Foreign merchants are oversold, and it is time to carry out a new round of digital upgrades.
Editor’s note: This article is from WeChat public account “New retail” (ID: ixinlingshou ), author Chen Xinsheng.
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The foreign-funded business that is surrounded by the traditional retail inertia is when it is necessary to carry out a new round of digital upgrades.
In the 1990s, foreign merchants such as Carrefour, Wal-Mart, Metro, CP Lotus, E-mart, and Lotte Mart entered the Chinese mainland to compete for the market. Benefiting from China’s accession to the WTO and related dividend policies, foreign-funded hypermarkets have ushered in a golden period of ten years of development.
There are data showing that in the 10 years of gold from 2001 to 2010, mainstream foreign-funded enterprises maintained an average annual growth rate of 15 to 40. The strong offensive of foreign-owned hypermarkets has deeply affected the pattern of China’s retail market. Their ability to standardize operations, procurement, supply chain, and technology has been emulated by local business super-enterprises. As the Huangpu Military Academy of China’s modern retail industry, foreign-funded enterprises have provided advanced management models and related talents for China’s retail.
However, due to the disappearance of low-cost dividends, excessive competition in the industry, the development of e-commerce, and the encroachment of segmented formats, foreign merchants have begun to enter a recession. In the context of sluggish performance, many foreign merchants have surpassed or closed stores. China may pack or sell local giants.
In 2014, Tesco, the UK’s largest retailer, sold its own business to China Resources Vanguard; in 2017, E-Mart was able to withdraw from the Chinese market by means of a transfer store; in 2018, Lottema of Korea announced its withdrawal from China, and the stores resold Wumei and Qingdao Liqun; In April 2018, Suning acquired 100% equity of Dia Tiantian China; in December 2018, Auchan China business was taken over by RT-Mart; in June 2019, Suning acquired Carrefour; since the beginning of this year, Wal-Mart has closed over 15 in China nationwide. Home store; CP Lotus is also seeking to privatize the company, Germany Metro is hard to find buyers…
Business transition is difficult
Ou Rui Consulting StatisticsAs of the end of 2017, the retail sales of the Supermarket/Hotmarkets accounted for 17.1% and 5.2% of the total retail business, respectively, and the growth rate slowed down significantly. According to data released by the China Chain Store & Franchise Association, in 2018, the sales volume of the top 100 convenience store companies increased by 21.1% year-on-year. However, the top 100 companies operating mainly in large supermarkets saw an average increase of 2.5% in sales, which was significantly lower than the average increase of the top 100. speed. In addition, the operating costs of large supermarkets continue to rise, and the cost-to-sales ratio is at a higher level in all formats.
In the face of difficulties, many foreign businessmen have not tried to transform. From the early self-built online mall to the segmentation to the subdivision track, they have bet on convenience stores, high-end supermarkets, shopping malls, new retail formats, etc. Although foreign merchants have tried many, most of them have not achieved obvious results.
Carrefour is a foreign-invested retailer that is sensitive to the Chinese retail market. In 2014, Carrefour opened the convenience store “Carrefour Easy”. In 2015, Carrefour launched its online business e-commerce business “Carrefour Online Mall”. In 2018, Carrefour China Smart Retail flagship store Le Marche officially opened, but no significant achievements were made. Statistics show that from 2010 to now, there have been more than 40 Carrefour stores in the past 9 years.
In the opinion of the industry, China’s retail market is more complicated, and the localization characteristics are very obvious. Foreign investors are lacking in localization. In addition, in terms of management mechanisms, foreign-owned hypermarkets rely on foreign experience and are slow in decision-making and inefficient. Hu Chuncai, a veteran of the retail industry, once pointed out that foreign retail itself is rather rigid in management, relying more on its experience in Europe and the United States and localization in China, but China’s retail sales have changed faster than the United States, and cannot rely entirely on Experience can quickly complete the transition.
Strengthen the “home” scene as an antidote
In fact, under the self-built website, the lack of exploration in the segmentation field and the new retail trend, many foreign merchants have begun to integrate with the online and embrace the giants. On the online side, the company started to open an official flagship store; offline, deep-seated with third-party platforms such as Hungry, and expanded the “home-to-home” scenario of take-away, hoping to promote the transformation of traditional offline business through home business.
In 2015, Ali and Metro reached a strategic cooperation, Metro entered Tmall International; in April 2016, Metro announced its presence in Tmall. Since Ali’s strategic shareholding in RT-Mart in 2017, Tmall Supermarket, Tmall Maternal and Infant, and Amoyda have merged with RT-Mart, and the new retail transformation has continued to deepen. In addition, perhaps I saw the “home” student.With the unlimited potential of live scenes, many foreign businessmen have begun to test the local life-storing business, embrace the hungry word of mouth, and expand the take-away “home” scene.
In the view of Bao Yuezhong, a retail expert, the Chinese consumer market has begun to be stratified, and the individualized demand has been more prominent. The retail format that originally served the unified market is difficult to adapt to the changes in the current consumer market. The retail form is also changing. The original single-store retail scene has become a new form of “home” and needs to be adjusted from the original “to the store” function to satisfy the user’s purchase convenience.
In addition, compared with traditional supermarkets, many local life platforms and e-commerce platforms have obvious advantages at the front and rear. Their digital capabilities in procurement, logistics, membership, marketing, warehousing, and payment are leading. Whether it is speed, quality or convenience, it is far more than the traditional business. This is also a factor that traditional commercial super transformation has to consider.
Take the German old-fashioned discount supermarket ALDI Olezi as an example. Unlike other foreign-invested companies who have first landed their stores and opened their online businesses, ALDI Oroqi first tested the water online and then opened an offline store. With the advantage of China’s online retail digitalization, Aleqi ALDI began to enter China through the Tmall flagship store two years ago. After playing a famous role in China, it opened its first store in Shanghai this year. At the same time as the store opened, the order of the brand’s WeChat small program was taken by the hungry hummingbird, and the radius of three kilometers was delivered within about one hour. This is also the attempt by ALDI Olezi to take the initiative to carry out the “dissatisfied” in China.
In fact, whether they are foreign-funded or local companies, they are faced with the same situation. The rise of operating costs, the migration of consumer spending habits, the abundance of goods and prices are not comparable to e-commerce, and the new retail industry is in need of innovation and reconstruction.
In terms of the traditional “superior home” scenario, offline stores are an important way to establish effective links with consumers. Offline stores can focus on consignment, product distribution, and customer self-lifting to solve the last mile problem. . Ali’s local life service platform can open up offline and online systems to achieve offline distribution, use big data and other means to bring passenger flow to traditional offline stores; on the other hand, offline physical retailing can achieve digital transformation, Helping sales growth and profit growth.
New ideas for “reverse transformation”
A lot of third-party platforms have provided some new thinking on the “reverse transformation” of the offline supermarkets. After deep docking with third-party platforms such as Hungry, the front and quick picking warehouses are becoming the experimental fields for their new retail renovation.
In August this year, Hungry Word of mouth announced the establishment of a digital business super-open platform, unified output digital growth capability from the order, distribution, warehousing, etc., aiming to provide the business super brand from the front-end traffic to the back-end transformation . The first is to help the business through online traffic and instant delivery.