Is the spring of China’s paid membership meeting coming?
Editor’s note: This article is from WeChat public account “Commercial real estate Headline” (ID: Dtoutiao), author Mia, Lu Zhizhen, editor Fu Qingrong.
It’s not yet on the scheduled opening day, and the first store of Costco China is too much to unveil.
Three days ago, Costco organized a trip to the first store in Shanghai. 14,000 m2 of store space, “rough” neat; high warehouse steel frame, the whole box of goods stacked. The best guides here are the flexible forklifts.
In advance, Costaco made a big move – the world’s lowest membership fee, the promotional price is only 199 yuan / year. In less than two months, it has tens of thousands of Chinese members.
Low price is another eye-catching point of Costco. Some products are even lower than the market price by 30%-60%. “If the price can’t be lower than the opponent, then it would rather not sell.”
Shanghai is only the first step in Costco’s ambitions in China. This trip to China, which has been brewing for five years, will accelerate if there is no accident. East China is a cut.
On this hot land, the “old rival” Sam member store has been rooted for 23 years. Recruit Costco, what is the bottom of the board? A new and old tug-of-war horn rang, and the Chinese membership system was approaching the spring.
Source | Visual China
Recruitment Costco and veteran Sam
In October 2014, Costco made its first appearance in China with Tmall International as a springboard. It mainly sells food and health products from its own brand Kirkland.
After three years of testing, Costco opened its second Tmall flagship store in September 2017, expanding its category toDigital home appliances, home department stores, daily necessities, red wine coffee, etc., and gradually increase the popular products of Kirkland.
“The decision to settle in Shanghai for the first store comes from Tmall’s operational experience,” said Zhang Hanhan, president of Costco Asia. From the past five years, Costco’s main consumers are concentrated in East China, Shanghai is the most , Minhang, Pudong orders are quite.
Based on this, Costco China’s first store settled in Minhang, Shanghai, with a shopping area of nearly 14,000 m2. It uses a floor plan of the US Costco standard, a flat-level warehouse, and a simple installation with 3,400 SKUs (US 3,600).
Costco Shanghai Store
Slightly different, the Costco store parking lot around the United States is around the hypermarket, while the Shanghai store also has two or three floors of indoor parking, a total of 1200 parking spaces, the largest in the world.
On the site selection, Costco Shanghai continues the “American Features”:
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Non-commercial bustling place
Away from the urban area, it is not the core area of commercial development. The nearest bustling area is the Hongqiao hub business circle three kilometers away. There are only a few small convenience stores and supermarkets around 1 km away, and there are basically no competitors.
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Focus on “group consumption”
The Costco membership system is divided into Gold Star (Personal Use) and Business (Company Only). Both can hold an additional family card for free. In addition, Business members can apply for an additional paid secondary card. Group consumption. According to the big data of the winners, there are 73 residential areas and 91 office buildings in the west of Costco Shanghai.
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Good logistics and freight transportation
The Shanghai Road has a developed road network. Shanghai Changchun Expressway, Shenhai Expressway, Beijing-Shanghai Expressway and Jiayu Elevated Road meet. Convenient transportation is conducive to maintaining Costco’s low-cost distribution advantage.
About 2 months ago, about 15 kilometers away from Costco Shanghai, its old American rival, Wal-Mart’s Sam’s member store, opened the second store in Shanghai, which is 9 years since it first entered Shanghai. .
Although Wen Ande, President of Sam’s Member Store China, stressed that the location of the store is based on data analysis. Can be the “boss” player of the super-member system, Costco and Sam must have a battle in China.
Sam Shanghai Qingpu Store
At present, Costo plans to focus on the East China, which is the township of Sam’s member stores (12 stores, accounting for 46% of the national total).
Costco and Sam have a general synchronization in terms of store size, number of parking spaces, and height. Whoever can occupy the nearest treasure in the core area of the city will be more obvious.
At the moment, Sam is a quick step and has a first-mover advantage. However, Costco, which has a shorter construction period (the Shanghai store has a preparation period of 2 years), is very strong, because Sam opens a new store “may take 3-7 years”. However, Sam has also accelerated the speed of offline layout in recent years. There are 7 new stores since 2018, and it is expected that there will be 40-45 open and under construction stores by the end of 2022.
Sam Shanghai Qingpu Store
Beyond the competition, members are the second resource for Costco and Sam, and their target audience is high-to-high-end consumers. Looking at Sam’s 16 stores (in the business district divided by Winners Big Data), the surrounding crowds are as follows:
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The middle class (42%) and the rich (10%) account for more than half of the average; the 25-44 year old population accounts for about 60%;
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The proportion of people with children is as high as 47%, mainly in the middle and high-end income families, especially the “80/90” mother.
In terms of the number of members, the promotion of “¥100 commodity vouchers (later changed to ¥199)”, since July 1st, Costco has over 10,000 Chinese members; Sam has entered China 23 In the year, it has 2 million “live powder”.
China’s paid membership system?
Recruitment Costco and Sam veteran, you chase after me, which is a new round of Chinese business super membership.
After 36 years of precipitation, Sam and Costco have long been the “duopoly” type of paid membership. In FY 2019 (as of January 31), Sam has more than 800 stores worldwide, confirming membership fee revenue recognized $1.4 billion.
As of December 3 last year, Costco had 768 stores worldwide, with membership fees of $3,142 million, which was basically the same as the net sales of $3,134 million.
To a certain extent, the emergence and prosperity of Sam and Costco represent the successful transformation path of foreign merchants. In China, subject to the complex market environment, the process has many twists and turns.
The timeline was opened and the first Sam’s membership store appeared in Oklahoma, USA, in April 1983. In September of the same year, the first Costco warehouse-style membership supermarket opened in Seattle, Washington.
At that time, the US supermarket industry was in a period of change (1980~2009). On the one hand, competition has intensified, mergers and acquisitions have become more obvious, and a large number of traditional businesses have closed down.
In the case of Wal-Mart, it has acquired the chain department store Big K and the warehouse club Super Warehouse C.Lub, etc., the market share of 10%, becoming the first supermarket in the United States.
On the other hand, the demand of American consumers has shifted from pure commodity demand to demand for high-quality, soft services.
Data shows that during this period, American GDP increased from $15,000 in 1983 to $47,000 in 2009, with an average annual growth rate of 47%.
The above two points gave Sam and Costco the opportunity to enter, and became a new mainstream business with discount stores and fresh food stores.
The Shangchao exploration period (1910~1939) and the rapid development period (1940~1979), gradually promoting urbanization, automobile penetration rate, road network, logistics network, etc., have laid an important role for the paid membership system. Retail infrastructure.
In contrast, the membership system in China has been late. In the late 1990s, the Chinese retail market was initially opened to foreign investment. The warehouse-based paid membership-based enterprise represented by Sam, Metro, Wankelong and Puermaster is coming and going.
After that, they have been in China for a 10-year membership system. Unexpectedly, the sprout has not yet grown up, it has encountered a dark moment.
The entire “Pioneering Period”, foreign supermarkets are fashionable consumption places for Chinese people. However, the membership system that pays the “entry fee” has never formed a wave. From 1996 to 2003, Sam opened only one store in China.
In 2004, China’s retail industry was fully open to foreign investment. The new bud of the super-paid membership system has never grown up, but has entered the dark zone. Wankelong transformed its business in 2007, and Purmasite completely withdrew from China in 2005 due to the capital chain break. Only Sam continued to open stores at this stage, and e-commerce business started around 2010.
The e-commerce tide hit before 2010, and the physical retailing suffered a huge impact. The commercial super-small initial appearance, Wal-Mart and Carrefour all experienced different speed reductions. This state continued until 2017, and supermarket mergers and acquisitions frequently appeared.