest British retailer, sold its assets in China to China Resources Group at a price of 2.5 billion yuan. Foreign retailers meet frequently in China.
“The foreign-funded enterprises themselves are not acclimatized in China. At present, China’s retail industry is rich and competitive. The upgrading of online and offline digitalization makes it difficult for foreign-funded enterprises to cope well. With the impact of the epidemic, the development of foreign-funded supermarkets in China has encountered some difficulties.”
Zhuang Shuai also said, “New business forms, such as the community group purchase of qiancang, the integration of hemacang stores, and the Costco membership store model of a new foreign competitor, have entered China. The current competition is not simply online and offline competition, but online and offline integration of multiple business forms. Under the background of the general trend of digital transformation, some supermarkets cannot adapt to this transformation, nor can they rapidly localize and carry out digital upgrading to adapt to the Chinese market to cope with this innovation This is the key to the competition of the new digital transformation. “
The collapse of foreign supermarkets has given China’s local retailers a chance to “turn over”. However, if local retailers want to be neutral in the brutal market competition, they should also transform and upgrade in time. If you stick to the tradition, even if you have the opportunity to turn over, you may not be able to grasp it.
Fangtongshu, executive director of Weimeng group and President of smart business group, told titanium media app that, “Against the background of repeated epidemics, large supermarkets have faced great challenges in recent years. Many categories in the stores have been impacted by e-commerce and smart retailing. The impact mainly comes from two aspects, one is the diversion of volume, the other is the diversion of profits. Specifically, online retailing and the impact of the epidemic have dispersed the offline traffic, but a considerable number of stores have not been prepared for smart retailing, especially online. In addition, the original hypermarkets have Business efficiency and cost performance are relatively high, but now the overall cost of retail channels, especially online channels, has been greatly reduced.
“The online impact has brought about a series of impacts. For example, brands and dealers, whose original channels were mainly hypermarkets, now have more channels. The platform providers of each channel are different, and their pricing strategies and marketing strategies are also different. Merchants have a wider range of choices and higher independent pricing authority. This is the dilemma of attracting investment for stores. It is difficult for new merchants to settle in, and stores may no longer have a high level of certainty after they settle in Price right. For consumers, the prices of the same commodity in different channels are different, and the activities are also different. They also have more space and choices for price comparison. These have an impact on the category structure and profits of hypermarkets. “
In Fang Tongshu’s opinion, the first problem faced by offline entities is space constraints; Secondly, the way to reach customers is too single; Moreover, the cost of offline marketing activities is high; Finally, the diversion brought about by the increasing number of consumer purchase channels. However, the advantages of offline logistics and timeliness can not be ignored.
It is said that a ship is too big to turn around. The transformation of large-scale supermarkets can not be achieved overnight. We should not only grasp the opportunity, but also do it in the right direction.
“The larger the boat, the more likely the impact will be. Compared with large supermarkets, small and medium-sized supermarkets have lower operating costs in all aspects, and are flexible to deal with. For example, during the epidemic period, small and medium-sized fresh food supermarkets in the life service category can change their strategies immediately in case of emergencies. However, it takes longer for large supermarkets to change.” Fang Tongshu told titanium media app.
Online business support, enter into Omni channel operation
While traditional supermarkets are closed, some emerging retail formats are blooming everywhere. HEMA x member stores have been opened for three consecutive years, Metro member stores have opened nearly 20, several Carrefour hypermarkets have been transformed into warehousing member stores and reopened, Costco, the world’s largest member supermarket, has settled in Suzhou, and even Yonghui, a traditional retail enterprise, is also transforming into a warehousing supermarket on a large scale.
The current retail model is no longer the same as before. However, without exception, they have all undergone digital transformation.
“In fact, now there are many well managed enterprises in big supermarkets, such as Zhongbai warehouse, Yonghui supermarket, jiajiayue in Shandong, Beiguo supermarket in Hebei, etc. they either have strong regional operation, or they are carrying out rapid transformation and upgrading, adding online business units, accelerating the integration of online and offline, quickly realizing transformation and upgrading, and obtaining new growth.” Zhuang Shuai told titanium media app, “now online to offline is not an impact, but a deep integration and common development with offline formats. I think this is the current evolution trend.”
Fang Tongshu also holds the same view. He believes that “supermarkets should not determine whether they are online or offline. They must be Omni channel. Online and offline coexist.”
In his opinion, supermarket retailing has entered the era of Omni channel operation. For hypermarkets, the omni channel layout should be started as soon as possible. Online and offline integration includes operation, marketing, management and other aspects. From traditional supermarkets to smart supermarkets, supermarkets should first open up the online and offline Omni channel business scenarios and integrate online and offline. This integration is the integration of the whole supply chain, the whole marketing and the products.
Many retail enterprises are also making such attempts. Wumart has made multi-point apps and empowered other supermarkets to provide digital transformation solutions after enhancing its digital transformation and upgrading capabilities. Yonghui supermarket launched super species very early, and then adjusted its organizational structure to transform its stores into member stores.
In an interview with titanium media app, Carrefour said that at present, relying on the storage network, logistics and digital technology of the e-commerce platform, Carrefour has fully completed the upgrading and transformation of its business system, including the supply chain link, commodity master data, store operation, inventory, price, logistics, personnel, financial cashier and big data. At the same time, Carrefour applet was launched and settled in taoxianda, tmall supermarket and other three-party platforms, completing the omni channel operation of near field, midfield and far field.
In the face of this sudden outbreak, the business strategy of supermarkets that have been transformed as soon as possible is more flexible. For example, Carrefour carries out community single group purchase through small programs.
As Fang Tongshu said, “the society is constantly changing, and the consumption scene and business are also constantly changing. The digital economy has become a general trend, and the integration of digital technology and the real economy has further deepened. The sudden epidemic has made digital transformation a must for enterprises.”
There is another important reason for the transformation of large supermarkets. “At present, some decision-making power is slowly transferred to the suppliers. Which channel earns more, the suppliers prefer. If you want to develop better, you must solve the needs of suppliers. Suppliers are more concerned about sales and profits. How can hypermarkets solve the problems of suppliers, reduce costs, and improve sales and profits? Integrate all channels and do Omni channel marketing.” Fang Tongshu explained to the titanium media app.
Digitalization, the only way for offline retail in the future
Every transformation and upgrading of the industry is a critical moment for the survival of the enterprise. The transformation is successful and everyone is happy; The transformation failed and was eliminated by the market.
Liuyonghao, chairman of new hope group, once openly talked about enterprise transformation. He said, “in simple terms, traditional enterprises + digitalization, combined with new enterprises. Is this right? Theoretically, it is right. But I think it is difficult to implement. Many enterprises have been transformed to death, and the market is still yours. If not, the oil pot is yours.”
The same is true of retail enterprises. After years of deep cultivation in the industry, Fang Tongshu said, “the digital economy must be further deepened through the integration of digital technology and the real economy. This is the only way for offline retail to break through its own, bottleneck and development in the future.
In order to better survive in the market, online and offline retail channels have made new explorations, which may inspire the transformation of large supermarkets. Jd.com links to jd.com hourly shopping at home. Meituan connects with various supermarkets, and supermarkets carry out community group shopping business. Some regional small supermarkets and community stores try the e-commerce integration model, and some supermarkets even try the front warehouse model.
“The original store may be limited to less than 10 kilometers, but now it can be targeted beyond 10 kilometers. It can be used for online consumption, but now it can be led offline. To a certain extent, it is n times larger than the original potential energy.” Fang Tongshu has repeatedly told the titanium media app that “when online and offline are combined, the physical space of the supermarket is opened.”
When talking about how to transform, he said, “A hypermarket in Shanghai can do business all over the country. Originally, there were only tens of thousands of people within a radius of 10 kilometers. But looking at the whole country, there may be a consumer group of 100 million. Therefore, the first thing to do is to make an all-channel layout and integrated operation, covering all kinds of online and offline business scenarios, and aggregating multiple types of traffic. Second, we should build a private traffic pool. We should focus on single customer value, pay attention to member operations, and carry out all-round maintenance for members Degree of analysis and accurate marketing, and improve the consumption experience. In addition, it is necessary to change the operation mode, carry out the digital transformation of the whole value chain, and gradually digitize the whole business and operation management process step by step. All these require a complete set of smart retail system. “
“The third is the unified management of the whole business, including its supply chain. Through data management, the efficiency is very high. You can immediately see which goods are on which shelf and what the price is. You can change the price at any time. At the same time, you can find out which goods are out of stock at any time. Through cloud warehousing, you can call the nearest warehouse goods to replenish them as quickly as possible. All these require a complete set of smart retail systems.”
Zhuang Shuai believes that there are four main aspects to the transformation of business supermarkets. He told titanium media app that, “In the face of the multi format competition and the process of digital transformation, as well as the trend of online and offline integration, the response of supermarkets mainly focuses on several aspects. The first is organizational and institutional changes; the second is to increase technical investment, improve the digital ability, and adjust the category structure to meet the diversified needs of consumers; the third is to better follow the online platforms, such as JD home and meituan flash purchase; the fourth is to build their own online platforms and Try to innovate business forms. “
The trend of transformation and upgrading of supermarkets also gave birth to smart retail and smart business service providers. Weimeng group where Fang Tongshu works is a leading smart business service provider in China. According to him, “at present, Weimeng can meet the overall digital transformation services of small and medium-sized supermarkets 100%. 90% of the needs of super large supermarkets can be met. The other 10% need to be customized.” This fully shows that the digital transformation of supermarkets has entered a relatively mature stage.
Whether online or offline integration or creating new consumption scenarios, retail enterprises are accelerating on the road of transformation and upgrading. Digitalization will also become one of the important means for retail enterprises to fight in the future market. China’s retail industry is destined to present a new business story that is more brilliant, complex, ingenious and diversified.
Original title: “digitalization” dominates the life and death of large supermarkets ｜ depth of titanium media
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