RT-Mart announces closure! The news came out ten days before the Spring Festival, and today is the last day of RT-Mart in Huanggang, Hubei Province.
There are only three days before Chinese New Year's Eve, which should be the best period for the supermarket industry to make money. Generally speaking, unless forced to do so, no hypermarket will choose to close early during this time.
It can be seen that RT-Mart's business in 2023 can be described as sluggish. According to the semi-annual results report released by parent company Sun Art Retail in November last year, the company's revenue for fiscal 2024 was less than 36 billion yuan, down 119%γ
What's even more worrying is that the net profit is even worse, with a loss of up to 37.8 billion yuan, an increase of nearly 3 over the same period of the previous year5 times. What's even more worrying is that this is without calculating the fourth-quarter figures.
Looking back on last year, RT-Mart Zhengzhou University Road Zhengtong Road store was closed in October, and then at the end of November, the only store in Yichang, Hubei Province was also announced to close, and the 11-year history of operation finally ended in dismal ends.
Although the relevant data at the end of the year has not yet been released, according to the current trend, RT-Mart's overall loss in the previous year is expected to exceed 4 billion.
In fact, RT-Mart's decline in the mainland market was already evident eight years ago.
Since entering the mainland market in April 1997, RT-Mart in Taiwan has created a myth in the supermarket industry. For 19 years, they have never closed a single store, showing their strength. However, in 2016, this undefeated myth was finally shattered. In October of that year, RT-Mart Weiyi Square in Weifang, Shandong Province, ended its seven-year business history and became the first RT-Mart store to close down in the mainland market. This incident aroused great concern from all walks of life at that time. As the old man in the family said, once the first cockroach is found, it means that a nest of cockroaches has grown in the home. Since 2016, the arrival of the wave of store closures also means that RT-Mart has reached an eventful time, and it is difficult to continue to hide the facts. It wasn't until 2017 that RT-Mart finally waited for a life-saving straw, and Alibaba Group increased its stake several times, and finally became the absolute controlling shareholder of RT-Mart. With Alibaba investing more than 40 billion yuan, RT-Mart, which is in crisis, can finally breathe a sigh of relief. However, the story doesn't sound like something is quite right. When RT-Mart came back to their senses, they must have been surprised: "You, the e-commerce giant, were originally my sworn enemies of traditional offline retail, why did you spend a lot of money to save me?" There is an old saying in China that "no profit is too early", why was Ali willing to spend a lot of money to save RT-Mart?
Businessmen are known to value profits. Let's think about it first, what advantages did RT-Mart have to attract Ali at that time? Compared with large supermarket brands such as Wal-Mart and Carrefour, RT-Mart's model is particularly special. Because when RT-Mart entered the mainland market in the late 90s, it was not yet a mature supermarket brand. Few people know that RT-Mart, formerly known as Taiwan Runtai Group, actually started in the textile industry. Since the 90s, due to the sharp rise in labor costs in Taiwan, coupled with the low-price competition of overseas giants in order to compete for the market, Taiwan's local textile industry has been severely hit, and the living space is getting smaller and smaller. In order to save itself, Runtai Group began to actively seek transformation, one of the directions is mass merchandising supermarkets. In 1997, Huang Mingduan, a senior executive of Runtai, received an order to come to Taoyuan County, which is next door to Taipei, where the land price is relatively affordable, to supervise the construction of the site, and under his full tracking and supervision, the first RT-Mart supermarket was quickly built. RT-Mart adopts the business model of European warehouse supermarket, focusing on the parity route and providing comprehensive products. People can choose the goods they need efficiently and freely in the supermarket, and the experience is far ahead of the traditional small supermarkets, so it is very popular. Seeing the success of the first RT-Mart and its recognition by the market, Huang Mingduan and the leader of Runtai, Yin Yanliang, made a rather bold decision: no longer wait and see, and immediately enter the mainland market, because there is a bigger market cake there! RT-Mart has been established for less than a year, and the foundation in Taiwan has not yet been firmly laid, so is it really bold enough to expand the mainland market now?
But admittedly, the rules of the business game in the 90s were that the timid would starve to death, and the bold would be strutted to death. At the end of 1997, Huang Mingduan received another instruction to urgently go to Shanghai to select a site, and finally determined a piece of land in Zhabei. As Huang Mingduan expected, the construction of the Zhabei store is progressing very smoothly. In 1998, RT-Mart, the first RT-Mart store in mainland China, was officially opened to the public.
Compared with Carrefour and Wal-Mart, which entered the Chinese mainland market earlier, RT-Mart entered slightly later, and it is not easy to get a piece of the pie among these powerful overseas giants. You can't just hit it hard, you have to compete in strategy.
In order to be able to negotiate with the first business at a relatively low level, RT-Mart dares to determine a shorter account period, so as to help the first business to relieve the pressure of capital turnover, which is beneficial to both parties. In addition, in order to stimulate the enthusiasm of employees, RT-Mart has set up a variety of incentive systems and has a complete employee dividend system. Under this model, the more employees produce, the more they benefit.
February** Dynamic Incentive Plan It is worth mentioning that, as the absolute leader in the mainland market, the site selection assessment of each new supermarket is personally led by Huang Mingduan to ensure that the location advantages are accurately grasped.
Thanks to this new business model, RT-Mart, which started the latest, finally achieved corner overtaking, and achieved a breakthrough in annual revenue of 40 billion yuan in 2009, surpassing Carrefour and Wal-Mart with an absolute advantage of more than 5 billion.
Moreover, RT-Mart at that time only had 121 supermarkets in the mainland market, but the average revenue of a single store was as high as 33.4 billion yuan, 1 billion ahead of Carrefour, almost twice that of Wal-Mart, which shows the employees"Combat effectiveness"Strong. Since 2009, RT-Mart has maintained an annual revenue of more than 300 million yuan per store, and it did not decline slightly until 2014, but it is still much higher than the two main competitors.
Having a team that can win battles and a number of well-located offline stores may be Alibaba"Keep an eye on"RT-Mart is the key. By 2016, RT-Mart had merged with Auchan to become Sun Art Retail, with more than 300 offline stores in the domestic market and successfully listed on the Hong Kong Stock Exchange, with a market value of HK$120 billion, occupying a leading position in the domestic offline retail industry.
Under the impact of e-commerce, RT-Mart's traditional advantages have gradually been weakened"New retail"The envisioned Jack Ma also seized the opportunity at a time when RT-Mart was beginning to show decline"Take advantage of the fire"γIn 2017, Alibaba invested 22.4 billion Hong Kong dollars to grab RT-Mart 3616% of the shares, and in the following years, it injected capital several times to increase its holdings, and became the absolute controlling shareholder of Sun Art Retail. In the vision of Jack Ma and Alibaba, RT-Mart has a fairly complete retail system, which is realized through its shell"New retail"The envisioned layout should be a natural thing. However, as we see from God's perspective today, things are far from that simple.
The absolute hegemon in the domestic e-commerce field, Alibaba's best thing is to turn business into digitalization. After taking over RT-Mart, Alibaba assisted in the launch of the "RT-Mart Youxian" app. The entire e-commerce system of the Alibaba system covers RT-Mart's offline stores, such as Taoxianda, Ele.me and other platforms, providing a large amount of online traffic for these stores. With the support of Alibaba, RT-Mart's online sales have now accounted for 35% of the total, which is significantly higher than before. However, total sales have been declining. In the past three years, Sun Art's total retail revenue has dropped from 90 billion to 80 billion, a decrease of nearly 10 billion, and the downward trend is very obvious. Not long ago, in 2017, this number exceeded 100 billion. In short, RT-Mart's transformation to online is far from keeping up with the contraction of the entire offline retail industry. RT-Mart's glory has faded, and the fundamental reason is that they are too late and not fast enough to lay out the line. This has led to the huge offline retail empire being unable to cope in the era of the rise of e-commerce, and can only passively suffer losses. It is foreseeable that with the change of modern people's shopping habits, the consumer group will be less and less. Moreover, the emergence of new retail models such as discount stores and membership stores will also make the competition between offline retail stores more intense.
Perhaps when they decided to take the risk of acquiring RT-Mart in 2017, Jack Ma and the entire Alibaba management did not expect that the survival challenge of offline retail would be so huge today.
The ideal is beautiful, but the reality is cruel. The "new retail" plan that Ali originally envisioned is still facing a rough and long road at present.
However, from an optimistic point of view, RT-Mart is not in a bad position compared to its former competitors. Carrefour, which once suppressed RT-Mart by virtue of its strength at the beginning of the new century, has now withdrawn from the Chinese market after losing billions of dollars and closing more than 300 stores.
Walmart is also not doing well, having closed more than 80 stores since 2016 and has disappeared in Shandong Province. In overseas markets, the performance is even more dismal, with 70% of revenue coming from the United States.
Overall, although RT-Mart still faces the urgent task of accelerating its transformation, it still has a significant advantage over its competitors. This is not only because of the solid foundation laid many years ago, but also because of the accumulation of a good reputation among consumers, but also because of the ability to rely on the big tree of Ali to get more support.
In short, while accelerating the transformation remains a priority, RT-Mart still has plenty of room to pivot and become the most promising brand in the traditional retailer supermarket for a successful transformation.
When the times abandon you, you won't even say hello, but I hope RT-Mart, which has suffered enough, can keep up with the pace of the times, transform quickly, get rid of the quagmire as soon as possible, and return to its former glory.