Can helping Yonghui and blasting the BBK Fat East model save offline retail？
The market is concerned about the recovery of offline retail.
The long-lost () recently attracted great attention from the market because of a cooperation news.
On May 8, Yonghui Supermarket’s share price went up by a daily limit, closing at 2.62 yuan that day, with a total market value of 23.7 billion. However, one day later, at the close of May 9, its share price fell back to 2.55 yuan/share, down 2.67%.
In the news, on May 7th, Yu Donglai, the chairman of Fat Donglai, appeared in Yonghui Supermarket in Zhengzhou, Henan Province. At the closed meeting after this visit, Yu Donglai made a decision and started to help and reform Yonghui Supermarket.
In this regard, the relevant person of Yonghui Supermarket told 21st century business herald that "we are learning from Fat East now, and the company will put performance first, so it is not convenient to disclose the progress of assistance".
As two major supermarket brands born out of low-tier cities, Yonghui and Pangdonglai have similar growth genes. However, when Yonghui made great strides in the first-tier market in the past two decades, Pangdonglai chose to deepen the Henan market and became popular on social networks with high cost performance and "meticulous service" last year. This cooperation between the two has once again strengthened the market’s expectation for the recovery of offline retail.
Zhu Danpeng, a senior researcher at China Food Industry Research Institute, said in an interview with 21st century business herald that the offline retail consumer market in China has entered a diversified and multi-level node, and the market must use multiple formats to meet and match the core needs and demands of consumers. "Some people talk about cost performance, some talk about quality and price ratio, some talk about brand tonality, some talk about differentiation, and some talk about high quality." Zhu Danpeng said that the advantage of Fat East is actually an extension of the "five-plus strategy" of multi-brand, multi-category, multi-scene, multi-channel and multi-consumer groups, which can better meet the diverse needs of Chinese people. Help Yonghui Supermarket and BBK
21st century business herald reporter learned that the two start-up stores of Fat Donglai are Yonghui Supermarket Hanhai Beijindian Store and Xinxiang Baolong Plaza Store, and the renovation work is expected to start at the beginning of June and the end of June respectively. In the process of helping the reform, the team from Fat Donglai will be responsible for leading the management work, and Yonghui Supermarket will also set up a special "Yonghui Supermarket Reform Team" to cooperate with and support the smooth progress of the whole reform work.
In terms of specific transformation measures, referring to the previous adjustment and reform of BBK by Fat Donglai, it mainly involves three aspects: adjusting the layout of stores to provide more convenient and smoother shopping routes; Adjust commodities to provide first-line brand commodities with better quality and more reasonable price; Improve the treatment of employees and stimulate their heartfelt sense of service.
According to relevant media reports, for the adjustment and reform of Yonghui, first, in terms of merchandise in the store, we will comprehensively refer to the commodity structure of Pangdonglai, focusing on Yonghui’s existing supply chain system, with Pangdonglai as a structural supplement to greatly improve the quality of goods. Second, it will improve the salary of Yonghui-related store employees and shorten working hours.
The adjustment and reform will focus on the team management of Pangdonglai, with Guan Na, the general manager of Pangdonglai Supermarket, and Wang Ming, the general manager of Pangdonglai Xinxiang as the two places. Zhang Xuansong, the chairman of Yonghui Supermarket, is located in Zhengzhou, and transferred the national elite to form the "Yonghui Supermarket Adjustment and Reform Team" to cooperate with the on-site adjustment and reform.
However, it is worth noting that it seems more realistic to interpret the cooperation between the two companies as "mutual benefit" than the outside world’s belief that Fat Donglai unilaterally "helped" Yonghui Supermarket. As Yonghui Supermarket, which is known for its advantages in supply chain, it is natural to make up for its own shortcomings in store design and operators while its business situation is improving.
According to the report of Yonghui Supermarket in the first quarter of 2024, in the first quarter of 2024, Yonghui achieved an operating income of 21.665 billion yuan, an increase of 30.87% from the fourth quarter of 2023; The net profit of returning to the mother reached 736 million yuan, a year-on-year increase of 4.57%; The net profit of returning to the mother after deduction was 599 million yuan; The weighted average return on equity reached 11.68%, an increase of 2.58 percentage points. In 2023, Yonghui achieved a revenue of 78.642 billion yuan last year, a year-on-year decrease in net profit attributable to its mother of 1.434 billion yuan, and a cash flow from operating activities of 4.569 billion yuan.
In fact, this is not the first time that Fat Donglai has replicated and promoted his own business model.
From March 31st to April 2nd this year, at the invitation of Wang Tian, the founder of BBK, Yu Donglai led a senior management team to Hunan to start the adjustment and rectification of BBK. As the first modified store, BBK Meixihu Store has made a comprehensive adjustment from the aspects of store layout, product structure, quality and price, environment and personnel service.
According to public information, before the reform, the store had an average daily sales of about 150,000 yuan and an average daily passenger flow of 2,000 people. On the first day of the reform, the sales reached 210,000 yuan and the passenger flow reached 4,200. On April 20th and 21st, the store’s sales exceeded 1.42 million yuan for two consecutive days. On the first day of the May Day holiday, the store sales reached 2.4 million yuan, and the sales passenger flow reached 17,700.
In addition to BBK after the "explosive reform", there are all kinds of self-owned brand products from Fat East to attract consumers to the store. According to Cailian News Agency, on April 11th, online celebrity’s "Big Moon Cake" was sold out soon after the sale. On April 12th, Fat Donglai’s own brand products, such as DL brewed wheat beer, DL fruit juice and DL free-love liquor, were put on the shelves one after another, and were also quickly snapped up. "Fat East" mode
Pang Donglai was once called "the existence of China retail industry" by Lei Jun.
According to public information, Pangdonglai Trading Group Co., Ltd. was established in 1997, and has never carried out large-scale chain expansion. Due to years of deep cultivation of services and products, and not excessive pursuit of scale exaggeration, Pangdonglai has become a representative of the supermarket industry. At present, its stores are only opened in Xinxiang and Xuchang.
However, at the moment when physical retail is facing difficulties, Fat Donglai is living very well. According to Yu Donglai’s introduction, Fat Donglai’s revenue in 2023 is estimated to exceed 10 billion, with a tax revenue of 300 million to 400 million and a profit of 300 million to 400 million.
Previously, when asked why he didn’t open a shop in Zhengzhou, Yu Donglai explained that compared with Xuchang, Zhengzhou’s store cost and employee benefits were much higher, so it was not suitable for copying.
Regarding the question of "can’t leave Henan", he also responded in an interview: "Fat Donglai wants to be an example and let more people learn, not how many companies he wants to be, and he has not left the concept of Henan."
In fact, the "password" of Fat Donglai, which lasted for many years and became popular on the Internet in the near future, is also hidden in the refined service and warm corporate culture.
Previously, because of service problems, the management staff of Fat Donglai were all demoted for three months, and they came to apologize for customers with gifts and 500 yuan Service Complaint Award.
But at the same time, Fat Donglai is also very protective of employees. It stipulates that customers’ rights and interests can be fed back through complaint channels, but they can’t yell at employees at the scene. This is a serious act that hurts personality and dignity. Where is the offline retail going?
In fact, in the eyes of the industry, the capital market’s violent reaction to Fat Donglai’s help to Yonghui Supermarket, in addition to individual stock factors, implies more expectations for the supermarket format to get out of the current predicament.
Previously, Shanghai Chengchao’s parent company "Shanghai City Supermarket Co., Ltd.", which had been deeply cultivated in Shanghai for more than 20 years, suddenly announced its closure. According to the "Notice" issued by Shanghai City Supermarket, the operation of Shanghai City Supermarket has been difficult in recent years, and it is still difficult to continue despite various self-help measures. Therefore, it was decided to dissolve and stop the operation of all stores in Shanghai City Supermarket from April 16, 2024.
Shanghai City Supermarket, established in 1995, deals in local delicacies all over the world, more than 80% of which are imported goods. It was once one of the largest imported food and daily necessities supermarkets in Shanghai and even the Yangtze River Delta. Due to the focus on high-end imported boutique supermarkets, Shanghai City Supermarket’s stores in Shanghai, such as Shangcheng Store, Jinqiao Store, Lianyang Store and Tianshan Store, are all located in the traditional "high-end residential area".
However, in today’s developed e-commerce, the high-input mode of selling imported goods has not helped Shanghai Chengchao to form a differentiated advantage, but has led to unprecedented difficulties in its operation.
According to an interview with its founder Cui Yixiong in 2016, Shanghai Chengchao has more than 20,000 products, of which more than 8,000 products are directly purchased from abroad, and its sales account for more than 60% of the total sales. In order to ensure the quality, Shanghai Chengchao has set up direct agricultural bases in Pujiang, Maqiao, Huacao and Huating, Hainan and Yunnan in Shanghai since 1997, and even the employees, feed and seeds used in them are directly controlled by the company. In addition, the company has established direct production bases and logistics.
A consumer said that the earliest contact with imported food began in Shanghai city supermarket. Although the price was a bit high, the product quality was not bad. "Later, imported food was available everywhere, so I wouldn’t go to the city supermarket specially."
The closure of Shanghai city supermarkets is not a case. According to incomplete statistics, in the first quarter of 2024, at least 31 supermarket brands and more than 140 stores in China closed down, involving well-known brands such as Wal-Mart, RT Mart, Yonghui, Wumei, over the rainbow Supermarket, Boxma Xiansheng and CP Lotus. Among them, there are also some first stores in cities or regions, such as the first store of Wal-Mart in Nanjing, the first store of Yonghui in China, the first store of Fuzhou Pingxi, and the first store of Zhuji in wu mart.
Pei Liang, president of China Chain Store & Franchise Association, pointed out to 21st century business herald that the core reason why offline supermarkets in China are in trouble at present is that the production end and brand end of China are too strong, and the client is slightly weak.
"China is the largest production base of FMCG in the world, and brands have very rich choices in channels. They can sell their products through e-commerce platforms and other channels. Retailers in Europe and the United States are very strong, occupying a great voice in the channel, so its dominant market position can ensure that it takes the initiative in the development and sales of its own brands, but this is particularly difficult in China. This is determined by the different national conditions and environments of the two places. " Yan Liang said.