In addition to the collapse of supermarkets, Yonghui’s super species and mini stores have also shrunk rapidly. The warehouse supermarket, which began to expand vigorously last year, faced the dilemma of closing its stores for the first time.
One year after exploring the "warehouse store" model, Yonghui Supermarket (SH:601933) ushered in the closing of the first warehouse supermarket.
A few days ago, Yonghui Supermarket Shijiazhuang White Plaza Store announced the closing of the store for clearance. According to the signs in the store, the clearance promotion period lasted from July 29th to August 7th. It is reported that the store opened in November 2014, and in July last year, it became one of the experimental stores where Yonghui transformed hypermarkets into storage supermarkets.
In recent years, domestic hypermarkets are on the ebb tide, and Wal-Mart, Carrefour and Yonghui have frequently closed their stores. In addition to folding the hypermarket, Yonghui’s super species and mini stores have also shrunk rapidly. The warehouse supermarket that began to expand aggressively last year faced the dilemma of closing its stores for the first time.
Under the preferential efforts of 30% off clearance, the store triggered a rush to grab goods. "When I went, there were a sea of people, and I came out without buying anything." Local resident Xiao Chen (pseudonym) said that as of August 2, many shelves in the supermarket were empty.
In fact, driven by Costco and Sam, the founders of warehouse member stores, domestic supermarkets have entered the market one after another, running out of two forms: warehouse member stores and warehouse supermarkets. The former can only enter by paying for membership, while the latter has no restrictions. In terms of scale, Yonghui is currently the head player of the free storage supermarket. Since the trial in May 2021, a total of 53 stores have been opened by the end of that year.
However, Time Finance found that domestic players, such as Box Horse and Yonghui, seem to be still in a simple imitation stage, and their fist products, such as roast chicken, Swiss rolls and cheese rolls, are very similar to those in Sam.
I opened 53 storage supermarkets in 7 months, but I was told that they were all miscellaneous brands.
In Shijiazhuang market, well-known supermarket chains such as Beijing Hualian, Century Lianhua, Wankelong, Shenzhen Renrenle, Beijing Huapu are as busy as they are when they come, and as embarrassed as they leave.
Among them, Yonghui’s White business district is the most competitive, and local enterprises such as Baolongcang, Beijing Huapu and Yichu Lotus have settled here successively, and then left angrily. Now with the exit of Yonghui Warehouse Supermarket, northland supermarket, the local strongman, has become the final winner.
In 2011, Yonghui Supermarket entered the Hebei market, and expanded 9 stores within 3 years, becoming a small scale. In 2014, it opened its doors on the first floor of White Square to welcome guests, with a leased area of 13,115 square meters. The store was separated from northland supermarket by a street, and they had a hand-to-hand fight in the following eight years. In 2022, northland supermarket celebrated its 15th anniversary, but Yonghui ended in failure.
A supplier of Yonghui Supermarket told Time Finance that when Yonghui first entered the Shijiazhuang market, a local supermarket had an operation to let the supplier choose one.
According to public information, northland supermarket belongs to Shijiazhuang Beiguobai Group Co., Ltd., with a state-owned background, and its commercial map involves shopping centers, department stores, cultural tourism and entertainment, community commercial complexes, catering services, supermarkets, warehousing and transportation, jewelry and other formats. Company official website shows that it has 37 supermarkets in Shijiazhuang, covering a wide range.
In addition, due to the great influence of northland supermarket and its parent company in Shijiazhuang, supermarket shopping cards are still the choice for many enterprises to distribute employee benefits. There is a local saying that half of the people in Shijiazhuang have shopping cards from northland supermarket.
Time Finance learned that after Yonghui upgraded its warehouse supermarket in July last year, it made a compromise in product selection in order to make up for the profit gap caused by the decrease in gross profit. On the one hand, there are more miscellaneous brands in supermarkets, such as 1828 herbal tea toothpaste, which is being cleared and sold in 5 yuan. "I have never heard of this brand, and I feel that what northland supermarket sells is a brand, so Yonghui Supermarket has few brands, so I go less," said resident Jingjing (a pseudonym).
On the other hand, storage supermarkets are characterized by expanding the number of stores, streamlining the number of goods (SKU) and large packaging. Although large-scale sales are conducive to increasing the unit price of customers and attracting family customers, streamlining SKU puts forward higher requirements for the supply chain and product selection ability, and consumers have fewer choices. Therefore, when the quality of the goods can’t win, the decrease of the available categories will lead to the loss of consumers.
Local residents have a deep understanding of this. Xiao Ke (pseudonym) told Time Finance: "It may be because there are too few kinds of goods, and the things provided by the North are really complete." However, according to her, she went to Yonghui more often than in the north, "because Yonghui has fewer people and provides pet dog cages, which is very friendly to consumers with pets."
In May 2021, Yonghui announced to test the water storage supermarket. In July, it took the lead in closing and upgrading the store in Dongsheng Square, Shijiazhuang. According to the annual report data, by the end of 2021, Yonghui had opened 53 storage supermarket stores. However, while expanding its stores in a big way, Yonghui Supermarket harvested its first annual report of revenue decline since listing. In 2021, its operating income decreased by 3.8% year-on-year, and the net profit attributable to shareholders of the parent company was 3.93 billion yuan, a decrease of 5.72 billion yuan compared with the same period of last year.
Lack of explosive ability, staying in the imitation stage.
In August 2019, Costco, the head enterprise of warehousing member stores, entered China and landed its first store in Shanghai. On the opening day, the roads around the store were congested and there was a large passenger flow in the store, which led to the suspension of business that afternoon.
Sam entered China in 1996. According to the data released by Wal-Mart China, by the end of November 2021, the number of Sam member stores in China had reached 36, the number of members exceeded 4 million, and the membership fee income was 1.04 billion yuan. Wen Ande, President of Sam Member Store and Deputy CEO of Wal-Mart China, said that by the end of 2022, the number of member stores in Sam will reach 40-45.
Foreign players have a strong momentum, and domestic retailers are super aware that the spring of warehousing membership is coming. Since then, Box Horse, Yonghui, Metro China, etc. have entered the market one after another, and launched two forms, namely, a charging warehouse member store and a non-charging warehouse supermarket, which are regarded as the company’s second growth curve. In order to become the winner of the new track, all enterprises regard store expansion as the first step to seize the market.
After Metro China was acquired by Wumart, in May, 2020, it began to launch a paid membership program in 13 Metro stores, namely, PLUS membership, with a price of 199 yuan/year. Wumart’s prospectus shows that as of December 31, 2020, the number of PLUS members has increased to 1.48 million, of which 11 metro stores account for 48% of the total customers, and the order volume accounts for 67% of the total orders, which indicates that the membership plan will be gradually extended to other metro stores in the Mainland. On November 27th last year, Metro opened 16 member stores in 8 cities including Beijing and Nanjing.
In May, 2021, Yonghui tried out the warehouse member store model. According to the financial report, by the end of the year, 53 stores had been opened, and the same-store sales increased by 32.9%. In October, Carrefour’s first member store in China was established in Shanghai. According to the plan, 100 hypermarkets will be upgraded and transformed into member stores in the next three years. Box horse, Beijing Hualian and others also entered the game.
However, the track of the warehouse member store, which was still bustling in 2021, became quiet in 2022. According to the statistics of public information in Time Finance, so far this year, Metro China and Fudi have added one member store, Yonghui has added two, Carrefour China, northland supermarket, Jiajiayue and Beijing Hualian have added zero, which is in contrast with the rapid expansion of stores in 2021.
On the other hand, foreign warehouse players are still making steady progress. Costco currently has three stores in China, including Shanghai, Suzhou and Shenzhen, but it has successively acquired land in cities such as Hangzhou, Shanghai and Nanjing to prepare for the opening of new stores. In July, Sam issued a recruitment notice at Wal-Mart, announcing that seven stores will open in Shanghai, Chongqing, Nanning, Changsha, Wuxi and Beijing in the second half of the year.
A few days ago, Time Finance visited Tianhe Store in Guangzhou, Sam. Although it was a working day, the store was crowded with people. A family of three is almost a standard for customers. Children sit in shopping carts with all kinds of big items piled up behind them. Crayfish, milk, cold-soaked cold dishes and other tasting tables all need to line up. On that day, the croissants in the store were on sale, and almost every shopping cart contained one or two boxes.
The staff said that this stream of people is not too much, and there are too many customers to walk on weekends. In the store, several elderly customers also told Time Finance that they had five old sisters in total, and they would come together to replenish the goods on weekdays from time to time. "The goods are of good quality and the prices are acceptable."
However, domestic storage supermarkets are more in the imitation stage. Hou Yi, CEO of Box Horse, once said that Box Horse X member stores have borrowed from Costco in many ways. Time Finance noticed that the roast chicken, Swiss roll, potato, croissant, cheese beef roll and lime juice displayed in Boxma and Yonghui stores are all out-of-the-box products in Sam, and their prices are generally lower than those in Sam.
It is worth noting that warehouse member stores are not superficially large-package, low-SKU, nor are they the same explosive products. The core logic behind them is the real competitiveness, such as inventory turnover speed, supply chain, product selection and customer positioning. For domestic warehouse supermarket players, it is better to sort out the logic behind the warehouse supermarket before expanding, which may be more conducive to long-term development.
