Shanghai citizen Li Fang is very worried recently. A brand new Sam membership store has just opened at the entrance of the Contemporary Gaodi Community on Jufengyuan Road where he lives. It is a good thing to have a membership store at the door of his home, and troubles come with it. The core of the contradiction between
is parking space renovation. Some community residents have different opinions with community owners' committee (hereinafter referred to as " owners' committee ") and member store owners, and they can't argue.
First Financial reporter learned after a field investigation that it seems that the parking space dispute between residents and merchants is actually behind the increase in operating pressure from physical retailers in recent years. Member stores with high sales have become "a place to compete for". Walmart , Carrefour , Metro, COSTCO and Hema have all increased their investment in member store formats, causing intensification of competition. Member stores that originally selected locations in remote suburbs have begun to march towards urban center projects - directly transforming the original hypermarket project into member stores to accelerate the layout. However, urban center hypermarkets may not be suitable for building member stores in terms of parking spaces, floor heights and other hardware, and the dispute arises.
The troubles of residents
A while ago, in the 40-degree high temperature, Li Fang, Zhang Yang, Zhou Junming and others have been standing at the door of the neighborhood committee of Contemporary Gaodi Community. "We have talked with the property management committee several times, and it has been since July, and there has never been a satisfactory result." Zhang Yang told the First Financial reporter with a sweat.
According to the descriptions of several people, there was originally a Walmart hypermarket at the entrance of Contemporary Gaodi Community, which had been open for many years. In the second half of last year, the hypermarket issued an announcement stating that it would upgrade and renovate it into a Sam's member store, and it was planned to open in August this year. "Actually, we were happy when we first heard that we would be converted into Sam . Because the member store has a wide range of products and high cost performance, we all welcomed the Sam brand. However, what happened later was unexpected. Because Sam is a member store, there are many parking spaces needed, and the hypermarket is difficult to meet the requirements, so the owner of the store began to renovate the parking lot. The vegetable market near us was directly demolished and went to renovate the parking lot. In this way, it was very inconvenient for our residents to buy vegetables." Zhang Yang told the First Financial reporter. What makes residents such as Li Fang, Zhang Yang and Zhou Junming even more dissatisfied with is a community renovation plan. According to the information of the "Beautiful Home Renovation Project" presented by residents, the total investment of the renovation project is 8.2 million yuan, of which 10% is paid by the owner, and then the construction unit is determined through public bidding. "This renovation plan involves renovating the community gate, sealing the original gate, and building a new gate, which is particularly unfavorable to the residents of the community. This project involves renovating the road outside the east gate of the community. It turned out to be a bridge, which should be widened and then connected to HSBC Road. At the same time, the community should also be renovated to the corresponding lanes and pedestrian roads, and connect with the external bridge after the renovation. But after crossing the east gate and entering the community, this is already a "use or renovating the public space inside the community". It is very fundamental. One thing is, let’s think about why this transformation is needed? Have you considered Sam’s influence? The neighboring residential areas will face serious traffic problems such as traffic caused by Sam’s opening a store. After Sam opened a store, will it cause serious congestion on Jufengyuan Road? Will it cause further difficulty in parking in our community and other problems? We are even worried that foreign vehicles will treat our community as a parking lot, which will be messy." Zhou Junming complained to the reporter of the First Financial Daily.
Then, the residents took the First Financial reporter around the community and walked around it. They could see that the roads around the community were not too spacious and the nearby vegetable market had been demolished. Zhou Junming even worried that if the community renovation was really implemented, it would damage the greening in the community. Many residents bought houses here at that time because the community had a high greening rate. According to the reporter, not all residents do not agree to the renovation plan, but there are also many residents in the community who have similar concerns and oppose the renovation.
First Financial reporter then contacted the relevant neighborhood committee, but no one answered the phone.According to a situation statement from a neighborhood committee, the neighborhood committee stated that the south gate passage of the contemporary Gaodi Community remains in its original state, vehicles and people enter and exit normally, and the central square remains in its original state, and there is no such thing as closing the south gate and renovating the central garden.
Sam opens as scheduled
After all, residents' concerns stem from the impact of the renovation of the Sam member store near the community.
First Financial reporter contacted the owner of the renovation of Sam's member store on Jufengyuan Road - Shanghai Dachang Commercial Investment Management Co., Ltd. . The relevant person in charge of the company Li Weikang told the First Financial reporter that residents may have misunderstandings about the renovation. "Sam does need about 1,000 parking spaces, so we are renovating, hoping to have more parking spaces, but the renovation we have done is within the scope of our property rights, and all procedures are legal and compliant. It does not exist and will affect the greening of the community or occupy the area within the community. Residents don't have to worry too much." Li Weikang said.
According to the feedback from Shanghai Dachang Commercial Investment Management Co., Ltd., the transformation of the vegetable market is to become Sam's parking lot. After all, the member store needs 1,000 parking spaces, and the vegetable market can be converted into a parking lot with 200 parking spaces. However, considering the needs of residents, the renovated parking lot will be restored on the first floor, and the parking lot above the floor will be made into a parking lot. In addition, the parking lot owned by the mall property itself has a total of about 600 parking spaces. Although it is still a certain distance from 1,000 parking spaces, it is the result of the owner's current efforts to expand.
Some people close to Walmart said that Walmart will sign rigorous contract documents with partners when developing projects, which will definitely have clear rights and responsibilities, and Walmart will be legal and compliant.
After the community residents received the above statement, their mood calmed down, but some residents of the community were still worried about whether there would be congestion in surrounding vehicles in the future.
On August 27, Sam's member store located on Jufengyuan Road announced its opening. This is Sam's fourth store in Shanghai and the 37th store in the country.
Andrew, President of Sam Member Store China Business Miles) said: "With Sam's rapid development, we see more and more members want to experience a high-quality lifestyle in a more convenient way. The newly opened Baoshan store represents Sam's continuous exploration and attempt to meet the needs of members. It not only allows us to connect with members closer, but also further enriches Sam's omni-channel shopping experience. At the same time, the opening of Baoshan store is also a beneficial exploration of Sam's efficiency. I hope that we can continue to innovate in e-commerce, replenishment, operations, supply chain management, etc. to continuously improve efficiency, and promote experience, thereby further promoting Sam's overall efficiency and continuously creating value for members." On the first day of the opening of
, the store welcomed a large number of customers. There were reports that the store's admission reservation coupons on the first day of opening were sold out, and customers lined up for a long queue, and it took an hour to enter and 1.5 hours to check out. Behind the reconstruction of
, is 1 member store accessible to 5 hypermarkets?
With the opening of the above-mentioned Sam member store, the turmoil among some residents of Contemporary Gaodi Community has come to an end. But behind this incident is the trend of the industry and the fierce business war. Some residents are worried that member stores will cause traffic congestion, but Sam has been opening a store in the Chinese market for 26 years, so why are there few such storms before? The answer is, this is Sam's first attempt at the City Center store. In the past, Sam was usually opened in relatively remote places, but this time he opened a store close to the residential area, so nearby residents inevitably had concerns.
So, most of these large-scale member stores were originally selected in selected areas, so why did they flock to the city center? You should know that member stores are different from ordinary supermarkets. Member stores are similar to warehouse-style stores, with many large items, and have high requirements for the floor height, area and parking lot of the property. The supermarket stores in the city center are relatively small in area, and hardware and supporting parking lots such as floor height and parking spaces are difficult to meet the requirements of member stores. Retailers should also understand that there will be many flaws in converting city center stores into member stores, but why do you still need to do this?
"Under the epidemic, the physical retail industry has suffered setbacks, and supermarkets are under great pressure. Member stores have developed in the Chinese market for more than 20 years. Before this, many people did not accept this paid membership model very much, but with the upgrading of consumption and the growth of young customer groups, this high-quality and high-average membership store format has begun to rise." said Shen Jun, a senior retail industry analyst.
McKinsey and CCFA (China Chain Business Association ) jointly released the "2022 China Retail Digitalization White Paper" pointed out that according to data from the National Bureau of Statistics, the total retail sales of consumer goods grew by 3.9% from 2019 to 2021, which was significantly lower than the annual growth rate of 6.8% in the previous three years (2016 to 2018). Taking supermarket formats as an example, the industry's profits have declined significantly, especially the store formats, which have frequently seen store closures in the past year. In 2021, many leading supermarket listed companies experienced a year-on-year revenue declined. The recurrence of the epidemic this year has exacerbated the uncertainty of the industry environment, and the customer flow of physical stores is on a downward trend. Traditional supermarkets are positioned as one-stop purchases for the public. They have large stores (mainly the hypermarkets cover more than 5,000 square meters of land) and many SKUs. The subsequent cost is that the rental cost is too high, which makes it difficult for enterprises to afford rent when the customer flow is reduced. Looking at the emerging business formats of the grocery retail market, whether it is member stores (about 4,000 SKUs), community group purchase (less than 1,000 SKUs), and convenience stores (1,500-2,000 SKUs), they all achieve differentiated competition through few and exquisite SKUs and focusing on segmented markets. A more streamlined SKU can be carried by smaller stores, which also means better cost control in procurement, warehousing, logistics, store operations and rentals.
In this case, the advantages of membership stores are highlighted. Ren Ping, who has been engaged in member store management for a long time, told the First Financial reporter that the SKUs in hypermarkets can reach more than 10,000, but the SKUs in member stores are generally more than 3,000 to 4,000, and most of them are selected products, which can better accurately reach consumers' key purchase categories, high sales and high turnover rate , making management more convenient. In addition, there are a large number of exclusive products in the member store that are owned or exclusive to member store, which gives the member store’s products exclusive and pricing advantages. Compared with ordinary supermarkets where the products are the same, the sales of member stores and the profit of and will be higher. "One member store can have an annual turnover of about 500 million yuan, while an ordinary hypermarket has an annual turnover of about 80 million to more than 100 million yuan, that is, the performance of one member store is equivalent to that of 5 hypermarkets. Some member stores have excellent performance can have an annual turnover of 2 billion yuan. So when general supermarkets are becoming more and more difficult to build, popular member stores have become a key business format for retailers to expand." Ren Ping revealed to the First Financial reporter.
It is reported that since its first store opened in Midwest City, Oklahoma, USA in April 1983, Sam has a history of more than 30 years and has more than 800 stores around the world. In the Chinese market, the first Sam's member store settled in Shenzhen on August 12, 1996. At present, Sam has opened 37 stores in China, located in Beijing, Shanghai, Shenzhen, Guangzhou, Fuzhou, Dalian, Hangzhou, Suzhou , Wuhan, Changzhou , Zhuhai, Tianjin, Xiamen , Nanjing, Changsha, Nanchang , Chengdu, Shenyang, Nantong , Ningbo , Kunshan , Chongqing and Huizhou .
Medron has entered the Chinese market for decades, and its business model has also been a membership system, but it previously focused on B-end consumers. Now, after Metro has greatly reduced SKUs and improved small-package goods, it has also begun to focus on C-end consumer groups; COSTCO has opened a high-profile store and its business is booming; Hema has opened many X membership stores after the upgrade; Carrefour, which has not been involved in the membership store format before, has also tried membership stores in the Chinese market.
According to the interviews and sorting out public information from the First Financial reporter, after the above-mentioned Baoshan Sam membership store opened on August 27, Carrefour will have two new membership stores open at the same time in September; and COSTCO will open a new store in the Kangqiao Industrial Zone, Zhangjiang Science City, Pudong, Shanghai. Previously, COSTCO has made layouts in the Yangtze River Delta market; Hema X membership store plans to add one new store in the Shanghai market by the end of this year, and it has already deployed membership stores in Beijing, Shanghai, Nanjing and Suzhou; Metro will further expand its membership stores; Carrefour has even boldly stated that it will deploy hundreds of membership stores. Under such fierce competition from
, site selection has become a matter for major retailers to "break their heads". In order to quickly layout and save costs, converting existing hypermarkets into member stores has become a major "magic weapon".
"If it is a self-built membership store, a store requires an investment of 200 million to 300 million yuan (excluding land acquisition costs), and the construction cycle is at least about 2 years. The existing hypermarket is converted into a membership store, which can be completed in 4 to 5 months. The cost of single store renovation is about 50 million to 80 million yuan. The more particular one is about 100 million yuan. Compared with the cost of self-built, the reconstruction of hypermarkets is obviously cheaper and faster. But hypermarkets are usually in the city center, so we will see many operators converting hypermarkets into membership stores in the city center, such as Sam, Carrefour of Walmart, etc.." Ren Ping revealed.
Carrefour China CEO Tian Rui once said: "In the next three years, 100 of the 200 Carrefour hypermarkets in the Chinese market will be fully upgraded and transformed into paid membership stores. Our target user base is quality life users in 4 municipalities and 15 sub-provincial cities, breaking the current consumption pattern of membership stores that drive dozens of kilometers and take time to queue. Take the Shanghai market as an example. After 3 years, there will definitely be a Carrefour membership store in 15 minutes of driving."
For the above-mentioned new Baoshan store, Sam said that "urban center store" is an internal word, which is Sam's membership store, but it is relatively small, a pilot. The store has become smaller, but the online business has also become larger. "The area of Baoshan store and the number of offline display products have been slightly reduced, but we will make more efficient use of the store's space, such as replenishing goods more scientific, reasonable and efficiently, which requires innovation based on the existing operations."
"Renovating a hypermarket into a member store is a cost-saving, rapid layout and access to more forward warehouse outlets. For the owners of hypermarkets who were originally under huge profit pressure, rebuilding into a member store is a good opportunity to make money, but the owners must face the troubles caused by the hard flaws in hardware transformation, such as the reactions of nearby residents, the renovation of parking lots and loading and loading areas, and how to coordinate if traffic congestion occurs. The merchant will make an assessment, measure the pros and cons and make a decision." A person in charge who has experienced the renovation of a member store told the First Financial reporter. Who will be the winner in the
member store battle?
The war between membership stores is inevitable, so what are the conditions required for a high-quality membership store? Who will laugh to the end in Sam, Carrefour, Hema, Metro, and COSTCO? The membership fee of the
membership store is a major source of its income. Metro's PLUS annual card price is 199 yuan; Sam membership store ordinary membership annual fee is 260 yuan, Excellent membership annual fee is 680 yuan; COSTCO membership annual fee is 299 yuan; Carrefour membership fee is 258 yuan. These member stores know how to dig deep into membership values and accurately subdivide them to enhance their stickiness with members. Public information shows that COSTCO's member renewal rate reaches 90%, and it contributes a stable profit to COSTCO every year.
and site selection and operating mode are also part of the business war.First Financial reporter learned from multiple interviews that most COSTCO currently adopts the self-built model in the Chinese market. The advantage is that the property value-added and preserved value is obvious, and there are no construction flaws. It is completely customized, but it requires a lot of money and has a slow expansion speed. Metro adopts a combination of self-built and reconstruction. A considerable part of its original hypermarkets are self-owned properties, and reconstruction will also have more autonomy. However, Metro's specialty is to serve B-side customers. The transformation of the C-end requires a process; Sam is mostly a rental model, and it is currently trying to achieve urban central stores is also a breakthrough, which can accelerate development, but sometimes it may need to face the above-mentioned residents' storms and reconstruction challenges; Carrefour and Hema are "novice" in member stores, and relatively speaking, their experience is not as rich as the previous brands, but as latecomers, these two brands are working hard to expand new stores in order to catch up with their competitors. Renovating old stores is a big way, but they will also face the reconstruction challenges encountered by Sam.
The most fundamental logic of member stores lies in the advantages of core products. Since SKU is controlled at 4,000 or even less, the goods must have extremely high competitiveness, such as hot-selling private brand goods, such as exclusively purchased goods, etc. DT Finance, a subsidiary of First Financial, found that mochi , roasted chicken, beef, etc. are hot-selling products in member stores.
In Sam, there is an thousand-layer cake that is very popular. The First Financial reporter also saw similar products at the Carrefour membership store. However, Sam's cake size is larger, while Carrefour's size is smaller. Both have their own advantages. The large size of the former is the cost optimization choice, while the small size of the latter is more suitable for individual consumers.
"The most fundamental competitiveness of member stores is the supply chain. For example, COSTCO and Sam's products have very large supply chain advantages. COSTCO sometimes even directly participates in suppliers to obtain exclusive advantages for some goods and can control pricing rights; Sam is very experienced in member stores. They have strong purchasing capabilities for their own brands and products. Many suppliers are exclusive and exclusive to Sam. For example, if you see a big brand entering Sam at a low price, it is because this big brand has already negotiated with Sam to provide exclusive products and will cooperate with Sam's channel to create a series for sale in Sam, which will lead to a high-price advantage for big brands. Moreover, with 26 years of business experience in the Chinese market, Sam has long known consumers' favorite categories and seize the core hot-selling products by developing their own brands. An important role of private brands is to reduce price comparison and master the right to speak for products; Metro and Hema also have the advantages of direct procurement, but one used to supply B-end and the other mainly focuses on fresh food, so when facing consumers of C-end membership stores, it is necessary to improve the category and supply chain product line; Carrefour is relatively inexperienced in membership stores among these major brands, and its membership stores are somewhat similar to the upgraded version of supermarket goods. You should know that the product structure of membership stores is completely different from that of stores. For example, the meat products in supermarkets mainly focus on pork, while the membership stores mainly focus on beef. But Carrefour also has its own purchasing advantages, and what it needs to do is to re-plan and establish a membership store supply chain system. "Ren Ping analyzed to the First Financial reporter that the battle between membership stores has just begun, and the competition from territory to supply chain will become more and more fierce. It remains to be seen who will be the final winner.
(Li Fang, Zhang Yang, Zhou Junming and Ren Zheng are pseudonyms in the article, and some of the chart data are derived from DT Finance)
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