Facing high-intensity competition and increasingly critical customers, Yonghui urgently needs to find a more correct path.

Editor’s note: This article is from the WeChat official account “Yiouwang” (ID: i-yiou), author May, editor Qiao Xiaoliang. Released with authorization.

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 also 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 stores that have been merged into the Yonghui system and turned into mini stores. PARKnSHOP has opened 364 new supermarkets. According to the financial report, as of the end of 2019,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, Future communityThe market demand for commerce will usher in an upward trend.” Retail industry analyst Song Yong analyzed this.

The “China Community Business Development Report” pointed out that the urbanization rate will reach 67% in 2030. It is estimated that 12 to 14 million people will enter the city every year in the future, 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, the total size of the supermarket industry (including hypermarkets, supermarkets, and convenience stores) in 2018 was 3.1 trillion yuan, and there will be no significant growth in the next five years. Among them, the total size of the hypermarket industry is about 650 billion yuan, which is- 2.8%.

“E-commerce, specialty chains, convenience stores, etc. are all grabbing traffic from hypermarkets, such as RT-Mart, Yonghui, China Resources Vanguard These large supermarket companies have to look for new breakthroughs. For them, small businesses will be An opportunity.” Song Yong analyzed this.

Small business stores have low investment costs, short maturity cycles, diverse play styles, and can account forLeadership From the perspective of long-term development, the end lanes, commercial districts and residential communities 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, Yipin Fresh, Aunt Qian and other community fresh food supermarkets as representative A new business model continues to emerge; on the other hand, leading supermarket companies represented by Gaoxin Retail and China Resources Vanguard have opened mini stores to expand and improve their multi-business layout.

The more difficult opponents come from online. Daily Fresh, Dingdong Shopping and other fresh food e-commerce companies 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 “Homework“, business category The above can also be said to be a scaled-down version of Yonghui Supermarket. Fresh food accounts for more than 50%. The types of supplies are no less than the daily necessities of Dachao.

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 issued a total of573 mini store, only partially realized profit.

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.

The next stage, alwaysHui needs to be more refined in considering the location model, operation logic, and product selection of the mini store.

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 life of the first generation store fresh fruits and vegetables are mostly sold in bulk, and second-generation stores will add more Pack fresh food and strengthen online 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.

This is also Fresh Legends and other enterprises vigorously develop boxed vegetables, semi-finished products, and private label One of the reasons is to cover the cost of small stores by providing consumers with more convenient and more secure services and obtain higher gross profit returns to 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.

In terms of large super enterprises, Wal-Mart community stores are accelerating their expansion from Shenzhen; Gome’s first communityFresh supermarket “Mei + Fresh” life supermarket has opened in Beijing; RT-Mart has piloted the first RT-Mart MART-mini in Nantong, Jiangsu.

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 and enter the community service and sinking market; Jingdong Qixiansheng Living Community Store will also be launched on a large scale this year; Suning Store It is fully open to franchise, and plans to reach 10,000 in three years.

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.

An investor 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 the overall operational 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.

“January-September 2019China Mobile Internet Industry Analysis Report” 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. Some insiders said that they stillCamp logic expressed concern.

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 become a must 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.

Thanks

Due to space limitations, I could not attach all the content, but thanks to many professionals for providing in the writing process of this article For valuable views and rich cases, special thanks (in no particular order):

Retail industry expert Lin Rui, retail industry analyst Song Yong, fresh food retail industry practitioners Chen Yi, Yong Hui internal employees. At the request of the interviewer, the above names are all pseudonyms.

Reference material:

1. “Supermarket Industry: Two Sharp Swords, Breakthrough in Efficiency” CICC

2. “Private retail is breeze, and consumption is recovering at the time” Kaiyuan Securities

3. “China Mobile Internet Industry Analysis Report from January to September 2019” Trustdata