This article is fromWeChat official account: Every Jing Toutiao (ID: nbdtoutiao), the original title “The Carrefour of “Late” Turning to the Internet, the Revelation of the Rebirth of Foreign Supermarkets”, reporter: Wang Xingping, editor: Wang Lina
Now it seems that the decision made a year ago gave the “late” Carrefour a new life.
In the 24th year of entering China, Carrefour finally chose to retreat by selling itself to Chinese companies. In September 2019, Suning Tesco officially completed the handover with Carrefour and became the controlling shareholder of Carrefour China.
Before the acquisition, losses were the norm for Carrefour in the past few years. However, this situation began to change after the acquisition. On the first anniversary of Suning Tesco’s acquisition of Carrefour China, Tian Rui, CEO of Carrefour China, accepted an exclusive interview with reporters from the “Daily Economic News”. According to Tian Rui, in the first quarter after being acquired by Suning.com, Carrefour China turned losses into profits and remained profitable under the influence of the epidemic in the first half of this year.
Behind the profit is Suning Tesco’s transformation of Carrefour over the past year. When acquiring Carrefour China, Suning Tesco announced Carrefour China’s “Five Major Upgrade Strategies”, covering five aspects including digital transformation, scene transformation, store expansion, home-to-home service, and supply chain opening. Now it seems that in one year, the integration of the “Sujia” model has gradually succeeded, and will this provide a sample of the transformation for the transformation of foreign stores with the same background as Carrefour?
“Don’t be afraid to send it again”
“I remember it very clearly, because it was Saturday and I was on vacation, and suddenly I received a call saying that I should be called back to the company for a meeting to discuss the renovation of the store.”
September 28, 2019, the day after Suning Tesco officially took over Carrefour China, recalled Hu Zhigang, the head of the grocery front desk of Carrefour Shanghai Gubei, who received the call.: “Because before, we almost never receive work calls on weekends.”
Of course, it was not just Hu Zhigang who received the call, Qu Haibin was also one of them. However, as an “old man” who has been in Carrefour since 2007, Qu Haibin is not only not anxious about this sudden “change,” he is also looking forward to it. Because the department he was in charge of was full of problems at the time, “I think there is nothing worse than it was then.”
Four years ago, Qu Haibin transferred to Gubei Store and began to take charge of the store’s e-commerce business. At that time, Carrefour’s e-commerce business orders were more from the Carrefour online mall APP and Carrefour WeChat applet, hoping to provide consumers with next-day services.
Carrefour Gubei Store
Picture source: every photo by reporter Wang Xingping
According to Qu Haibin, the previous method of processing online orders was more traditional. When an order was placed online, he would take a photo and post it in the company’s WeChat group. The clerk in the group went to pick up the order for the category he was responsible for. Goods, whoever is in charge of what kind of goods will pick them up, and then pile them together for picking.
This kind of operation does not seem to be a big problem. But when the number of orders increases, the efficiency of picking and packing cannot keep up. This troubles Qu Haibin. On the one hand, he hopes that online orders will increase, and on the other hand, he is worried that his ability to fulfill contracts will not keep up with the excessive orders.
Carrefour opened its first store in Beijing in 1995
However, the reality is that the Carrefour Gubei Store that existed in 1998 has always been known as Carrefour AsiaThe first store in Zhouzhou, due to its reputation for goods and services, has gradually increased online orders after opening its online business. As a result, backlogs of orders, damaged goods, etc. often occur, especially during the promotion period, problems will appear more.
As a result, a large number of customer complaints will follow. According to Qu Haibin, just before the renovation of the store, the number of customer complaints from the department had always been relatively large, at most more than 3,000 a month, which put him under a lot of pressure.
Now, customer complaints are no longer a problem that Qu Haibin needs to face. “We have almost no customer complaints every month. At most, there will be one or two orders occasionally. We will deal with this soon.” Qu Haibin said.
This effect has been achieved by the rapid improvement of Carrefour’s home service performance capability over the past year.
On Double 11 in 2019, Suning Tesco announced that Carrefour would join the “1 hour scene life circle” and take Carrefour as the core layout of the near field. As the first batch of integrated and transformed stores, Gubei Store also launched the “one-hour delivery” service. Consumers within 3 kilometers of the store can receive the goods within one hour.
According to our understanding, the current daily average of online orders at Carrefour Gubei Store is around 1,200. And this business is rapidly expanding. It is understood that last year the online accounted for only 4% to 5% of stores, and now this proportion is close to 8% to 12%, and the number of orders has also doubled many times.
“I am not afraid that I can’t deliver it now, so I hope that more online orders can be made.” Qu Haibin said.
Carrefour has the taste of the Internet
The increase in orders has made Qu Haibin’s work more busy. And “getting busy” is almost the biggest feeling of all Carrefour employees this year. But when the reporter asked whether the employees liked the current rhythm, it seemed that everyone was quite immersed in this busyness. The reason is that the reporter gets more feedback: there is hope.
Carrefour store
Image source: every photo by reporter Wang Xingping
In the eyes of many people, Carrefour now has the flavor of Suning. What used to be a traditional hypermarket is now more and more like an Internet company.
“Be vigorous and vigorous” is what Qu Haibin thinks is the most Suning flavor. “For example, it doesn’t matter where this problem may not be done well in the past, you can postpone it later, but Suning’s style is not like this. After a program has been verified by the store, there is no problem requiring it to be posted three days later. Then you need everything within three days. All in place.” Qu Haibin said.
For the outside world, Carrefour’s most obvious “Suning flavor” this year is undoubtedly the integration with Suning.com.
From the perspective of external changes, the most obvious thing is that Carrefour is no longer synonymous with hypermarkets, but a retail complex with multiple formats coexisting.
In terms of business layout, Carrefour implements a “1+2+1” business combination. “1” refers to the community life center in the far field. This kind of store generally has an area of more than 15,000 square meters, a radiation radius of 3 to 5 kilometers, and covers a population of two to three million. This type of store is mainly from two sources, one is the transformation of the original hypermarket, and the other part is the newly opened store.
“2” refers to the community standard and selected stores in the midfield. Among them, the community standard area is 1000~2000 square meters, and the radius is 1.5 kilometers, mainly in the neighborhood; the area of selected stores is generally In 4000~5000 square meters, it is mainly opened in shopping malls. Compared with the former, its positioning in terms of merchandise and decoration will be higher.
According to Tian Rui, there are currently 10 selected stores of this kind opened in shopping centers, of which 8 were transferred by Su Xiansheng, and the remaining two were newly opened later.
The other “1” is the near-field community fresh food store closest to the user, with an area of 500-800 square meters and a radiation surrounding 500-1000 meters. This format opened in Shanghai on September 30.
In addition to the store, Carrefour will also pilot the next day delivery to expand the scope of compliance, and achieve the city where Carrefour is located within 3 kilometers an hour, 3 kilometers to 10 kilometers half a day, and 10 kilometers away the next day delivery . The specific approach is to choose a store in each city as the fulfillment center, and use an area of 3,000 to 4,000 square meters as a warehouse for online fulfillment.
According to Tian Rui, Carrefour currently has about 200 hypermarkets and 10 selected stores in 52 cities in China.(Boutique Supermarket), 21 easy convenience stores. According to the current plan, Carrefour will open about 15 new stores this year.
In fact, in the past year, the integration of Suning Tesco and Carrefour was not just in terms of business formats. For example, behind the change in business format, Suning also carried out a full-link digital upgrade of Carrefour’s entire supply chain. The first is to digitize Carrefour’s SKU. On this basis, Suning integrates the procurement, orders, warehousing, distribution, contract performance, and membership services of the entire Suning FMCG system.
redefining the hypermarket
The reason why Carrefour will be transformed with the “1+2+1” business combination is not only based on Carrefour’s own advantages and Suning’s ecological thinking, but also Tian Rui’s thinking on hypermarkets.
Tian Rui believes that channels are divided into online and offline channels, but consumers are more about distance. Therefore, offline stores now need to combine large and small formats to complement each other’s consumer groups that they cannot cover. At the same time, offline stores have long passed the era of “one trick to eat all over the world”, so today’s stores must be diversified.
Tian Rui pointed out very clearly that the reason why Carrefour’s original advantages will remain in the transformation process is because he believes that the “one-stop shopping” concept upheld by the big sellers is not outdated, and consumers are still One-stop shopping is needed; the reason for the large-scale transformation is actually because the scene and content that carry “one-stop shopping” do not match the needs of current users, and the reason behind this is Caused by the homogenization of commodities.
Based on this judgment, Tian Rui believes that what needs to be resolved at the moment is to upgrade the store’s products.
At present, Carrefour’s product upgrades this time are more about the scene of “eating”, mainly focusing on categories such as fresh food, food and catering. The reason for this is because, in Tian Rui’s view, the products in the “eating” scene are high-frequency consumption, which can attract consumers to shop for consumption.
For example, in food, increasing the number of new products and online celebrity products is an important means of Carrefour’s product transformation. The reporter previously saw in the Carrefour Beijing Shuangjing store that had been upgraded and remodeled in July this year. There were a lot of new brands that were not commonly seen in supermarkets before. In the prominent position of the store, there are also popular displays on the Internet. Internet celebrity products such as plum and snail noodles, cocoa velvet flavor Zhong Xuegao, soda from the second factory in Hankou, and Ovaltine milk malt solid beverage.
According to Tian Rui, Carrefour has introduced more than 2,000 online celebrity items so far. “In general, the output of these online celebrity products is not bad. Therefore, it is more determined that the entire food category will be reformed. It is to advance in the direction of youth, health and personalization.”
In terms of catering, the reporter also noticed that more and more Carrefour stores have added catering areas. This category of products is more adopting the method of integrating the resources of brand owners, doing asset-light operations, produced by the cooperative central kitchen, and sold after simple processing on site.
In the department store and textile categories that are currently in a “semi-abandoned” state in many stores, Carrefour has also made major adjustments in its positioning in the past year and changed it to experiential categories. Through the three methods of joint operation, agency sales and distribution, the transformation is carried out in the form of small and beautiful brand shop-in-shop. Carrefour only controls the inventory, the purchase price and the price of the category.
It is not difficult to see that for the fresh food, food, household and other sectors, Carrefour has adjusted to different degrees in each sector, but no sector has been strategically abandoned or ignored. This is also consistent with the thinking mentioned by Tian Rui, “There is nothing wrong with one-stop shopping in hypermarkets.”
Of course, in the process of transformation, Carrefour did not just add brands and products, because this does not conform to the current business philosophy of selected products in hypermarkets. Therefore, Carrefour will regularly eliminate products that are less than a certain value. It is understood that 6,000 products have been eliminated from Carrefour stores.
However, Tian Rui also pointed out that the number of selected products is a general direction of the industry, but it should not be too radical, because this is related to the deep-seated problems of the supply chain.
Suning’s “conspiracy”
Time goes back more than a year ago. On June 23, 2019, Suning Tesco announced that it would acquire 80% of Carrefour China’s shares for 4.8 billion yuan in cash. This news is undoubtedly like a “depth bomb” that will instantly make the market boiling.
Despite Carrefour’s reputation, Carrefour China has almost always been at a loss in the seven or eight years before Suning’s acquisition. People in the industry talked a lot about taking the “behemoth” of Carrefour China. For Suning, is the deal a good deal?
Suning.com’s announcement shows that as of December 31, 2018, Carrefour China’s total equity attributable to the parent company was 1.927 billion yuan, and the net profit attributable to the parent company’s owners in 2018 was -578 million yuan.
Carrefour China’s main financial indicators in 2018 and 2017
Picture source: Suning Tesco announcement
Such a big move, Suning certainly has his own “conspiracy.”
When announcing the acquisition at that time, Suning said that the acquisition of Carrefour China would help make up for the shortcomings of its big fast-moving consumer. According to the announcement by Suning.com, the integration of Carrefour China into Suning’s ecology will mainly promote the development of Suning.com in the fast-moving consumer goods field in the future, thus allowing the leap-forward development of the current big fast-moving consumer category.
Obviously, in the past year, Suning has been doing its best to integrate Carrefour into the Suning ecology. Now that the “Su family” has been integrated for one year, Suning is satisfied with the current situation of Carrefour.
After the release of this year’s semi-annual report, Suning Tesco said in response to analysts’ questions that Carrefour’s first phase of integration was relatively smooth. Carrefour achieved a profit of more than 100 million yuan in the first half of the year, and its cash flow has also turned positive. The integration of Carrefour will enter the second phase.
Suning is committed to let Carrefour quickly integrate into the ecology, so how does Carrefour China integrate into Suning to promote the development of Suning’s FMCG?
Tian Rui said that the rapid integration of Suning Carrefour in the past year was not a blind investment from Suning. Carrefour’s performance has also contributed to Suning’s business. In addition to allowing Suning to lock in the resources of high-quality large-scale domestic supermarkets, Carrefour is still Supply chain, membership and other aspects have promoted Suning.com’s business.
“In fact, Suning.com’s online supermarkets do not lack traffic, but what are they lacking? The first lacks a better supply chain and products, and the second lacks a better, closest performance to users. Scene. After Carrefour joined in, Suning Tesco just made up all of them.” Tian Rui further told reporters.
At the level of scene integration, as an important part of Suning’s full-scenario retail, Carrefour not only forms the scene closest to consumers with the surrounding Suning Tesco Cloud Store, Suning Plaza, Suning Store, and Red Kid’s Maternal and Child Store, but also Suning other industries within 3 kilometersOpen up the connection to make Suning’s “1 hour scene life circle” more complete.
At the level of supply chain integration, in May this year, Carrefour’s supply chain was fully integrated into Suning’s store, and the integration of Carrefour and Suning’s stores was completed through store-warehouse integrated construction, which caused Suning’s store to increase by 30,000. Multiple products. Through the opening of the supply chain, the daily sales of Suning’s single store increased by more than 30%. At the same time, the overall gross profit margin of Suning’s store increased by 5%-6%.
According to Tian Rui, Carrefour expects to fully open its supply chain by the end of October, open to all social channels, third parties, and even some regional supermarket chains. From the outside, this is also consistent with Suning.com’s positioning as a “retail service provider”.
In addition, in the past year, Suning merged Carrefour members into Suning Tesco’s membership system and used digital channels for user operations. For each Carrefour member, Suning has established digital touchpoints in every stage of activation, conversion, repurchase, and wake-up. It is understood that 80% of Suning.com’s current paying members come from Carrefour. The addition of these members has greatly improved Suning’s daily activities.
However, these are not the final results. “The real effect has not yet appeared.” Tian Rui said that the integration of Suning and Carrefour will probably be completed in September 2021, when the integration effect of “multiple scenes and one inventory” will be fully revealed.
The “rebirth” of foreign hypermarkets in China
Although Carrefour’s transformation has not yet been completed and the effect has not yet fully emerged, it clearly gives the current foreign-funded hypermarkets more hope.
In the 1990s, foreign giants such as Metro, Carrefour, Wal-Mart, Auchan, Lotte Mart, and RT-Mart, Haoyouduo and other Taiwan-funded hypermarkets entered mainland China to compete for the market. In the golden decade at the beginning of the 21st century, mainstream foreign-funded enterprises maintained an average annual growth rate of 15-40, and the changes brought about by China’s retail industry were not trivial.
When large international supermarket chains enter China and their first store location
At that time, “foreign monks were good at chanting”, and most foreign-funded hypermarkets could easily defeat retail companies everywhere. At the same time, foreign-funded hypermarket companies have also become the Whampoa Military Academy of China’s modern retail industry, exporting a large number of procurement and operation talents.
However, after 2010, with the continuous development of the domestic retail industry, more and more retail scenarios have emerged. Hypermarkets are no longer the most advanced format in the market, and the sales level of single stores no longer maintains growth. It is not uncommon for subsequent store closures to adjust.
Sales of leading supermarket companies in China (100 million yuan)
With the further decline in performance, foreign-funded enterprises have begun to retreat and have begun to sell themselves in the Chinese market. From the earliest Taiwanese-funded “good and much” sold to Wal-Mart, then Tesco became China Resources, RT-Mart and Auchan sold to Ali, and last year Carrefour committed to Suning and Metro was taken by Wumart. At present, Wal-Mart is still insisting on it, but in September this year, there have been news from time to time that Wal-Mart has negotiated with some companies on the sale of part of the Chinese business of hypermarkets.
The failures of foreign-funded hypermarkets are steadily retreating. If we want to summarize the reasons, it is undoubtedly that “the success is also the failure.” At the beginning because of the rapid rise of low-cost dividends, now it is also left behind because of the disappearance of this advantage. But in the final analysis, in the eyes of industry professionals, it is because its thinking has failed to keep up with the changes in the market.
“New retail, new normal” is a sentence repeated by Tian Rui during the interview. Tian Rui said that the Chinese market is changing too fast, and consumers are the fastest to change. Therefore, if hypermarkets want to survive, they must change and they must adapt to the Chinese market.
Inspired by Carrefour’s transformation, the reporter noticed that on September 26, after more than two months of upgrading, Metro’s first new concept shopping mall in Shanghai officially opened in Putuo, Shanghai. The reporter of “Daily Economic News” saw in Metro Putuo Mall that the towering shelves of Metro had been reduced in this new mall, and more warehouse boards that were in line with consumers’ sight were added. At the same time, new-concept shopping malls pay more attention to fresh and ready-made products, increasing 30%Frozen products area, and new transparent processing rooms are added in the meat, aquatic products and baking areas, and new functional areas including juice bar, baking area, dessert shop, tasting station, etc. are added to enrich offline services…
According to Kant, President of Metro China, in the future, Metro will use Metro Shanghai Putuo Mall as a template to deploy new concept shopping malls across the country, and complete the upgrade plan for 35 shopping malls in 2023.
Carrefour and Metro, the two first-line brands in the field of foreign-funded hypermarkets, joined forces with Chinese companies last year, and they were not optimistic at first. Just a year has passed, and through the omni-channel transformation, the Internet flavor of the two traditional hypermarkets has become stronger and stronger.
In the eyes of industry insiders, this may be another form of “rebirth” of foreign hypermarkets.
Of course, Tian Rui also said that the current form of Carrefour’s transformation is only a change made according to market characteristics in a certain period of time. This is not the ultimate form, and it may continue to be optimized in the future.
Reporter’s notes: In the changing situation, companies can only go more stable if they continue to seek changes.
In the trajectory of our personal lives, “seeking change” and “seeking stability” are often two contradictory directions. But in the commercial market, “change” and “stability” are often mutually accomplished.
Reviewing business history, it is not difficult to find that no successful company is immutable, and no outstanding company is constantly seeking change. Just as Amazon started out as an online bookstore, it continued to explore after becoming an e-commerce giant, and then became a super giant with its cloud computing business; another example is Alibaba, which gradually upgraded from an e-commerce platform from B2B to Taobao and Tmall to cloud computing “Digital Economy”. These excellent companies are telling the outside world: Those companies that can cross the cycle have done the same thing right, that is, seeking change.
As Tian Rui, CEO of Carrefour China, repeatedly repeated during the interview, “New Retail, New Normal”. Rapid change has become a problem the industry has to face, and under this circumstance, no one dares to determine what the market will become in the next few decades. What can be done is to find the context of the development of the industry as much as possible based on experience, relying on the power of science and technology, and explore step by step. Therefore, changes with time must be the step that all companies need to take.
Change, first of all, is a change in philosophy, which is also the most difficult step for many companies to take. Just like foreign-funded stores in recent years, the reason why they will quickly lose out in the Chinese market is really because of insufficient funds.Or is it because of technical ability? Obviously not, the most important thing is not paying attention to the concept.
In Tian Rui’s view, the Chinese market is changing too fast, and consumers are the fastest to change. Therefore, if hypermarkets want to survive, they must change and they must adapt to the Chinese market.
And once you make up your mind to change, many results that were previously thought impossible will often become reality. Even the “late” enterprises can still be reborn. This can be fully reflected in Carrefour China. Therefore, if an enterprise wants to go better and further, it must not stand still, and must adjust its business thinking in time according to market changes.
Of course, change is not blind change. We must pay attention to methods and strategies. We must rely more on the power of technology to assist us in making more perfect decisions, so as to better achieve the state we want.
This article is fromWeChat official account: Every Jing Toutiao (ID: nbdtoutiao), reporter: Wang Xingping, editor: Wang Lina