Biyide offline stores Source: Dianping.
On December 22, Biyide issued an announcement: Biyide Supermarket will be temporarily closed from December 22, 2023.
Source: Biyide WeChat***
According to consumer feedback, just two days before the announcement of the suspension of business, some community stores in Shanghai were still doing big promotions and discount activities, and most of the nearby consumers said that the news was "very sudden".
Source: Sina Weibo.
1. Who is Biyid?
Founded in 2017, BYD is a discount store brand founded in China by German Philipp Spangenberg. "Biyide" means "cheap" in Shanghainese. In October 2016, Biyide opened its first store in Shanghai, and at its peak, the number of stores was nearly 200.
Similar to ALDI, a hard discount supermarket from Germany, the motto of Biyide is "high quality and low price, rest assured to save money".
Biyide's single-store model: the area is about 200-300 square meters, the number of SKUs is controlled at about 500-600, and the categories include snacks, daily necessities, fresh vegetables, etc
According to official data from Biyide,From 2017 to 2021, its sales grew at a CAGR of 120%, with private labels accounting for about 40% of total sales。Biyide officials have said that they hope to have 800 stores by 2025.
Second, why did Biyide suddenly shut down?
Why did Biyide suddenly suspend business?Jia Hongbin, the former CEO of Biyide Supermarket, responded in an interview with the 21st Century Business Herald that Biyide has been in an overall loss state since it entered China in 2016, but before the suspension of business, about 80 of the 161 stores had achieved store-level profitability.
In the first half of 2023, the board of directors of Biyide has been negotiating the business of **, and there have been negotiations with potential buyers, but as of December 24, the acquisition has still not been confirmed.
The cash flow break may be the last straw that breaks the camel's back.
However, there are also certain problems in the operation of Biyide in the Chinese market: the store category is still dominated by packaged food and daily groceries, the proportion of fresh food is low, and the unit price of customers is not ideal. Due to the impact of scale constraints and the increasingly crowded discount store market, the competitiveness of BYD's own brand and its ability to control operating costs are also constantly being challenged. Whether these problems can be fundamentally solved directly determines whether it can make a comeback in the future.
Biyide store product display Source: Dianping.
Third, the hard discount format is questioned
As soon as the news of the suspension of business came out, the market was full of voices about the decline of the "hard discount format". Is the hard discount really a no-go road in China?
Previously, we wrote an analysis article on the excellent discount format (clickBlue lettersIn retrospect), local supermarkets represented by Hema Outlets and Yonghui Supermarkets are taking the discount route. After foreign retailers entered China, they were not completely cold, and some brands have stepped out of the growth curve against the trend, such as the German hard discount brand ALDI.
Source: ALDI official website.
In 2019, after years of market research, ALDI entered the Chinese market in a personalized way according to local conditions and officially opened two offline stores in Shanghai.
In addition to retaining the advantages of the original brand, ALDI has not completely applied foreign models according to the characteristics of the Chinese market and the different habits of Chinese consumers, but has carried out localized strategic transformation.
(1) Retargeting the target population. ALDI removed the low-end label, targeted the middle class, and transformed from "suburban stores" to "community stores". The decoration style is removed from minimalism and moves closer to the boutique supermarket.
(2) The form of the store has been adjusted accordingly. ALDI changed the 1,000-square-meter store to a 300-400 square meter community store. Most of the sites are located in the central area of the city, close to the community, covering the activity radius of consumers.
(3) Localized improvements have been made in category selection and product update frequency. For example, in order to cater to the shopping needs of Chinese consumers, new products will be updated and replaced regularly. After entering China, ALDI placed more emphasis on three meals a day to meet the needs of young and middle-aged families, and opened up a large number of cooked food areas to create the concept of "community canteens".
Source: ALDI official website.
Despite this, ALDI's genes remain unchanged:First, adhere to the private label strategyThat is, in the same kind of goods, the strategy of being lower than the same kind and the quality and grade is higher than the same kind is carried out for product research and development, so as to create more cost-effective products. Second, the strategy of streamlining SKUs remains unchangedThe products selected and put on the shelves in the same category are guided by consumers' preferences and actual purchase data, and insist on building product power, so as to better control costs.
In 2022, ALDI, which has officially entered the Chinese market for only 3 years, will have 32 stores and a total revenue of 7500 million, with an average daily sales of 6 per store40 thousand.
The hard discount format is a track with long slopes and thick snowTo a certain extent, it is a trend in the development of retail formats in the future. JustThe large and comprehensive model in the market has not worked, how to explore a store model that meets the market demand?is the biggest problem facing retailers