This article is from WeChat official account: billion euros net (ID: i-yiou) , Author: May, editor: Qiao Xiaoliang, thematic map From: Visual China
The core point of this article:
1. Blind expansion and unreasonable operation logic are the main reasons for Yonghui mini’s closing and adjustment.
2. If you do not continue to deploy mini stores, the fresh food business of Yonghui Supermarket will be diluted.
3. In the fierce competition of community stores, Yonghui mini still needs to improve its online business capabilities as soon as possible.
88 stores closed, with a loss of 130 million. Yonghui’s financial report for the first half of the year showed the fact that Yonghui Mini was defeated.
“As the innovative format of Yonghui Supermarket, the mini format model is still in the exploratory stage. However, the mini store is still the key area of Yonghui’s development in 2020.” Yonghui responded to the outside.
But in the eyes of people in the industry, Yonghui Mini obviously has not learned the lessons of Yonghui’s life. In the absence of the model, a large-scale expansion of the store began.
For Yonghui Mini who wants to expand the country, in addition to facing more community formats and competition from rivals, it also faces issues such as location selection, rental costs, and business logic. If you only operate a small store by copying the model of a large store, an unsuccessful situation is inevitable.
Incoming mini
Yonghui is one of the first offline retailers to enter the community mini store. As early as the end of 2018, Yonghui proposed to pilot a mini store and chose to open its first store in Fuzhou.
Entering the second quarter of 2019, Yonghui Mini has entered a period of large-scale store expansion. Excluding the 17 PARKnSHOP supermarkets that have been merged into the Yonghui system and turned into mini stores, a total of 364 new stores have been opened. According to the financial report, as of 2At the end of 019, a total of 573 mini stores were opened throughout the year.
Before Yonghui deployed its mini stores, the trend of miniaturization of hypermarkets and sinking of small businesses into communities has been highlighted, and the commercial value carried by communities is being valued.
“The community is the last mile post to connect consumers. With the acceleration of urbanization, the market demand for community commerce in the future will usher in an increase.“Retail industry analyst Song Yong said analysis.
The “China Community Business Development Report” pointed out that the urbanization rate will reach 67% in 2030, and it is estimated that 12 to 14 million people will enter the city each year, and more than 20,000 new communities will be formed in China. The proportion of total consumer retail sales can reach 60%.
Under this background, community businesses such as convenience stores, boutique supermarkets, and community-based shopping malls will become important directions for retail enterprises to seek transformation and upgrading.
In addition to the market environment, industry professionals have analyzed that the growth space of hypermarket formats is very limited.
According to Euromonitor, in 2018 the supermarket industry (including hypermarkets, comprehensive supermarkets, and convenience stores) has a total scale of 3.1 trillion yuan in the next five years There is no obvious growth change; among them, the total scale of the hypermarket industry is about 650 billion yuan, -2.8% year-on-year.
“E-commerce, specialty chains, convenience stores and other formats are all robbing the traffic of hypermarkets. Large supermarkets such as RT-Mart, Yonghui, and China Resources Vanguard have to find new breakthroughs. For them, small formats Will be an opportunity.” Song Yong analyzed this.
Small business stores have low investment costs, short maturity cycles, diverse play styles, and can occupy streets, commercial areas and residential communities. From a long-term development perspective, they are more in line with the objective needs of the consumer market under the new situation.
But from Yonghui’s own perspective, the layout of the mini format is actually a decision that has to be made. Yonghui Supermarket, which started with fresh food, has its advantages being weakened.
On the one hand, community fresh food supermarkets represented by Yipin Fresh and Aunt Qian are emerging as a new business model; on the other hand, leading supermarket companies represented by Gaoxin Retail and China Resources Vanguard have emerged Open the mini store expansion and improve the multi-format layout.
The more difficult opponents come from online. Fresh food e-commerce companies such as Daily Fresh Food and Dingdong Maicai have brought great challenges to Yonghui’s fresh food business.
“Yonghui’s mini store is actually playing a defensive battle. If there is no such entrance to connect its hypermarkets, the fresh food business of hypermarkets in the future will be diluted.” Retail industry expert Lin Lin Rui explained.
Judging from the number of store expansions mentioned at the beginning, Yonghui is almost rushing in order to seize the market.
In order to develop the community fresh supermarket model, the mini store is positioned as a “family”, and it can be said to be a scaled-down version of Yonghui Supermarket in terms of business categories. Fresh food accounts for more than 50%, and the types of supplies are no less than large. Super daily necessities.
Compared with Yonghui Life, Yonghui mini’s “groundedness” can help Yonghui better sink the community and compete for offline traffic.
It can be said that the general direction of Yonghui Mini’s strategy is correct, but it is radically seeking quickness and blindly opening stores, and store management problems are quickly exposed.
radical layout
At the shareholder exchange meeting in 2019, Zhang Xuansong, the founder of Yonghui Supermarket, set the goal of opening 1,000 mini stores throughout the year.
But the rhetoric soon turned into nothing because of the loss.
As of the end of 2019, Yonghui only opened a total of 573 mini stores throughout the year, and only partially realized profits.
Lin Rui told Yiou that in fact, since the end of 2019, Yonghui has been aware of the operating problems brought about by the large-scale expansion of stores, and has slowed down the opening of stores since the fourth quarter.
“Store expansion is not a simple task. It is necessary to select appropriate property resources, investigate the population density around the project, the situation of competitors within the consumption radius, match the consumption power and customer group characteristics around the project, and evaluate its future development potential And so on.” Some industry insiders analyzed this, but Yonghui, who was only looking at expanding the store, ignored these.
At the financial report meeting, Yonghui Supermarket once admitted that Yonghui mini store is trying its best to run through the model.
“It’s a problem to expand the store on a large scale before the model is fully operational.” Lin Rui believes that Yonghui started to make mini for development, pursuing speed but not quality, operating data and efficiency. It’s not ideal, it’s almost half the difference compared with the more than 30,000 yuan of Yipin Fresh.
In terms of store operation logic, Yonghui Mini almost copied it.
At the beginning of the store opening, Yonghui used the Yipin Fresh which had already been marketed at that time as a case study, learning its store area, product mix and staffing; in terms of distribution, the small store was configured through the original hypermarket supply chain Commodities; management is still the responsibility of the original large store team, and the management method of the large store is copied.
Whether it is from operational thinking, or from operational links, processes and habits, there are big differences between large stores and small stores. You can learn from previous experience, but once you copy it, problems will arise.
The latest financial report for the first half of 2020 shows that Yonghui’s mini store achieved sales of 1.451 billion yuan, a loss of 130 million yuan, only 16 new stores were opened, and 88 stores closed. As of the reporting period, only mini stores remained. There are 458, 115 fewer than at the end of 2019.
“Miniaturization of the store area is just the basis, and the selection of compact supermarkets is more important than that of Dachao. In addition to the advantages of fresh food, Yonghui mini has no bright spots in other categories of product lines. It is not in product selection or in its own It is difficult to get out of the competition if you put a lot of effort into the brand,” Chen Yi, a practitioner in the retail industry, told Yiou.
In the next stage, Yonghui’s consideration of the location model, operation logic, and product selection of the mini store needs to be more refined.
In the adjustment period, Yonghui said that the mini format is still a key area of development in 2020, and the mini store will form a complementary business model with the Bravo store to fill the gap in the existing area.
According to Yonghui’s internal news, the second-generation mini store is undergoing polishing and adjustment and has not yet been fully formed. Compared with the first-generation store of Yonghui mini, the second-generation store has changed in display and business form. In addition, the first-generation stores mainly sell fresh fruits and vegetables in bulk, while the second-generation stores will add more pre-packaged fresh products to strengthen online home-to-home business.
The revision and upgrade of Yonghui mini is mostly based on the consideration of gross profit and efficiency.
Small shops have to face high rents and high labor costs. If the community fresh food store cannot achieve high gross profit, it will be very difficult to make a profit, let alone subsidize the burning flow.
thisIt is also one of the reasons why Fresh Food Legend and other companies are vigorously developing boxed vegetables, semi-finished products, and private brands. By providing consumers with more convenient and safer services, obtaining higher gross profit returns to cover the cost of small stores, and thus support the profit model .
The revision of Yonghui mini seems to be based on this.
Key decisive battle
Compared with previous years, this year’s community store competition has reached the most critical time.
As for large-scale super enterprises, Wal-Mart community stores are accelerating their expansion from Shenzhen; Gome’s first community fresh supermarket “Mei + Fresh” life supermarket has opened in Beijing; RT-Mart is piloting the first RT-Mart in Nantong, Jiangsu -mini.
New retail forces and community fresh food e-commerce are also proactively attacking.
In March of this year, Hema announced that the mini store will accelerate the opening of stores on a large scale, entering the community service and sinking market; Jingdong Qixian life community store will also be launched on a large scale this year; Suning store will be fully open for franchising, plan 3. Annually reached 10,000.
The front warehouses represented by Daily Youxian and Dingdong Maicai are also staking out. Dingdong Maicai plans to open 1,000 warehouses in the Yangtze River Delta in the next two years.
At this time, Yonghui slowed down and entered the adjustment period, which is tantamount to giving up the opportunity to occupy the market.
If you want to catch up in the later stage, Yonghui mini may need to put more effort online.
Some investors said to Yiou that the supermarket industry that started offline is relatively slow to respond to online. If you want to make a breakthrough, the essence is to use new infrastructure such as big data and logistics to improve products and The advantage of service (home business), through digital transformation to improve overall operating efficiency.
In the past two years, Yonghui has gradually transformed into new retail, using e-commerce platforms to empower offline stores. However, due to the weak internal e-commerce genes, they were left behind by Hema and Dingdong in terms of APP orders and number of users.
The “Analysis Report of China’s Mobile Internet Industry from January to September 2019” shows that fresh food e-commerce has shown a “631” pattern in first-tier cities. In Q3 of 2019, the daily fresh food users accounted for about 60% of the total number of fresh food users in first-tier cities, and the Hema APP accounted for about 30%. Yonghui Life APP did not even make the top ten.
On the other hand, the lack of core barriers also allows Yonghui Mini to be in a community with oversupply such as vegetable markets, mom-and-pop shops, non-branded community fresh food stores, meat and aquatic specialty stores, fruit stores, and standard supermarkets. In the fresh red sea, it is difficult to highlight profitability.
“Community business not only sells vegetables, but can also increase long-tail benefits through extended services, such as fast food, cooked food, baking, etc. These are important categories to establish differentiation and increase gross profit, but obviously, Yonghui is in This aspect is missing.” Song Yong said.
Nowadays, many supermarkets regard self-operated cooked food and freshly-made fresh-sale processing as the main means of improving gross profit. RT-Mart’s chairman Huang Mingduan also said that homemade ready-to-eat is something that consumers can remember after eating, attack the minds of customers, make customers scream and turn back.
In addition to the Hema Vegetable Market and Hema Mini, which are focusing on ready-to-eat and fresh food, many regional retailers who have been working hard in one place and one city are also competing with national supermarket chains by creating differentiated and localized cooked food. But the “moat”.
Homogeneity means only price competition.
The slogan of Yonghui mini is “the vegetable market at the doorstep”, which means that its development space lies in its hope to “replace” the vegetable market and compete with vegetable markets, mom-and-pop stores and other miscellaneous supermarkets. In comparison, Yonghui does not have an advantage in price.
It is undeniable that Yonghui’s own relatively complete supply chain may allow it to quickly integrate after transformation, but the current community fresh food needs more refined management.
According to reports, after the transformation, Yonghui Mini will continue to use the previous supermarket model, and the generational change is not large. Insiders said that they still expressed concern about its operational logic.
end
In July this year, seven ministries and commissions jointly issued the “Notice on the Promotion of the Small Store Economy”, proposing to empower 100 service companies to reach the goal of “100 cities, hundreds of districts and 100 million stores”. Driven by the government and the market, small businesses around the community have becomeA battleground for retailers.
Faced with the dilemma of closing stores at a loss, it is imperative for Yonghui to reflect on the strategy of the past period of time.
In the face of intense competition and increasingly critical customers, Yonghui urgently needs to find a more correct path. There is not much time left for Yonghui mini to try and make mistakes.
Retail industry expert Lin Rui, retail industry analyst Song Yong, fresh food retail industry practitioner Chen Yi, and Yonghui internal employees. At the request of the interviewer, the above names are all pseudonyms.
Reference material:
1. “Supermarket Industry: Two Sharp Swords, Improve Efficiency and Breakthrough” CICC
2. “Private retail is brisk, and consumption is recovering at the time” Kaiyuan Securities
3. “China Mobile Internet Industry Analysis Report from January to September 2019” Trustdata
This article is from WeChat official account: billion euros net (ID: i-yiou) , author: May, editor: Qiao Xiaoliang