(On January 29, at the Furong Plaza store of Carrefour in Changsha, many customers with shopping cards were queuing up to return their cards. Photo by Tian Chao, an all-media reporter from Huasheng Online)
Huang Tingting, All Media Reporter of Huasheng Online
Carrefour, Carrefour, French means “crossroads”.
This company, founded in France in 1959, entered Hunan in 2002 and chose the location of Furong Square in Changsha, a densely populated intersection.
On January 30, the store, which had been operating for nearly 21 years, closed, and Carrefour officially withdrew from the Hunan market.
As the originator of the hypermarket model, Carrefour’s “decline” is not an isolated case. In recent years, Wal-Mart, China Resources Vanguard, BBK and other “supermarket brothers” have “closed stores to stop losses”.
At the crossroads, where do supermarkets and hypermarkets go?
Once the torrent was bravely advanced, but now it is sadly withdrawn
In 1995, Carrefour entered China and took the lead in introducing the format of supermarket and hypermarket, which was welcomed by consumers.
“Changsha is the first city for Carrefour to develop in the central and western regions of China. We want to find lost time here.” After entering Hunan, Ran Andong, then general manager of the central and western regions of Carrefour’s China Executive Committee, said.
Subsequently, Wal-Mart, Metro and other foreign-funded supermarket brands entered Hunan one after another. In addition to Changsha, the provincial capital, they also settled in other cities and prefectures.
In 2009, the situation began to change: “Singles’ Day” on November 11 became an e-commerce shopping carnival, Carrefour’s performance in China began to decline, and the impact of e-commerce on offline physical retail was immediate.
Large area, complete variety, and low price were once the advantages of hypermarkets. However, in the era of cloud consumption, consumers can compare prices online by swiping the mouse, and products from all over the world can be delivered to their doorsteps, and they can also enjoy preferential subsidies from the platform.
The supply chain and logistics system are backward, the category and price advantages are no longer there, and the large area brings high rental costs, and the advantages of traditional hypermarkets are gradually losing.
From 2016 to 2020, Walmart China closed about 80 stores; in 2017, Xinyijia, which had annual sales of 18 billion yuan, closed down, causing a sensation.
Supermarket hypermarkets turned from advance to retreat, and began to struggle and save themselves. In 2019, Suning.com acquired an 80% stake in Carrefour China. Self-service cashier area, small program ordering, JD.com home delivery… Carrefour’s many efforts, in the face of changes in consumer demand and the emergence of new formats such as community group buying, seem to be “unable to recover”.
According to the third quarter report of Suning.com in 2022, the revenue scale has declined rapidly, and the high fixed rental costs are difficult to amortize, which is one of the important reasons for the loss.
In the past three years, Carrefour has successively closed 84 stores across the country. This time, with the closure of the flagship store, Carrefour eventually withdrew from the Hunan market.
E-commerce transformation, exploring amid twists and turns
Turning around and “embracing” e-commerce is almost the most intuitive way out for supermarkets and hypermarkets.
RT-Mart launched Feiniu.com in 2014, but couldn’t bear the pressure of burning money. In 2017, it “sold itself” Ali, relying on the Internet giant to embark on the road of transformation.
According to the 2023 fiscal year semi-annual report released by RT-Mart’s parent company, Sun Art Retail Co., Ltd., as of September 30, 2022, Sun Art Retail’s revenue was 40.611 billion yuan, and the increase in online customer orders drove online business to achieve double digits of 14.3%. Growth, online sales accounted for nearly 35%.
Backgammon, which has recently changed ownership of state-owned assets, has never given up its exploration of smart retail. In 2014, BBK invested a huge amount of money to build the country’s first O2O local life service platform “Yunhou” and established a mobile payment company, which ended in failure.
In 2017, BBK proposed a comprehensive digital transformation, transferred 6% and 5% of the shares to Tencent and JD.com respectively in the following year, and launched the BBK Better shopping applet, bringing consumers a convenient experience of delivery within 3 kilometers and home in 90 minutes.
Why is the e-commerce transformation of supermarkets and hypermarkets so difficult? Jiang Han, a senior researcher at the Pangoal Institute, believes that the genes of e-commerce are digitization, asset-light, and online and offline integration. It is not simply moving products online, setting up an e-commerce system, or connecting with a food delivery delivery platform to solve the problem. Large supermarkets have not grasped the essence of e-commerce, and their own path dependence also makes it impossible for them to be fully e-commerce, and eventually become four different.
However, e-commerce transformation is still the general trend. According to the “2022 Supermarket Format Survey Express” released by the China Chain Store and Franchise Association in January, in 2022, 82.9% of supermarket companies will achieve positive year-on-year sales growth, and 45.7% of companies will have a year-on-year growth rate of more than 20%.
Become bigger and expand member stores, become smaller and enter the community
Expanding the scale and exploring warehouse membership stores; reducing the scale and entering the community are two paths that supermarket companies are currently exploring.
On November 25, 2022, the Walmart Sam’s Club Changsha Yuelu store opened to welcome customers, with an area of more than 20,000 square meters. It was crowded with people on the opening day.
2022 is the year when Sam has opened the largest number of new stores since it entered the Chinese market 25 years ago. It can be seen from Wal-Mart’s Q3 financial report that the sales and number of members of Wal-Mart Sam’s Club have increased, which has led to a rebound in Wal-Mart China’s performance.
Warehouse membership stores have opened up a new profitable situation for hypermarkets, and Costco, Yonghui Supermarket, Hema, etc. have also entered the game.
At the same time, large supermarkets began to downsize and started community businesses.
Yonghui Superstores and Hema promote the mini business format, deploying near the community, focusing on fresh products. RT-Mart has developed Zhongrunfa and Xiaorunfa, which are close to young consumer groups.
“A community supermarket with an area of 500 to 1,000 square meters can meet the daily needs of consumers.” Peng Yaoyi, executive secretary-general of the Changsha Retail Business Association, believes that community supermarkets and community business circles will be the key development direction in the future.