Although Red Star Macalline uses the store leasing model to avoid the business risks of direct participation in home sales, its investment ability and store occupancy rate still depend on the booming of the home industry.
Editor’s note: This article is from WeChat public number “underlying designer” (ID: Bottom-upDesigner), author Lu Ya, Yan Min, Yang Yan. The original title is “Red Star Macalline’s New Retail Transformation | Case Study.”
In the face of the challenge of the Internet+, the “charter” of Red Star Macalline can’t go on. Forefoot joins Tencent and hugs Ali in the back. In order to maintain the leading position of home retail, Red Star Macalline holds high the new retail banner, which is painstaking. However, can the so-called new retail transformation be able to innovate the traditional home store industry, or at best it can only play a icing on the cake?
The “rental” business of the home store
In 2009, Red Star Macalline swept B&Q to the first place in the nationwide home store with 66 stores, and began the road of home sales for ten years.
The store operation model based on retail leasing is a solid pillar for Red Star Macalline to establish a national brand.
In 1996, due to the high cost, Red Star Macalline gave up the business model of home direct sales, and instead developed a business model that is closer to the “rental woman” – the merchants pay through the store, the rent paid by the merchant and Property to make a profit.
To ensure that there is enough land to build new stores, after 2000, Red Star Macalline began to purchase land and invest in real estate. As of the end of 2018, the book value of Hongxing Meikailong’s investment real estate was 78.533 billion yuan, accounting for 70.84% of the total assets.
Hongxing Meikailong holds more real estate than any other A-share listed company including Vanke, Newtown and other real estate developers. It is known as “the largest landlord of A shares” and is therefore dubbed “the best thing to do in selling homes” Real estate, the real estate will sell the most.”
The large-scale real estate holding and store construction brings three major competitive advantages.
First, as a platform rather than a direct seller, Red Star Macalline is not directly involved in the home sales process, and its main source of income (rental and management fees for property assets) is predictable and stable income. This has greatly reduced the operational risks and profit pressures caused by the hot and cold changes in the home market.
Secondly, with the increase in land prices after 2000, a large amount of land acquisition not only relieved the suffering of Red Star Macalline, but also caused the rise of total assets and even the source of income.
Third, the store of Red Star Macalline is mainly composed ofThe self-owned shopping malls in the first- and second-tier cities and the commissioned shopping malls in the third- and fourth-tier cities. By the end of 2018, the average occupancy rate of self-owned shopping malls and commissioned shopping malls was over 95%.
Behind the high occupancy rate, on the one hand, the earlier real estate purchases can capture the strategic position of the first- and second-tier core cities, greatly increasing the attractiveness of the stores to merchants. On the other hand, with the formation of the national layout, Red Star Macalline has sunk its channels and relied on its brand advantage to defeat its competitors, greatly expanding the number and size of the malls in the third- and fourth-tier cities.
Overall, Red Star Macalline formed barriers to entry for latecomers and gained first-mover advantage.
Internet + Times: No transition, just behind
Although Red Star Macalline avoids the business risk of directly participating in home sales in the form of store leasing, its investment ability and store occupancy rate still depend on the booming of the home industry.
In recent years, the strict control of housing policies and the impact of the Internet + have led to the increasing difficulty of obtaining home sales in the form of traditional stores.
Among them, the main impact of Red Star Macalline comes from the impact of the emerging Internet + model, even if it has begun to carry out the Internet layout, the results are only embarrassing.
In recent years, real estate regulation and control policies have restricted the continuous growth of demand in the home market, and the market cake is facing the risk of contraction. According to the data of Zhiyan Consulting, since the real estate cooling in 2013, the annual growth rate of annual operating income of the national household industry has gradually declined to below 20%, and the annual growth rate in 2017 is only 5.8%.
The slowdown in revenue growth in the home market directly affected sales at home stores. According to the data of the billion-dollar think tank, the annual sales of the national home building materials store reached a peak of 1,28 billion yuan in 2012, and there has been no breakthrough since then.
In particular, after the launch of the “most strict” regulation policy for real estate in 2017, the annual sales of home furnishing and building materials stores in 2017 plummeted by 22.6% year-on-year to 917.37 billion yuan.
The coldness of the housing market has intensified competition in the home industry, which has forced the industry to reshuffle. Due to the low barriers to entry for home sales, the domestic market was originally filled with various home stores of varying sizes and different qualities.
But in the context of the tightening of the housing market, the expansion of the home market has been hampered, and competition within the industry has intensified. The traffic volume of small and medium-sized stores has been the first to suffer, and the occupancy rate of shops has begun to decline, and then gradually shrinks or relocates. The core areas of second-tier cities are either closed or acquired by large companies.
And large-scale home stores such as Red Star Macalline are staking, expanding by opening stores and acquiring small and medium-sized stores. From 2009 to 2018, the number of Red Star Macalline stores expanded from 66 to 308, and retail sales of shopping malls rose from 31.3 billion yuan to 111.6 billion yuan. Red Star Macalline’s CampIndustry income also increased year by year, reaching 14.24 billion yuan in 2018, an increase of 29.9%.
The actual home also expanded during the same period, the number of stores expanded from 8 to 284, and the retail sales of shopping malls rose from less than 5 billion yuan to 75 billion yuan, becoming the second largest business in the country after Red Star Macalline. Sex home store.
In other words, by squeezing the living space of small and medium-sized stores, Red Star Macalline and Real Home have resisted the unfavorable factors of the housing market in the short term, ensuring a certain passenger flow and revenue growth. However, the real external threat is the challenge of the new Internet + model.
The first is the rise of e-commerce.
With the popularity of the Internet and the construction of logistics infrastructure, consumers’ consumption habits have changed, and e-commerce has developed rapidly and cut into the field of household consumption. At first, the e-commerce model was strongly resisted by traditional home stores.
After Taobao announced its entry into the home furnishing industry in 2010, 19 chain or regional hypermarkets jointly signed the “Opinions on Standardizing E-Commerce Work” in 2013 for counter-measures, which clearly stated that “the market cannot be disguised to make the store become an e-commerce company. Offline experience venue.”
However, the pioneers of home e-commerce have already made a profit, a typical example is Lin’s Wood. Since entering Tmall in 2007, Lin’s Wood Industry has won six furniture sales champions in Tmall’s “Double Eleven” sales from 2012 to 2017, and has overtaken the corners, and has pressed the old-fashioned company’s all-friends furniture. Great success. Behind the successful brand, the Taobao home sector has achieved rapid growth. In 2018, the Taobao home improvement O2O platform “very home” turnover exceeded 300 billion.
The second is the rise of Internet group buying home improvement.
Since 2003, Internet group purchase home improvement websites such as the fence network, Qijia network, and a decoration network have gradually developed, trying to reform the “pre-sale and after-sales” of traditional home stores.
Before the pre-sales, through a large number of home improvement orders, these sites can get the competitive advantage of the lowest price of building materials business. At the same time, by inputting online demand to match household information, the website tries to alleviate the cost burden of consumers having to reach the store in traditional consumption to obtain information.
The website also provides consumers with services such as appointment design and consumer consultants to form a home improvement program to meet the individual needs of consumers. In the sale, consumers only need to place an order online.
After the sale, the website sent the home improvement team to decorate according to the consumption plan. Although the above concepts encountered many difficulties in landing, the Internet thinking and the concept of adapting to consumption upgrades have had an impact on traditional stores.
The home store represented by Red Star Macalline and Real Home has become a mainstream home retail channel in the past 10 years with its “full range and one-stop shopping” advantage.
The characteristics of low frequency, high price and heavy experience at home make Red Star Macalline able to withstand the impact of the Internet and squeeze small and mediumThe space of the store ushered in a contrarian expansion.
In this process, the service is also a competitive advantage for Red Star Macalline, such as providing financial and logistics services. In the face of the pressure of being hit by the Internet and the huge benefits that can be brought about by embracing the Internet, Red Star Macalline will naturally not be indifferent. However, the three-dimensional Internet layout of Red Star Macalline has always been difficult to obtain traffic, and its performance is flat.
In 2012, Red Star Macalline established the online platform of Hongmei Mall (later renamed “Xingyijia”), trying to create a comprehensive e-commerce platform similar to Tmall’s home field. However, within half a year of the operation of Hongmei Mall, 200 million yuan of investment was only exchanged for 40,000 yuan.
In 2013, Red Star Macalline established the “Family Club” website to imitate the brand discount sales model of Vipshop. However, data from third-party monitoring agencies showed that the traffic on the website was extremely small, and even in 2015, there was news of massive layoffs in the e-commerce department.
In early 2016, Red Star Macalline introduced Li Bin, former executive vice president of Suning Tesco. In the previous year, Suning achieved a sales volume of 162.38 billion, of which online platform reached 50.275 billion, accounting for 31%. Li Bin is one of the leaders of Suning’s transformation. The intention of Red Star Macalline to choose Li Bin is self-evident.
In June 2016, Red Star Macalline proposed the “1001” strategy, which opened 1,000 offline stores and built an online platform to achieve online and offline interconnection. With Li Bin’s position adjustment and final separation, The “1001” strategy seems to be on the road.
In fact, not only the Red Star Macalline experienced the pain of Internet transformation in the traditional home store, but the home of the “Home Online” online store has been losing money for two years.
The myth of transformation failure: Can you solve the pain points of users?
In the face of the difficult situation of getting customers, the Internet giant with its own traffic is undoubtedly a quality partner of traditional home stores.
Hongxing Meikailong cooperated with Tencent in the second half of 2018 to build an IMP platform. In May this year, it introduced a high-profile Alibaba shareholding of 13.7%, opening a new retail transformation. As of March 2019, the number of monthly active accounts of WeChat and Wechat reached 1.112 billion, and the monthly active users of Taobao Tmall reached 721 million.
Red Star Macalline hopes to further expand its brand awareness through cooperation with the two, and more accurately deliver home sales information to potential users, stimulating passenger flow and sales.
Compared with Tencent, the cooperation between Red Star Macalline and Ali is undoubtedly more optimistic about the industry. This is not only because the value of 700 million “sales users” is much larger than 1.1 billion “flow users”, but also because Ali is expected to open up brands, merchants and users in home consumption, and improve overall service capabilities and efficiency.
It is still too early to talk about the effectiveness of the strategic cooperation between Red Star Macalline and Ali. But it can be said that the red starThe transformation of the company’s past has not solved the pain point of the C-end users of the traditional home store; the purpose of the new retail should be to focus on the “people” and reduce the burden on the C-end users, but the new retail transformation of Red Star Macalline is still It is difficult to meet this goal.
For a long time, the two major users have pain points, and long-term hindering home consumption has become a kind of “enjoyment.”
First, the decision-making chain for home consumption is longer and the decision-making cost is higher. Compared with FMCG, the purchase frequency of household products is low, and the unit price is high, which directly increases the decision-making cost of C-end users.
At the same time, the home consumption decision chain is extremely long, ranging from pre-sales design, home-sales purchase and home improvement construction, to after-sales service.
More importantly, every aspect of pre-sale and after-sales sales shows a “high correlation.” For example, there is a correlation between goods and goods (beds and mattresses, refrigerators and cabinets); design and goods are related; goods and decoration are also related.
If there is a problem in any of the links, the overall consumption experience and the final consumption result (home improvement effect) are affected. This pushes the cost of user decisions to a very high level.
Therefore, in home consumption, user value is not only reflected in the moment of purchase payment, but also in the simple home store environment, but also in every link in the long decision chain.
Second, information asymmetry in home consumption is higher. The problem of “where to buy” and “what to buy” for C-end users is usually easier to solve in the fast-moving industry, because the consumer demand is clear, and well-known brands in the industries such as daily chemicals and food are concentrated.
With different household consumption, high-discrete industry characteristics, high-associated consumption links, and high-complexity customer demand ultimately lead to extremely high information asymmetry in household consumption.
At present, China’s home furnishing industry is “highly discrete”, that is, the channels, categories and brands of consumption are highly dispersed. For example, in the sanitary industry, the head brand only accounts for about 2% of the entire industry.
According to statistics, after the C-end user enters the home improvement cycle, he has to go through more than 20 links and deal with seven different types of characters to purchase hundreds of categories of goods.
What consumers are facing is not the purchase of a certain product, but a super-large project involving multiple links in various fields. At the same time, due to the difference in house type, preference and purchasing power, the personalization of household consumption is higher, and thousands of people face each other, further improving the difficulty of providing information in stores and brands.
In the new retail transformation, the pain points of users in the home industry have also led to different transformation effects than the fast-moving industry.
As a representative of the new retail transformation in the fast-moving consumer market, RT-Mart effectively mitigated the problem of information asymmetry through Ali, and optimized and upgraded the consumer experience on the basis of the original.
First of all, “Where to buy”, mobile Taobao will actively locate the user location in real time, providing users with 3 publicThe RT-Mart store in Rine guides users to shop. In response to “what to buy”, mobile phone Taobao based on the consumer’s past browsing purchase data, accurate recommendation of goods, and at the same time in the store to set up Tmall supermarket network red list of goods shelves, to reduce consumer decision-making burden. Finally, RT-Mart also optimizes the shopping experience with new technologies such as unattended, self-service shopping machines and face recognition.
At present, Red Star Macalline has achieved digital sales through cooperation with Tencent and Ali, including Unicom’s online and offline platforms, focusing on user big data analysis and using analysis results to sell products, through independent research and development of shopping robots, etc. Develop self-service shopping, and introduce consumer finance and liberalization of settlement methods.
On the other hand, it is committed to the upgrade of store outlets, mainly to create a multi-format integrated mall and realize the layout of the scene home sales environment. It is a pity that whether it is digital sales or store renovation, the solution to the pain point of C-end users is still stuck in the itching.
Specifically, Red Star Macalline did not propose an innovative future home consumption model.
Until today, the consumer process provided includes six steps: “Consumer Generated Requirements – Online Generation Design – Store Store Experience – Choice Design – Purchase – Home Improvement”.
In this process, pre-sales, because the big data generation solution is still relatively primitive, lacking high-level designers that consumers can afford, whether it is a machine or a manual design solution can not be converted into a purchase plan on a large scale. . Consumers still need to go to the store experience in person, and bear the workload of a large part of the program selection and even design.
In the sale, due to the complicated and different grades of the home brands of Red Star Macalline, the shopping guide robots provided for the convenience of self-service shopping can not effectively respond to the diversification problems from consumers in reality, but further increase consumption. The difficulty of obtaining information.
After-sales, Red Star Macalline did not propose a transformative refinement to the problems that may be encountered in the traditional home improvement process.
Therefore, Red Star Macalline’s existing new retail transformation has neither reduced the length of the consumer’s decision-making chain nor eased the information asymmetry of consumers’ entire process of home consumption. Simply analyzing the user and enterprise data on a single platform and launching a shopping guide robot does not break the limitations of high dispersion, high correlation, and high complexity in home consumption.
New retail transformation: Is it a icing on the cake or a comprehensive innovation?
In the proposed IPO listing in early 2018, Red Star Macalline said: “Since offline stores are still an important part of consumer experience and purchasing decisions, the company’s strategy to develop an Internet retail platform The focus is to give full play to the advantages of combining offline store entities.”
The offline channel is certainly the advantage of Red Star Macalline, but we have to ask: Can the new retail transformation innovate the traditional home store industry?Or can it only play a icing on the cake at best? It depends on several aspects.
First of all, whether Red Star Macalline can transform its business-centric business ideas and truly form a C-side user-centric concept.
It is also the home industry. IKEA and Red Star Macalline have different operating modes, but their emphasis on user value is worthy of domestic peer research and learning. This kind of learning should not only stay in the specific operation methods such as setting up the dining area, but should reconstruct the operation process based on the user’s needs.
For example, IKEA found that the handling of large and bulky furniture was a torment to consumers. So in 1965, the idea of flat self-assembled furniture was proposed. Most of the IKEA products today rely on flat sheet form, any A private car can carry a table that could not be put down.
At the same time, IKEA has also prepared an easy-to-understand picture description, and the fool-like assembly ensures that every consumer can complete the installation of the furniture.
Recently, in order to comply with the idea that some consumers are reluctant to assemble and transport, it is time-consuming and labor-intensive. IKEA is equipped with on-site distribution and installation services on the basis of “self-loading and self-installation”. Moving up one more level, IKEA is committed to helping users improve their taste, connect their emotions and share their achievements.
In the past three years, IKEA’s revenue growth in the Chinese market has slowed down, and even fell below 10% in 2018, causing some commentators to question.
However, according to a survey by the billion-dollar think tank, IKEA still topped the “2018 China Large Home Store Customer Satisfaction Index” with a score of 75.4 points, and the Red Star Macalline score was lower than the industry average.
Second, whether Red Star Macalline can abandon its dependence on the rent collection model and carry out real refinement operations. It is worthy of recognition that Red Star Macalline has successfully bet on the general trend of China’s real estate appreciation, and has built an irreplaceable offline channel, which has formed a high level of competition barriers and has long benefited from the rent collection model.
However, despite the fact that Red Star Macalline’s revenue and profit growth data exceeded expectations in recent years, the increase in performance was mainly due to the expansion of store numbers and rental increases, which was not the improvement of store operation efficiency and efficiency.
At the same time, the high debt ratio caused by the expansion of offline channels has also become a worry for its operations. Cooperation with Ali will definitely help Red Star Macalline in docking new business, such as boxing and application of digital technology. However, in order to truly solve the pain points of C-end users, it is necessary to continuously explore the operating mode.
The third is whether it can really make up for the shortcomings of online channels and recreate an online red star Macalline with a magnitude or even more than offline channels. As some consumers have formed the consumption habits of offline experience and online purchase, the offline channel of Red Star Macalline has become a place of experience for other online channels to some extent.
You can compare Suning, which started as a home appliance hypermarket. The sales volume of goods in 2018 reached 336.757 billion yuan.208.354 billion yuan, accounting for 61.9% of the total, will be far behind the opponents.
Behind Suning’s anti-superline line, Suning’s online channel exploration and breakthrough since 2009.
Red Star Macalline 2018 Annual Report said that its achievements in Internet retailing include that its new Internet retail platform has achieved nearly 15,000 merchants signing up; it has achieved 81 cities under the line of Red Star Macalline The shopping malls and the online platform of goods and services docked; in the report period through the online platform coupons to achieve offline goods sales of 269,000 singles, the transaction amounted to 8.16 billion yuan. Compared with several sets of data, Internet retailing still has the suspicion of “thunder and heavy rain”.
In terms of scale, Red Star Macalline is still the leader in domestic home stores, but in the future, it is necessary to learn how to focus on user value and further carry out refined operations.
The idea of a new retail transformation lies in “people,” and the future belongs to a company that truly creates user value. This is the soft power of enterprises above the hard indicators such as revenue and market value.