Text丨Bu Meow, Produced by Retail Krypton Planet (ID: LS-KXQ) Discount Store has just become lively in the domestic market, and there is a case of a fallen pioneer. In particular, it is a player with authentic German discount store roots.
On December 23, the community hard discount supermarket Biyide announced that it would be temporarily closed from December 22. At the same time, the Mini Program** and the official website are also no longer available. The day before, a special promotion was still being released on the official account.
Biyide, homonym for "cheap" in Shanghainese, is one of the newly created hard discount community supermarkets in the Shanghai market in the last 10 years. Founded by German philipp spangenberg, it opened its first store in October 2016.
It is believed that Biyide is the first (and only) retail operator of a hard-discount community chain store in China. In the latest 2023 TOP20 list of discount chain brands on Lianshang.com, Biyide ranks sixth with 200+ store scales.
In a **business "Notification Letter", Yirui (Shanghai)**, the operating company of Biyide, frankly admitted that the reasons for the closure of business were:The retail environment continues to deteriorate, with long-term losses and broken capital chains, making business activities unsustainable.
Therefore, the board of directors decided: "immediately suspend all operations of the company, sort out assets and liabilities, and look forward to getting out of the predicament after reorganization." "According to the analysis of professionals, asset liquidation is a necessary procedure for enterprises to go bankrupt.
In September 2021, the five-year-old Biyide received exclusive growth financing of hundreds of millions of yuan from ARGAN Capita, and Philipp Spangenberg was interviewed and ambitiously planned that the financing would be used for store expansion, focusing on Jiangsu in the short term, gradually covering the Yangtze River Delta and East China, and is expected to achieve the goal of 800 stores in 2025.
The forerunner of the broken capital chain
On social media, some Shanghai consumers mentioned that in the past month, Biyide has shown signs of "clearance sale".
On the morning of the announcement of the closure of the official account of Biyide, Gu Guojian, a retail expert and director of the Shanghai Chain Management Research Institute, just issued a reminder in the circle of friends, "December 20 is the day when Biyide hard discount stores pay suppliers, but many suppliers have not received the payment”
On the door of a store that has closed down, a small advertisement was posted saying "The current landlord has repossessed the house because Biyide is in arrears of rent" to seek new tenants.
In fact, from the perspective of business model, Biyide has always been considered the protégé of the Chinese market most like the German ALDI.
Rumor has it that Philipp Spangenberg, the founder of Beyid, was an executive at ALDI in Germany, and his team previously copied a local version of ALDI in Turkey, which was later acquired by ALDI.
Biyide completely imitates the appearance of the German "cheap supermarket", **touching", 200-300 square meters, selected about 600SKU. Service, marketing and decoration are "minimalist", simple multi-layer shelves, cutting boxes for display, and large volume goods are stacked directly on the ground. The clerk is a multi-tasker who unloads, tallens, ** and cashier.
In the Shanghai market, Biyide is densely populated in Baoshan, Jiading, Minhang, Putuo, which are far away from the core business districts, and the customer base is aging, sensitive to the best and does not value the brand.
The only time Biyide disclosed data was in 2021From 2017 to 2021, the compound annual growth rate of sales was 120%, and private brands accounted for about 40% of total sales, with an average price difference of about 35% with competitors.
In 2018, Biyide left Shanghai and entered Kunshan, Wuxi and Changzhou, but immediately withdrew from Changzhou in 2019. In 2021, the company established more than 160 self-operated stores in Shanghai and Jiangsu, and set up dedicated logistics and distribution centers in the north and south of Shanghai, respectively. In the same year, an online platform was launched to increase home delivery services.
According to the enterprise investigation, since January 2017, the registered capital of Biyide has been increased from 4 million US dollars and has undergone about 10 capital increases. In June 2023, the registered capital will reach 1$200 million.
However, a few months after the announcement of the financing in 2021, the legal person of Biyide was changed from the founder Philipp Spangenberg to Jia Hongbin, and on December 18 this year, five days before the announcement of the closure of business, the legal person was changed to Jia Pengfei.
Reflections on Biyid?
In April this year, Retail Krypton Planet published "Why are young people keen to go to Ole to buy groceries?".As mentioned in the article, the domestic supermarket industry, which is accelerating iteration and "new", is showing obvious differentiation. It is the warehouse membership supermarket that plays the card, and international and local players such as Sam's, Costco, Freshippo, Fudi and M Club have accelerated or stepped up their entry;The undercurrent is surging in the hard-stop discount store track that few people outside the circle, and players are entering the dark battle, from Shanghai Tang to various regional markets in China.
At the end of 2023, Hema will fully set off a discount reform, and the discount supermarket will officially surface. Especially in the Shanghai market, new players are constantly pouring in, including Biyide, which has been in development for 7 years, ALDI ALDI, which has been in business for more than 4 years, Hema Outlets and Qingmei Club that have entered the market in the last 1-2 years, and Dingdong Outlets, which have entered the market for the past 1-2 years.
In overseas markets, hard discount stores have proven to be a successful and sustainable format, with streamlining and efficiency reaching a pinnacle in the retail format. At present, the domestic economic environment is changing, and consumers are becoming more rational and cautious in consumption, which is also a period when hard discount retail is popular and goes against the trend.
But, why did Biyide leave the scene?
First of all, it is difficult to localize a successful business model.
The orange is orange in the south of Huai, and the orange is orange in the north of Huai. The company has a team of CEOs and founding consultants from Germany, with decades of experience in implementing hard discount practices, and the local team has insight into local needs and rich experience in implementation, and the two complement each other to explore a hard discount retail model that is in line with the actual situation in China.
However, the model can be copied, but the external economic and competitive environment is difficult to recreate. For example, in Chinese cities, community stores have small radiation and high rents, which is a great test for the model of large-scale orders to cover low gross profits. After ALDI arrived in China, it did not completely copy the German model at the beginning, and even now, how far it has gone under the high rent is also a question point for some people in the industry.
The deterioration of the competitive environment at home and abroad is also not the state of Germany when ALDI was on the rise, when it was not yet growing up, and the rapid influx of opponents brought about a strong suppression of development.
In addition, the fierce competition for standard products brought about by the development of domestic e-commerce, and the great demand of domestic consumers for fresh goods, also make it more difficult to debug and build the commodity power and chain of this format.
Secondly, the formation of a successful retail format requires solid polishing and long-termism.
Cherries are delicious and difficult to plant, and discount stores have become the outlet of the domestic retail industry, and a large number of joiners have emerged.
However, in the view of Chen Liping, a professor at the Capital University of Economics, "we can't follow the path of capital to promote expansion, blindly expand and open stores without careful consideration, and strive to attract more resources through the increase in the number of stores, regardless of the geometric increase in the cost behind it!."”
What's more, "the demands of capital and the demands of retailers are often different, so sometimes 1+1<2, sometimes it will be lower than 1." ”
In particular, the sustainable low ** represented by the hard discount model is essentially a system engineering, from birth to maturity, which requires continuous trial and error in the specific market, and finally takes shape.
Teamwork, strategy and tactics and the external environment, each element is critical, a set of combinations punch the world, but any wrong step, may drop the chain and bring lethal damage. For example, whether to increase online home services and fresh food categories in the later stage has also made some industry insiders question.
An industry insider revealed that in the initial stage, Biyide opened a family to make money, but after financing, he was eager to expand, hoping to exchange scale for efficiency, so it slowly went downhill. "Changing high-level, changing first-class business, changing products, improper site selection, declining operating level, superimposing various factors, and finally, the river is declining. ”。
In particular, the lockdown during the pandemic in 2022. "The two mountains of rent and business account period, once the number of visitors is not good, the cash flow is not good, it is difficult to continue. "Entering the second half of 2023, the fierce ** battle brought about by the influx of entrants has become the last straw that overwhelms Biyide.
Chen Liping's point of view is,"Practice has proven that in the context of limited resources, philosophical thinking and strategic direction are important!”。
Those so-called discount chains that open hundreds of stores or thousands of stores in a few years, expand rapidly, cater to the taste of the capital market, and are keen to join, are almost difficult to run far, and there are even projects that take advantage of the situation to "cut leeks".
A bucket of cold water poured on the discount tuyere
In the domestic retail industry, discount stores are not new. In the Shanghai market alone, several discount store brands have emerged for more than 20 years.
Founded in 2002, Wuyuan Discount Store and Agricultural and Industrial Supermarket were established, with a maximum of 230+ storesIn 2003, Dia Tiantian, established by a famous Spanish retailer, was wholly acquired by Suning in 2018, and its 300 stores densely distributed in the main urban area of Shanghai have turned into small Suning stores with ambitions to do ......Now, they have all disappeared in the dust of the history of the development of the industry.
The departure of Biyide once again proves the difficulty and long-term nature of the construction of this format. Biyid is not the first, nor will it be the last.
Everyone understands the truth, and there are still many people who can't live this life.