Retail is picking up! Some supermarkets are closing stores, while others are undergoing major changes
2024-08-22
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From "you are fine, I am fine, everyone is fine" to serious polarization.
The latest data released by the National Bureau of Statistics showed that in July, the total retail sales of consumer goods was 3.7757 trillion yuan, a year-on-year increase of 2.7%.
It is worth noting that from January to July, the retail sales of convenience stores and supermarkets in retail units above designated size increased by 5.2% and 2.0% year-on-year respectively.Compared with the same period last year, it has turned from negative to positive and the growth rate is the same as the same period last year.
Despite the overall recovery, many supermarkets are still not doing well. According to Lianshang.com, at least 131 supermarkets were closed in the first half of this year (January to June), including some industry giants.
Under the shadow, chain supermarkets are showing new development trends.
"Ice and Fire"
In general, the days of supermarket chains are not what they used to be."Hello, I'm fine, everyone is fine", butThere is serious polarization.
According to data released by the China Chain Store & Franchise Association, the sales scale and number of stores of the top 100 domestic supermarkets in 2023 have declined compared with the previous year, especially for traditional hypermarkets. The sales scale and number of stores of Yonghui, RT-Mart and CR Vanguard have both declined, and the sales of CP Lotus has even fallen by more than 20%.
After entering 2024, Yonghui Supermarket closed 38 stores in the first half of the year, CR Vanguard closed 15 stores, Walmart China, which achieved double growth in 2023, also closed 17 Walmart supermarkets, and Cityshop announced the cessation of all store operations and complete withdrawal from the market.
butThere are also some stores that are frequently taking actions such as opening new stores.
For example, while Walmart was closing stores, Sam's Club, owned by the same company, was expanding rapidly. So far, Sam's Club has opened 48 stores across the country, and plans to open 6-7 new stores every year in the future.
After the adjustment, Hema has not slowed down. The number of Hema Fresh + Hema mini stores exceeded 400 in the first half of 2024.
Aldi, which has been keeping a low profile for many years, has now become a high-profile brand on various social media platforms, attracting attention with its positioning as a "poor man's supermarket". Its 9.9 yuan liquor, milk, facial cleanser, etc. have attracted a large number of young people.
There is also Pang Donglai, which has become popular very quickly. Not only are its own stores crowded with people during holidays, but the company has also moved out of Xuchang and started to change its peers in various places.
Supermarkets step up efforts to expand into lower-tier markets
If there is one common understanding among supermarkets this year, it is this:sink.
In Shanghai, the city center, high-end communities and business buildings are no longer the focus of supermarkets.
The affordable community supermarket Aldi stores are mainly located on the first floor of newly built community shopping centers, with a small number located in commercial buildings, avoiding commercial centers with high land prices and being closer to community residents.
Hema Outlets has distributed more stores in residential communities in the middle and outer ring roads, while Yonghui Supermarket has also set up stores in the suburbs and far suburbs, avoiding the city center.
Not to mention warehouse-style supermarkets like Sam's Club and COSTCO, which are basically located in the suburbs and have more scattered stores.
There are more opportunities in non-first-tier cities, and even in third-tier, fourth-tier, and eighteenth-tier county towns.
Sam's Club opened a new store in Nanjing in the first half of the year, and plans to open new stores in Jinjiang and Zhangjiagang, with the store range reaching more county-level cities. Hema stores have also covered more than 30 cities, and opened its first new city store in Yiwu in July. The four stores opened by RT-Mart M Member Store are all located in Jiangsu, competing with other supermarkets in Nanjing, Changzhou, Yangzhou and Changshu.
Pang Donglai is more "down-to-earth", with all of its 13 stores located in Xinxiang and Xuchang, two third- and fourth-tier cities, meeting the demand for higher-quality consumption in the two cities' markets with a population of tens of millions. In 2023, it achieved sales of 4.6 billion yuan with 12 stores, ranking 31st among Chinese supermarkets in 2023. Its successful experience has also been learned by Yonghui and Bubugao Supermarkets.
Private brands have become the focus of supermarkets
In June this year, Pang Donglai transformed Yonghui, and the best-selling items were its own brand of Internet celebrity mooncakes and beer. There was a special queue, and each person was limited to one. In one morning, more than 4,000 mooncakes and more than 3,000 boxes of beer were sold out.
In addition to mooncakes and beer, Donglai cooked food, DL juice, Freedom Love liquor, DL oatmeal, DL laundry detergent, and DL towels are all Pang Donglai's flagship products, and there are even people who specialize in purchasing them on behalf of others.
The core of private brands is high quality-price ratio and differentiated products. Increasing the proportion of private brands and raising the popularity of private brands have become the consensus of major supermarkets.
According to the "2023 China Supermarket Private Label Case Report", the proportion of private label sales of the top 100 Chinese supermarket companies has increased year by year from 3.2% in 2018 to 5% in 2022. Among them, Sam's Club's private label sales in China accounted for more than 30%, and Hema's private label sales accounted for 35% by the end of October 2022. Aldi even stated that its private label sales in China accounted for 90%.
Not only membership stores and discount stores, but also traditional supermarkets in the hypermarket format are also focusing on their own brands. Yonghui Supermarket's own brand sales in 2023 reached 3.54 billion yuan, accounting for 5% of operating income, an increase of 8.26% year-on-year. Lianhua Supermarket also started the transformation in July this year, aiming to increase the proportion of store own brand products to 10% this year, and strive to increase it by another 5% in the next three years.
Warehouse-style and membership-based models are becoming more popular
Business transformation is an exploration for supermarkets to break out of the impasse.
The financial report shows that more than 60% of Walmart's overall growth from 2018 to 2022 was contributed by Sam's Club. Walmart China is also closing Walmart stores in the hypermarket format and turning to Sam's Club. COSTCO, also a warehouse membership store, ranks 26th among Chinese supermarkets in 2023 with sales generated by 5 stores. The number of stores continued to grow in the first half of the year, and the warehouse membership format has shown strong competitiveness.
Some traditional supermarkets have shifted from hypermarkets to warehouse membership stores during their transformation and adjustment. Yonghui Supermarket began exploring warehouse supermarkets in 2021 and quickly opened a number of warehouse stores. In January this year, Yonghui opened its first warehouse-style flagship store in Yunnan, but closed its first warehouse store in Suzhou in July, and is still exploring the warehouse format. In the first half of this year, RT-Mart closed 7 stores and opened 2 new M membership stores at the same time, laying out the warehouse membership store format in Jiangsu.
Hema also restarted its membership system. In April this year, Hema resumed the activation and renewal of memberships and optimized and upgraded the original membership rights. Four months after canceling membership processing and renewal in December last year, Hema once again embraced the membership system to find ways to expand profits.
As supermarkets try to find ways to break through difficulties, the industry is quietly reshuffled.
