**: The Paper.
In recent years, RT-Mart, Wal-Mart and other large chain supermarkets and hypermarkets have frequently closed stores.
According to the surging news reporter based on public information, so far in 2023, at least 14 RT-Mart have announced the closure of stores, of which 5 have been opened this year. Walmart hypermarkets have at least 15 stores closed in 2023. The above-mentioned reasons for closure mainly include lease expiration, business adjustment, upgrading, etc.
On February 29, a number of store managers of large supermarkets of different brands told The Paper that the leases of large supermarkets and hypermarkets are usually 15 to 20 years, and the longest is not more than 20 years. Usually, after the lease expires, you can choose to close the store or renew the contract, depending on the willingness of both parties to cooperate.
The business difficulties faced by traditional supermarket giants have long been a fact for all to see. A number of listed veteran supermarkets pointed out in their financial reports that due to the severe impact of online retail on physical stores, coupled with the many challenges to the development of supermarket physical stores due to the previous epidemic, the performance of many domestic veteran supermarkets is mixed. However, store closure is not the only way out for supermarkets, some traditional supermarkets and hypermarkets are trying to explore new tracks, accelerate transformation, optimize stores and continue to open stores.
Opening a store while closing? RT-Mart responded: short-term store adjustment is a normal market action.
Recently, the surging reporter did not fully verify the statistics, and since 2024, 5 RT-Mart stores have announced their closures. Among them, RT-Mart Huanggang store will close on February 6, RT-Mart Deyang store will close on February 26, RT-Mart Xuefu Road store will close on February 29, RT-Mart Caitang store will close on February 29, and RT-Mart Zhuzhou store will close on March 4, involving Huanggang in Hubei, Deyang in Sichuan, Zhenjiang in Jiangsu, Xiamen in Fujian and Zhuzhou in Hunan.
According to a number of ** reports, since January 2023, at least 14 RT-Mart stores have closed or announced their closures. The main reasons for the closure of more than 10 RT-Mart stores are the expiration of leases, business adjustments, upgrades, etc., and some stores have not explained the reasons for the closure.
However, in addition to closing stores in some areas, RT-Mart continues to open new stores. Judging from the information released by RT-Mart as a whole, RT-Mart's parent company, Sun Art Retail (06808.HK) will open stores in Sichuan, Hubei, Jiangsu, and Shandong provinces and cities from March, covering RT-Mart, RT-Mart Super, and M member stores, and renovate and upgrade old stores. This is another acceleration of Sun Art Retail's efforts after opening 12 new stores in 10 cities across the country in January this year. The Paper reporter learned that a total of 21 new stores will be opened nationwide in the three formats of Sun Art Retail.
In this regard, RT-Mart told The Paper reporter, "Store closure and store opening are very normal market actions for retail enterprises, and RT-Mart will continue to open stores steadily in accordance with the company's plan." I hope to have more information about the new store. Ali also said: "I have paid attention to the changes in the number of RT-Mart's stores, and there are indeed some store adjustments in the short term, mainly for restructuring and upgrading, and there will actually be new openings in the future." ”
It is worth noting that on February 2, there was news that Alibaba is considering some assets in the consumer industry, including RT-Mart. The source noted that Alibaba has been in discussions with multiple strategic and financial investors on the underlying assets. The Paper also asked Lin Xiaohai, CEO of Sun Art Retail (the parent company of RT-Mart), for confirmation of the rumor, but Lin Xiaohai has not yet replied to the rumor.
At Alibaba's earnings report on February 7, Alibaba Group Chairman Joe Tsai said that Alibaba still has many traditional brick-and-mortar retail businesses on its balance sheet, which are not core businesses, and it is reasonable to exit, but considering the current challenging market conditions, it will take time to achieve.
It is uncertain whether the "traditional brick-and-mortar retail business" referred to by Tsai Chongxin means RT-Mart, and it was rumored that not only RT-Mart, but also Intime Department Store would be ** that month. **It has been reported that Alibaba has approached several companies to assess their interest in acquiring Yintai. Ali did not respond to the news.
It is reported that in terms of retail formats, Alibaba invested in Intime Department Store in early 2014, and then successively invested in Xinhuadu, Lianhua Supermarket, Suning, and Easyhome, and launched a new supermarket format Hema Xiansheng in Jinqiao, Shanghai in early 2016. In 2017, Sun Art Retail entered Alibaba's field of vision, and in October 2020, it was further increased by the latter, with Alibaba taking a 72% controlling stake. After entering the Alibaba system, Sun Art Retail has been supported by Alibaba and is the first to carry out digital transformation in the supermarket retail industry, but it is still relatively independent in terms of management. Until May 2020, Lin Xiaohai, who was the vice president of Alibaba, joined Sun Art Retail, and he officially took over from Huang Mingduan at the helm of RT-Mart on December 1, 2020.
Sun Art Retail's 2023 semi-annual report shows that the company's revenue for the six months ended September 30, 2023 was 3576.8 billion yuan, down 11 percent year-on-year9%；Net loss amounted to 37.8 billion yuan, an increase of 334 percent year-on-year5%。Sun Art Retail pointed out in its financial report that the decrease in gross profit was mainly due to the shrinkage of Taocaicai and Tmall's shared inventory business and the contraction of supply guarantee business, the destocking in the process of maintaining the highest competitiveness and streamlining goods, and the reduction of marketing investment in 2022 under the mind of hoarding.
Shrinking the front, optimizing stores, and exploring new models, when will the old supermarkets usher in an inflection point in their development?
Traditional supermarkets and hypermarkets and other retail formats have closed stores or upgraded and optimized, which has become a common phenomenon in the industry in recent years.
According to incomplete statistics from The Paper, in 2023 alone, at least 15 Walmart hypermarkets will close in the Chinese market. Among them, on February 29 this year, the "first store in Nanjing" in Xinjiekou, which has been open in Nanjing for 20 years, will also be closed. According to a number of ** reports, since 2023, Walmart has successively closed many stores in Beijing, Nanjing, Ningbo, Changchun, Xi'an and other stores in China, and the reason for closing stores is mostly "lease expiration and no renewal".
Wal-Mart, the global retail giant, has been in China since 1996 and has since started to expand its hypermarkets, but in recent years, there have been reports in many parts of the country that Wal-Mart hypermarkets have closed due to the expiration of their leases. According to the latest financial results, Walmart's performance in the Chinese market is still strong, but the growth rate of sales and e-commerce business has slowed down. According to the official website, Walmart currently operates a variety of formats and brands in China, including Walmart hypermarkets and Sam's Club, and Walmart China has opened hundreds of stores and several distribution centers in more than 100 cities across the country.
On the whole, regional supermarket chains still faced great development pressure last year. The Paper recently learned from the China Chain Store & Franchise Association that at the beginning of 2024, the association conducted a thorough investigation on the operation of 43 regional supermarket chain sample enterprises in 2023, involving more than 10,000 stores. Specifically, last year's corporate earnings improved slightly, 488% of supermarket companies saw a year-on-year increase in net profit, and 53% of the supermarkets that grew grew grew by less than 10%. Last year, 665 new stores were opened, 449 stores were closed, and 216 stores were added to the net increase of 216 stores. Among them, ninety percent of the stores opened and closed are stores below 2,000 square meters.
At present, store closure is no longer the only way out for the supermarket format, and some traditional supermarkets and hypermarkets are trying to explore new tracks, accelerate transformation, optimize stores and continue to open stores.
Among them, Yonghui Supermarket (601933SH) expects net profit attributable to the parent company to be -13 in 2023400 million yuan, a year-on-year loss reduction of more than 50%. On the one hand, the company's management continued to promote the optimization and adjustment of stores last year, closed some long-term loss-making stores, and on the other hand, it is still "opening new stores against the trend". In the last quarter, more than 10 new stores were opened before the Lunar New Year in 2024. In addition, in recent years, Yonghui Supermarket has also promoted the integrated development of omni-channel business, focusing on the upgrading logic of "goods, scenes, and services" and "one store, one discussion" to carry out customized transformation, and will also add "first-class discount stores" in stores nationwide.
Walmart is also exploring new directions for development. On January 17, Walmart China announced on its official website that the first batch of 29 hypermarket stores in 8 cities across the country have completed upgrades, and Walmart is redefining the development model of hypermarket formats with "selected one-stop omni-channel shopping experience" through 'leapfrogging' cost performance, distinctive differentiated product power, and store-centered omni-channel retail model. Walmart's e-commerce business accounts for nearly half of the business, and it is growing rapidly in a profitable and sustainable way. At present, Walmart hypermarkets have achieved significant market share growth for 10 consecutive quarters.
Last year, the consumer market continued to maintain a moderate recovery trend, with a sales growth rate of 12%。According to a report released by Kantar Worldpanel on February 22, Walmart and Yonghui increased their market share in the fierce market competition last year. However, hypermarkets' sales will accelerate in 2023, and their sales share in the overall market will decrease by 18 percentage points. In 2024, large-scale formats will continue to face huge impacts, and only through changes such as product differentiation, first-class chain optimization, creation of characteristic stores, and refined operations can we have the opportunity to survive in the fierce omni-channel competition. In addition, the transformation of some traditional brands has begun to bear fruit in 2023. For example, Yonghui's boutique supermarket BR**O has increased its share in the modern channel, and its penetration rate is basically the same as in 2022.
Wen Zhihong, a senior chain industry expert, told the surging news reporter that for traditional supermarkets, the main theme of the future is to continue to explore transformation, but not any way will be successful. In the general direction, on the one hand, omni-channel and online and offline integration can be considered; The second is the transformation of business formats, such as membership stores, community fresh retail, discount stores, etc.; Third, you can explore the differentiation of your own brand.
The club store giants are developing well, and where will the market go?
The retail of traditional supermarkets in China is facing difficulties, while the development of membership-based warehouse stores is relatively optimistic.
For example, Sam's Club, a high-end membership store owned by Wal-Mart, has been "booming" since it entered the Chinese market in 1996. By the end of last year, it had opened 47 stores in China, located in 25 cities in China. According to Sam's previous revelation to The Paper, it plans to open 6 to 7 new stores every year in the Chinese market in the future. Sam's membership growth has reached a record high, and Sam's Club renewal rates and activity continue to rise.
According to Walmart's latest financial report, Sam's business and e-commerce business in the Chinese market continue to perform strongly, but due to the late Spring Festival last year, which has a certain impact on the sales growth rate, the penetration rate of Walmart's e-commerce in China is 48%.
In recent years, many supermarkets and hypermarkets have been closing some stores with poor efficiency, shrinking the front, and only member stores have expanded in a high-profile manner. Yu Jian, general manager of Kantar Worldpanel Greater China, said that Sam's still maintains a considerable growth rate in China, but it also faces the challenge of Hema "moving mountain prices" and the outflanking of local club stores in the second and third tier markets.
Talking about the development of the membership market, Yu Jian further said that in terms of penetration, China's membership industry still has a lot of room for development. The core competitiveness of the membership store comes from the commodity power, the best power and highly differentiated member value, as well as the ultimate chain ability and operational efficiency behind it, and many local retailers do not have the conditions for such transformation.
Although the number of membership stores in lower-tier cities in China is still small, with the gradual saturation of membership stores in higher-tier cities and the fierce competition, the sinking of membership stores may become a trend. According to a report released by Kantar Worldpanel on February 22, the paid membership store format will continue to grow in the fourth quarter of 2023, but the overall pace has slowed down compared with the previous two quarters. It is worth noting that since the third quarter, the growth rate of membership stores in lower-tier cities has begun to exceed that of up-tier cities.