Foreign-invested retail enterprises are “retreating” and “entering” in Shanghai.
Editor’s note: This article comes from Winner.com’s WeChat public account “Huadong Commercial Real Estate Hui” (ID: shwinshang), author and He Wen.
In the 1990s, foreign retailers represented by Carrefour, Metro, Wal-Mart, etc. entered the Shanghai market, witnessing and promoting the prosperity of Shanghai’s business.
For more than two decades, these foreign retail companies have seized the dividends of the development window of the times and created a lot of glory. However, with the development of the times, the phenomenon of foreign retail enterprises “losing China” is not uncommon, such as: Marks & Spencer, E-mart, Lotte Mart, Takashimaya (opened on August 25, 2019).
There is a retreat, and naturally there will be newcomers. Take Shanghai as an example. In the first half of this year, Galeries Lafayette and Alezi ALDI officially debuted in Modu. Next, the world’s largest chain member store, Costco, will officially open on August 27.
It is worth pondering: Why did the former retail leader withdraw from Shanghai and the entire Chinese market? Under this circumstance, why are there still many foreign retail enterprises “betting” on the Shanghai market? Winner.com selected several representative brands for analysis.
Carrefour Shanghai Quyang Road Store Source: Vision China
“The soil is not acceptable” or the key to retreat
On June 25 this year, Shanghai Gaodaowu Department Store Co., Ltd. announced a termination notice that Shanghai Gaodaowu will be closed on August 25. When the news came out, many people sighed and sighed. Some people said that the evacuation of Shanghai Takashimaya was a matter of time. After all, since opening in 2012, Shanghai Gaodaowu has not achieved the expected target, and it has been losing money in the past three years.
Shanghai Gaodao House Image Source: Vision China
In fact, the evacuation of Takashimaya is only a microcosm. Prior to this, foreign retail giants such as Marks & Spencer and E-Mart closed the stores opened in Shanghai, and there are still stores in the Auchan supermarket and Dia Tiantian. They were taken over by RT-Mart and Suning respectively.
Review that these foreign-invested retail companies can see from the appearance of Shanghai, the closure of the Shanghai store and the withdrawal of the Chinese market, the arrival of e-commerce and new retail, although it has a certain degree of impact, root cause It is because they have not self-innovated in time, and the localization of the brand has not been achieved, such as Martha and E-Commerce.
Mashasha Department Store
Martha’s is the UK’s largest multinational commercial retail group. It opened its first flagship store on Nanjing West Road in Shanghai in 2008. After that, Marks & Spencer was in Huaihai Zhonglu, Jinzhong Plaza, Shanghai Zhongsheng Mall, Shanghai Global There are stores in Hong Kong, Jiangqiao Wanda Plaza and Wujiaochang Wanda Plaza.
It is reported that Marks & Spencer opened 15 large stores in China in 8 years, but did not establish brand awareness. The reason is that when I first entered the Shanghai market, I adopted the strategy of “higher” and wanted to attract the middle-income class. However, there was no “price-performance ratio” advantage. In addition, the size of the British clothing was copied, and it was unable to adapt to the Chinese human body type, and the clothing style was conservative. “Aunt Department Store.”
Finally, under the pressure of performance losses, Marks & Spencer began to adjust its strategy in China in 2014, and began to close the store in 2015, until 2017 announced the official closure of Shanghai West Nanjing Road, Huaihai Middle Road, and Global Harbor. This means that Marks & Spencer has completely withdrawn from Shanghai.
Easy to buy
In 1997, E-Mart, the first store in China, opened on Quyang Road in Shanghai, which created a record of continuous profitability in China’s hypermarkets. However, it was not until 2004 that the second store in China was opened. Its branch was nearly 30. Family.
Since 2011, E-mart has started to lose money frequently, and stores have begun to shrink. Later, the easy-to-buy Shanghai Jinqiao Store and Quyang Store were gradually closed until the end of May 2017, when the whole line was withdrawn from the Chinese market.
It is worth noting that in order to seek a breakthrough, E-Buy will hand in hand Netease Koala, Tmall International, enter the Chinese e-commerce market, and play Weibo, WeChat, and KOL for localized marketing. It is a pity that after many attempts, E-Buy still has not localized the stores and brands, and with the emergence of many powerful enemies, it finally withdraws from the Shanghai market and purchases 100% of the shares by CP Lotus.
Today, the first department store shopping mall, the STAR MALL, has closed its store in 2015 and has been replaced by the “Star Treasure Shopping Center”. The first domestic easy-to-buy is as early as 2016. Closed in November, the original Shanghai businessThe central project has also transformed Bailian Quyang Shopping Center and is expected to open in the fourth quarter of this year.
The potential of the Shanghai market is still there,Olezi, Costco, etc. debut this year
Mexico’s closing of the official website and Tmall flagship store, 80% of Carrefour China’s shares were acquired by Suning, and Metro’s frequent “selling” anecdote… The challenges faced by foreign retailers in China have always existed.
Correspondingly, Lafayette Department Store, Alezhe ALDI, Costco Opener have actively entered the mainland market this year, and select Shanghai as an important position.
On March 23 this year, the second Galeries Lafayette department store in China was opened for trial at L+MALL in Shanghai Lujiazui Center, and more than 200 brands were gathered. It is reported that, unlike Paris and Beijing, in addition to the introduction of luxury goods, Shanghai Galeries Lafayette has brought a number of first-class brands such as European and niche designer brands to local consumers. It is not difficult to see that international retailers are flexibly adjusting their strategies in order to establish themselves in China.
Oleqi ALDI, which is also trying to differentiate the road in China, is known for its low price and high quality, and is called the “poor supermarket.” On June 7, 2019, Aleqi ALDI opened two stores in Jiangning Road, Jing’an District, Shanghai, and Gumei Street in Minhang District, becoming a hot spot in the retail market in the first half of the year.
It is reported that in order to be close to the Chinese market, many of Oriqi’s own brands are supplied by local Chinese suppliers, such as sausages from Henan, pork from Shanghai, and vegetable oil from Jiangsu. Many of the private brands with Chinese characteristics, such as steamed dumplings, self-heating small hot pot “good kitchen”, condiments-based “food new season” and so on. In terms of service, the Aleksie ALDI store can be used for manual checkout, shopping through a self-service scanner, and delivery service.
It is worth mentioning that Olezi ALDI is a two-year e-commerce experience in the Chinese market, only to open offline stores, two online stores to accumulate fans, to provide Chinese consumers with Useful information. However, in the eyes of the industry, it is still necessary to have a good “unacceptable”. After all, the positioning of Alezi’s ALDI Shanghai store is different from that of foreign countries.
After other retail giants withdrew from the Chinese market due to “unacceptable”, Costco opened the market and arrived in Shanghai, confirming the official opening on August 27.
Costco is targeting consumers who are targeting low-frequency, bulk purchases, and high-single-single purchases. The location is relatively remote, and the first store in mainland China is no exception. According to the information, Costco opened the first store in mainland China, located at No. 235, Zhujian Road, Minhang District, Shanghai. It covers an area of 20,000 square meters and there is no direct subway nearby. This kind of membership system, store location away from the city center, can cope with the fierce market competition environment is still unknown, after all, similar Metro is often spread to sell in China.
“Costco has a price advantage and can enter Shanghai. It is definitely attractive, but the radiation circle is limited. After all, Pudong’s consumers will not go to Puxi for consumption. Next, we must look at the scale of the brand and open the store. If you reach 5-10, you can show your advantage. If you have 2-3, you will find it difficult to see the advantages,” said Qi Xiaozhai, president of the Shanghai Commercial Economics Association.
For the new foreign retail enterprises entering the Shanghai market, Qi Xiaozhai believes that the market mainly lies in Shanghai. These enterprises have taken a fancy to their market potential. However, moving foreign mature experience to Shanghai will not necessarily succeed. Coupled with the emergence of new retail brands that are constantly emerging, the competition is becoming more intense and companies need to continue to explore the way.