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Text: Chief Business Review.At the beginning of 2024, RT-Mart will close 4 stores.
According to market sources, RT-Mart has successively closed stores in Zhenjiang, Jiangsu, Deyang, Sichuan, and Zhuzhou, Hunan. So far in 2023, at least 13 RT-Mart stores have closed or announced their closures.
Looking back at 2017, Alibaba invested HK$22.4 billion in Sun Art Retail, the parent company of RT-Mart, which was a sensation. Daniel Zhang, CEO of Alibaba, vowed that "we have talked very well about how to live after marriage before marriage, and we will work together in the future to make Sun Art Retail a bright new star in China's new retail world."
Now that 7 years have passed, RT-Mart (Sun Art Retail) has not only failed in the transformation of "new retail", its performance has turned into a loss, and Ali is also considering **RT-Mart (Sun Art Retail).
From this, people can't help but sigh, what happened to RT-Mart, the former "king of supermarket chains"? While RT-Mart is closing one after another, who is expanding? Is the warehouse membership store really a refuge for traditional supermarkets?
In response to the announcement of the closure of a number of RT-Mart, the relevant person in charge of RT-Mart said that the closure of stores and the opening of new stores are very normal business actions and normal regional business strategy adjustments. "On the one hand, the closure is due to property reasons, and on the other hand, it is due to the adjustment of local operational strategies, such as the transformation into a membership store. ”
The expiration of leases and business adjustments are the reasons for RT-Mart's transformation, while the impact of e-commerce, changes in consumers' shopping habits, high operating costs of physical stores, and homogeneous competition are the other reasons for RT-Mart's transformation.
RT-Mart is a veteran supermarket enterprise that has been operating for more than 20 years, opened its first supermarket store in Shanghai in 1998, and in 2010, RT-Mart's revenue reached 40.4 billion yuan, becoming the "king of supermarkets in China".
In July 2011, RT-Mart's parent company, Sun Art Retail, was publicly listed in Hong Kong, and according to RT-Mart's official website, as of 2021, RT-Mart has successfully opened nearly 500 comprehensive supermarkets in Chinese mainland, covering five major regions in East China, North China, Northeast China, Central China and South China, and its market share has remained the first in the domestic retail industry for many years.
In 2017, RT-Mart was also favored by Alibaba, which invested 22.4 billion Hong Kong dollars in Sun Art Retail, the parent company of RT-Mart, and then Alibaba continued to increase its stake in Sun Art Retail, and in 2020, Alibaba directly and indirectly held a total of 72% of Sun Art Retail's shares, becoming the controlling shareholder of Sun Art Retail.
However, RT-Mart's downhill road is also coming quickly, and RT-Mart's performance will begin to decline in 2021-2022. Sun Art's retail financial report shows that the company achieved operating income of 881 from April 1, 2021 to March 31, 20223.4 billion yuan, down 2927%；Net loss attributable to the parent company was 73.9 billion yuan, a year-on-year profit turned into a loss, and a net profit of 35 in the same period last year7.2 billion yuan.
In the past two years, Sun Art's retail performance has not improved. In fiscal year 2023, Sun Art's revenue during the retail period was 8366.2 billion yuan, down 51%。Recently, the interim performance report for fiscal year 2024 showed that its revenue not only fell by more than 10 points, but the loss during the period reached 37.8 billion yuan.
For RT-Mart's loss of more than 300 million yuan, many people are in disbelief, and it is no wonder that not long ago, Alibaba announced that it would consider withdrawing from the new retail business (including Sun Art Retail, the parent company of RT-Mart).
In fact, in addition to RT-Mart, Carrefour and Walmart have also closed their stores one after another.
Since 2023, from Shanghai, Beijing, Nanjing to Shenzhen, Carrefour stores in many places have experienced operational difficulties, and a total of 150 stores have been closed; The same is true for Walmart, which has closed about 140 stores in China since 2016: Yonghui has now opened 1,001 stores, down more than 400 from its peak of 1,440 in 2019.
Some players have already withdrawn, and the supermarket chain Biyide issued an announcement on its WeChat***, announcing that it will suspend business from December 22, 2023.
Judging from the data of the past ten years, China's large supermarkets are shrinking by closing an average of 690 stores per year. In 2012, the total number of large supermarket stores in China was 11,947, and by 2021, the total number of stores will shrink to 5,340, with a decline rate of 578%。Traditional supermarkets have embarked on a downhill road.
While traditional supermarkets are closing stores one after another, warehouse member supermarkets are expanding against the trend.
Warehouse-type membership supermarket refers to a retail format based on the membership system, selecting cost-effective goods, inventory and sales. The warehouse membership supermarket model originated in the United States in 1954, began to gradually enter the Chinese mainland market in 1996, and has developed rapidly in recent years.
Unlike traditional supermarkets, where most of the profits** are based on the difference between purchase and sales, the profits of warehousing member supermarkets come from membership fees and self-operated products. Therefore, the number of members and retention rate are also the focus of each competition.
From 2012 to 2023, the market size of warehouse-type member supermarkets in China has always remained above 20 billion yuan, reaching 36.4 billion yuan in 2023, a year-on-year increase of 87% - higher than China's total retail sales of consumer goods in 2023 by 72% growth rate.
At present, China's warehousing membership stores are gradually showing a "three-legged" situation of Freshippo, Sam's and Costco. In the case of Sam's, Walmart has 47 Sam's Club stores in China by the end of 2023. According to Walmart's latest financial report, net sales in the international market (outside the United States) in the fourth quarter of fiscal 2024 were $27.6 billion, a year-on-year increase of 13%, of which Sam's Club and e-commerce business in China performed well.
The reason for the rapid development of warehouse member supermarkets is that the author believes that there are at least the following reasons.
The first is the consumption classification of consumers, and the consumption upgrade of some consumers. Nowadays, some consumers have not only paid attention to **, but also paid more attention to shopping experience and quality, compared with traditional supermarkets, warehouse member supermarkets can provide some exclusive goods and high-quality services, so it has attracted the attention of a large number of consumers.
According to the latest data, more than eighty percent of Chinese consumers are satisfied with the services provided by warehouse member supermarkets, and more than forty percent of consumers are very satisfied.
For example, Sam's Mart has a lot of influencer products, such as 358 yuan 24 mochi, 398 yuan a whole roast chicken, 68 yuan 16 Swiss rolls, etc., these products with high cost performance, continue to "out of the circle" to attract many people to apply for membership cards.
iiMedia Consulting data also shows that the biggest reason why consumers are willing to go to the warehouse member supermarket to shop is the selection of goods (726%), followed by product ** discount (67.).9%), unique or novel products (63.)8%) and good after-sales service (59.).6%）。
There are many big brands, cost-effective, and no need to choose" is the unanimous evaluation of Sam by consumers, and even "whether to go to Sam's" has become a new way of socializing.
Second, it is the advantage of the membership system. In the case of paid membership, supermarkets are better controlled, and the service experience will be upgraded. Membership is both a cause and an effect.
Third, it is the optimization of the first chain. Usually in traditional supermarkets, the number of SKUs can reach tens of thousands, and there are only a few thousand warehousing member stores, but these thousands of SKUs are selected goods from warehousing member stores.
For example, Sam's has a grain-fed beef, which is the top three private label items in the "most popular among Chinese members", and with the advantage of the first chain, the ** of this Australian sirloin steak is pressed to 30 yuan.
The core advantage of Hema is that it has the best chain of fresh products. At present, Hema has more than 70,000 acres of land around the world, which can provide more than 5,000 different kinds of fruits, vegetables, meat and seafood.
In summary,The reason for the contrarian expansion of warehousing member supermarkets is mainly due to the combined effect of factors such as changes in consumer demand, the advantages of the membership system, and the optimization of the first chain.
China's warehousing member supermarket industry will continue to grow. According to iimedia research, the market size of China's warehousing member supermarket industry is expected to reach 387 in 2024800 million yuan.
The times say goodbye to you, and you won't even say hello, judging from the current market development, the decline of offline supermarkets has become a fixed trend.
Therefore, in recent years, traditional offline supermarkets have taken transformation and development as the focus of their future, RT-Mart Yonghui Supermarket, Fudi, and Metro are all accelerating the layout of warehouse member stores, and even the online platform Oriental Selection has also come to join in the fun.
Taking RT-Mart as an example, in the past two years, RT-Mart has focused on the development of member stores, and has opened M member stores in Changzhou, Yangzhou, Nanjing and other places. It is worth mentioning that after the M member store opened its first store in Yangzhou in April this year, it has become a landmark commercial entity in Yangzhou, with nearly 100,000 paid members.
The author compared several hot membership stores on the market from three aspects: membership fees, membership rights, and first-chain advantages.
Compiled by the Chief Business Review, the merchant policy may be adjusted, please refer to the actual situation.
According to incomplete statistics, there are at least 11 enterprises in the country that have entered the warehouse membership store, and the number of stores exceeds 150. In an increasingly crowded market, the competition around stores, chains, channels and other dimensions is also more intense.
For example, before, the "** war" between Sam and Hema was hot. First of all, a "business war" caused by a durian mille-feuille cake, a box of durian mille-feuille with a net weight of 1 kg was sold at Sam's for 128 yuan, and the Hema x membership store reduced the ** of 1 kg of durian mille-feuille to 99 yuan, and then Sam joined in and was forced to reduce the price and revise the cake's ** to 989 yuan, Hema followed closely behind and lowered ** to 89 yuan again, Sam then lowered the price again, only selling 88 yuan, and finally Sam stayed at 85 yuan, and Hema dropped to 79 yuan.
Not only durian mille-feuille cake, but also moon cakes, watermelons, eggs and other products in the follow-up.
At the beginning of 2024, Freshippo's discounting strategy continues. On February 18, Hema began a pilot project in 81 Hema fresh stores in Beijing, Nanjing, and Changsha to achieve simultaneous online and offline low prices, and generally lowered the number of products**.
Walmart hypermarkets have also joined the low-price race. On January 17 this year, Walmart China announced that it would add 199 yuan, 99 yuan, 199 yuan discount area, the launch of a variety of discount products. For example, no more than 9 per catty9 yuan of "cold fresh pork one-size-fits-all", 199 yuan of shampoo, shower gel ......
For consumers, such low-price competition is naturally the more, but for retail companies, behind the price reduction is the "unspeakable" pain.
For example, judging from the financial report, in the fourth quarter of fiscal year 2024, Walmart's net sales in the Chinese market were $4 billion, an increase of only 113%, and the comparable sales growth was only 66%, the slowest growth in the last five quarters.
On the one hand, the Hema fresh store has stopped opening and renewing members (members who have opened can still enjoy membership rights and interests normally), and implemented a comprehensive discount strategy, and many products have been directly pulled to the price after the previous member discount; On the other hand, the newly launched "Hema X Club VIP Card" is only used in Hema X Club stores, and from a strategic point of view, Hema X Club is to increase investment in the warehouse membership system, which is different from the strategy of Hema Fresh Store.
Although warehouse membership stores are considered to be the way out for traditional supermarkets to support performance, it is not so easy to do well. Secondly, under the pressure of Hema "moving mountain price" and Meituan's "tug-of-war price", traditional supermarkets also have to sacrifice gross profit margin in exchange for the market, which is still a heavy burden in the short term.
Again,Do consumers really need so many membership stores? How much more can the group of people who are willing to pay for membership expand, and they have already opened a membership card, and it is not easy for traditional supermarkets to pry consumers to buy another one.
References:
The supermarket industry is reshuffling, why can the warehouse member supermarket break out of the encirclement? 》The middle class is shrinking, why is the middle class paradise (warehouse member supermarket) soaring? "2023-2024 Research Report on the Development Status and Consumer Behavior of China's Warehousing Member Supermarket Industry", iiMedia Consulting.