When the times abandoned you, they didn't even say hello. The world is unpredictable, the person who can stand at the top is not the winner, the person who is really suspicious and laughs to the end is the real king, everyone is happy to be a "person block killing, Buddha block killing Buddha" The king, now it has fallen into such a field?
Insolvent and facing delisting
Renrenle recently announced that it is expected that its net assets will be negative by the end of 2023 and face the risk of delisting. Affected by unfavorable factors in the external market and internal operations, Renrenle's revenue has continued to decline and has been losing money for four consecutive years. As of the end of the third quarter of 2023, Renrenle's debt-to-asset ratio climbed to 10870%, insolvent.
In addition, Renrenle closed 6 stores nationwide and did not add new stores. Renrenle has 113 stores with a cumulative net loss of more than 2.4 billion yuan, and has been delisted by the Shenzhen Stock Exchange for three times. Despite the blessing of capital and the attempt of new business formats, the business situation of Renrenle continues to decline, and it is difficult to return to glory. Renrenle needs to seek more effective strategic transformation and business innovation to respond to changes in market competition and consumer demand, reverse losses, and regain market confidence.
10 years from peak to decline
Why did the first share of private supermarkets decline all the way?
Renrenle, a supermarket giant in Guangdong, originated in Shenzhen, drawing on Carrefour's marketing wisdom to attract consumers with a unique discount strategy, and its sales grew rapidly. In 1999, in the face of Wal-Mart competition, Renrenle launched the "Shopping Festival" to stabilize its market position. In 2008, it ranked 31st among the top 100 chain chains in China with a sales scale of over 10 billion yuan, and was successfully listed in 2010.
However, after the listing, Renrenle seems to have entered the predicament after the peak. Only after the profit exceeded 100 million yuan in the following year, it has been in a state of small profits or huge losses. What is the reason behind this?
First, scale expansion does not equal revenue growth
Renrenle was doing well before 2010 and went public to raise a lot of money, but there was no specific plan to use it. At the time of sales**, Renrenle continued to expand as originally planned, reaching 149 stores by 2020. However, the more you expand, the more you lose, and a vicious circle is formed. In 2021, after Xi'an Qujiang took over, Renrenle began to adjust and closed 37 stores to curb the trend of losses.
Second, the thinking is solidified and blindly follows the trend
In 2015, Renrenle launched the "Renren's Paradise" app to promote the integration of online and offline. Since then, Renrenle has experimented with a variety of formats, such as hypermarkets, online supermarkets and shopping malls, and added member discount stores and high-end supermarkets in 2021. While these attempts were aimed at boosting revenue, they didn't work well. The difference in the square footage between the new business formats is small, and the square footage efficiency of boutique supermarkets is only half of that of hypermarkets.
Renrenle has not formed a clear differentiation strategy, and the new format is more of a scale variant of hypermarkets, which has failed to bring new business increments. Analyzing the composition of its revenue, the main profit is in the venue rental and business rebates, accounting for about 10%. This shows that Renrenle's business model has basically remained unchanged in the past ten years, and it still relies on site leasing and business expenses to make profits.
Third, there is a lack of effective target management
Renrenle's management set a revenue target in its 2015 annual report, but failed to meet it for five consecutive years. Despite the continued opening of stores, the business target did not increase accordingly, resulting in insufficient operating pressure. This strategy goes against the core value of companies, especially listed companies, which are to create more value for consumers and shareholders. Renrenle's failure to grow effectively shows that there are problems with its management and strategy.
Fourth, the organization is rigid and the management is backward
Before Qujiang Cultural Investment acquired Renrenle in 2019, the company's management was centered on the founder He Jinming's family, which controlled 75% of the shares.
After the departure of senior executives, it is difficult for the company to attract excellent professional managers. After Xi'an Qujiang took over, the management level has improved, and the current vice chairman Li Yi and director Lu Liangwei are both experienced professionals in the retail industry. However, Xi'an Qujiang is not a lifesaver for Renrenle, because it is not good at retail business operations, and there is no business synergy with Renrenle after the holding. Renrenle still faces challenges and needs to find a path that suits its own development.
once crushed Wal-Mart and Carrefour
It is said that an anonymous employee said that everyone is happy, just like a tall man with a height of 190cm and a weight of 280 pounds, although the appearance is very strong, but the inner digestive system has been dilapidated and bruised.
In the competition with Carrefour, the founder He Jinming borrowed from Carrefour's business model, and crazy discount activities helped it counterattack, and the turnover soared from 20,000 to more than 600,000 in a year and a half, and Carrefour's sales were halved.
After the success of this battle, He Jinming accelerated its expansion, and the Xi'an store was so effective that Carrefour closed its doors. Carrefour has successfully been crushed by everyone, Wal-Mart is not a problem, and even the director of Wal-Mart said that in China, only everyone can really compete with Wal-Mart.
Conclusion
From the rise and fall of Renrenle, we can see that in the face of rapid changes in the market and the intensification of competition, the formulation and implementation of enterprise development strategy is particularly important, only to keep up with the pace of the times, continuous innovation and change, in order to be invincible in the market competition. Therefore, enterprises need to pay attention to market changes at all times, constantly adjust and optimize strategies, and at the same time strengthen internal management and team building to enhance core competitiveness. Only in this way can we ensure that enterprises are invincible in the fierce market competition and achieve sustainable development.
If you also encounter difficulties and doubts in the process of business development, you can do it[Comments]; Focusing on chain experience may bring more success and value to your business.
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