Dismantling "High-End Discount Store" Mode

WAL-MART's excellent cost control The ability and the perfect supply chain system have become a classic case for every business school. Most managers of retail businesses regard WAL-MART, the world's number one, as an example of learning and emulate. However, WAL-MART announced in 2006 that it will make every effort to learn from another retail enterprise. The company that became WAL-MART's teacher is Taghit (Target), the fourth largest retailer in the US who ranked twenty-ninth in Fortune 500 in 2006 and has a business income of 52 billion 620 million dollars. Taghit's profit margin reached 31% in that year, while WAL-MART was 21%.

Taghit's success is closely related to its positioning, which is different from WAL-MART's daily low price and one-stop shopping mode. It is also different from high-end department stores pursuing high quality goods and comfortable shopping environment. Taghit will target Lock in between the two, that is, "high-end discount" sales mode, mainly engaged in off-season or broken code discount brand name merchandise.

Taghit has broken the barriers that lie between consumers. Fashionable girls in high fashion can compete with housewives in their products, which is exactly what WAL-MART wants to learn. Apart from WAL-MART, there are many retailers who imitate Taghit's location globally, but few are successful. Among these imitators, Beijing top quality commercial development Co., Ltd., founded in 2000 (including four top grade discounts and a top quality and best value department store), is a stunning development trend, with sales volume of 620 million yuan in 2007 and a breakthrough of 800 million yuan in 2008.

Value proposition is not discounted.

The core of the success of the "high-end discount" sales mode is: on the one hand, the fashion clothing brand products are very timeliness. Once the season is over, they will be seriously devalued. The longer the season is, the more severe the depreciation will be. Therefore, all garment manufacturers will have to clear up inventory quickly to reduce the demand for money and reduce losses. On the other hand, some consumers will have to spend less money on famous brand products because of their limited consumption ability, or different emphasis on product demand (focusing solely on quality and brand, but not on fashion and style). The "high-end discount" sales mode has just built a platform that can bridge the needs of both sides: while attracting famous brands to clean up inventory, it will provide consumers with good quality and inexpensive products.

But why does it look so simple and perfect, and it seems that there is no whatever The commercial mode of technological content has not been successfully implemented by several retail enterprises.

A business model can be successful, first of all, it needs to be clear about what the value proposition of an enterprise is, or what kind of value it can provide for its customers. Top quality has a very clear and definite answer to this question: it is impossible to make any discount on the value proposition from the two real needs of consumers and suppliers.

Consumers who shop at discount stores want to buy goods that are worth more than they are worth, and the basis of "value" is that there is a clear scale in the market that can measure the value of the target goods. Therefore, the standard of choosing the top sellers is the brand of regular image counters in the famous shopping malls in Beijing, and the brand of the side hall is chosen as far as possible. In terms of top quality, it can have its own image counters in famous shopping malls, representing the strength of the brand and public recognition, and their commodity value is easier to be measured and recognized by consumers.

There is a discount for a discount retailer, but in fact, the brands they introduce are brand names that consumers do not understand, or even bad quality. Such underestimation or disregard of consumer identification capability essentially ignores customer value. For example, the business model designed by I.T.A.T, once famous for its retail stores, has meticulously taken care of the sparse commercial developers, overcapacity clothing suppliers and their own interests, but it has neglected to provide consumers with real value. In the end, this deficiency makes it look like a "perfect" business model.

Providing value to consumers is not a matter of not providing them locally. satisfy All the needs of consumers, but seize the most important consumer value aspirations. Consumers' main demand for discount stores is quality and low price. Through the selection of merchants brand and the supervision of commodities, top quality can achieve the goal of "quality"; while low prices, the top grade will control the cost by reducing other unnecessary inputs, such as the environment of shopping, the timeliness of products and so on.

From the supplier's point of view, suppliers are generally reluctant to invest more in clearing inventory. However, when merchants enter retail channels, they usually have to pay a variety of miscellaneous fees, such as entrance fees, shopping malls management fees, advertising costs and store costs. In addition, the supplier has to pay a margin of about 5000 yuan (to ensure compliance with the provisions of the shopping mall and adequate supply of goods), and there is no additional cost.

Li Yan, a founder of top grade discount, was once the general manager of North China in Battie company. This experience made him very aware of the needs and difficulties of suppliers, so after the establishment of top quality products, many of the processes have highlighted the purpose of service providers.

First of all, suppliers can adopt different ways of cooperation according to their own circumstances. At present, top two businesses and suppliers are mainly co operating and leasing. Affiliation refers to the agreement between the top grade businesses and suppliers before entering the market (the ratio between suppliers and stores). After entering the field, the suppliers uniformly accept the silver in the stores, and the two sides are divided into sales cooperation forms according to the deduction rate. The two sides can decide whether long-term sales or short-term cooperation depends on their sales status. For some big brands that can set up factory shops, the two sides can also discuss the use of fixed position, with their own shelf type of cooperation. And leasing refers to the two sides agreed to enter a fixed business location before, suppliers on schedule to pay rent to the top quality business cooperation.

Secondly, the original intention of supplying value to suppliers is to accelerate the return of funds. Therefore, in order to ensure that suppliers can make profits in the case of high commodity discount rate, the discount rate set by top grade discount is lower than that of traditional retail stores. Another way to relieve Supplier pressure is to accelerate the cash flow of suppliers. Compared with the three months or even half a year's checkout period in many shopping malls, top quality discount can be done to suppliers one month. In addition, the top grade discount will also provide some free services according to the needs of businessmen, such as the recommendation of excellent salesmen who have previously been put on the top grade.

The technical content of "cheap and good quality"

After clarified the value proposition of enterprises, enterprises need to fully allocate their resources and capabilities to ensure the operation of a business mode. The most difficult and successful part of the top quality model is to see if it has the ability to attract more upstream manufacturers and offer more favorable discounts. More consumers will come and more upstream firms will be attracted. However, in the early stage of business, which is the lack of resources, how can we complete the benign cycle between the supplier and the consumer?

In this regard, top grade discount has its own set of ideas. In 2000, the first store of top quality discount opened in Wangfujing Gong Mei building, the main sports brand. The reason why sports brand is chosen as the main selling product is relatively stable because of its relative stability. Whether Adidas, Nike or Lining, the accumulation of years has made them have a stable audience and a strong market position, selling their products without any extra effort and time to explain their positioning to consumers. Moreover, the functional appeal of the sports brand itself also counteracts the overly old style of the product. The fashion brand update is faster, and consumers do not have a unified understanding of which brands are "famous products". It is not conducive to a high-end discount retailer to disseminate their positioning in the early days of its establishment.

In the case of insufficient channel influence, many well-known brands are reluctant to cooperate with them, coupled with concerns about the loss of brand image of discount stores, and the cooperation with well-known brands is even more difficult. In the face of such a dilemma, the top grade discount is as far as possible for factory direct sales, but if there is really difficulty in cooperation with the manufacturers, then it tends to be strong first class agents. These businesses are relatively regular, easy to control product quality effectively, and have sufficient source of goods, and it is easier to achieve low price in promotional discounts.

The development of top grade discounts does not depend on one step in place. Instead, we should make full use of existing resources as far as possible and improve consumers' shopping experience without increasing investment. And this experience is not just a shopping environment, but also a psychological change in shopping. Because the storefront area and goods are limited, consumers are likely to gradually lose the freshness of top grade discounts. For this reason, top grade discounts often make adjustments and changes to store display, increasing the freshness of consumers to the stores, making up for the monotony of goods and the shortage of goods.

This way of improving efficiency through effective management has been extended to this day. Every once in a while, the top grade discount will organize a certain category or several kinds of commodities. In the form of theme, using special stores area, through a unified external publicity and promotion, we will focus on introducing different commodity combinations to consumers. The frequent change of theme often adds to the customers' return and loyalty, and at the same time, consumers are accustomed to the time and the time of thematic sale of top grade discounts.

With the recognition and familiarity of the top grade discount mode, the top grade discount has attracted more and more suppliers' attention, and has attracted more suppliers to enter. In order to strictly control the quality of supplier's supply and the top grade discount, several specialized inspection teams have been set up in the sales process, and the members of the team have been trained professionally to be able to see the fake goods at a glance. The working place of the inspection team is not in the office, but to the various shopping malls and its own stores for supervision and investigation. The contents of the investigation include whether there are counterfeit and inferior issues such as changing the commodities and changing the standard, and whether the same commodity is the lowest price in Beijing. For suppliers who violate the top grade discount "low quality" proposition, the penalties for top grade discounts are very heavy. If a commodity violates the lowest price commitment of Beijing stipulated in the original contract, a ticket may be the month's sales volume of this businessman.

Top quality discount, all on-site managers and investment personnel should conduct market research every week. This is to ensure that they can grasp the general situation of goods in the market, and accurately estimate the cost of suppliers and the state of goods in the market, so as to ensure favorable situation in the negotiations and enhance their bargaining and bargaining power, so that when the contract is signed, the top quality discount can make the discount more easily. Another advantage of knowing the cost of a businessman is that in the promotion season, the top grade discount can take a more flexible and thorough measure to deal with the discount sale of retail outlets.

Expansion and transformation

With the steady market position, top grade discounts have expanded demand. In the process of expansion, top grade discounts adhere to the business strategy of single shop profit and gradual development, and abandon the practice of blindly pursuing speed, quantity, scale and market awareness, and strive for the balanced development of speed and benefit.

This seemingly universal rule is often hard to adhere to in the process of implementation. After all, it is easier to get the overall profit growth through the expansion of stores than to raise the profit rate of single stores, which is the fundamental reason why many chain enterprises finally get into trouble.

The choice of store location is fundamental to the success or failure of a retail department store. Top grade discounts every time a new store is opened, it will comprehensively consider and analyze qualitatively the human environment, business environment, traffic conditions and other factors around the new store. Among these factors, the most important index of top quality is the guarantee of passenger flow. I.T.A.T in order to increase the possibility of cooperation, the selected commercial real estate is remote and sparsely distributed. In the early days, such partners are indeed more conducive to building their own platforms and expansion, but in the end it will become one of the causes of its decline.

Since the opening of the top grade shop in Asian Sports Village, top grade businesses have chosen to form neighborhoods with a large household appliance store and a supermarket hypermarket on the selection of each new store. Such as Asian Sports Village store and Wumart store and Gome, Wukesong shop and Wang City Bailey hypermarket and Suning Appliance, first store and Carrefour hypermarket and Gome. Practice has proved that this is a very attractive form of business combination, forming its own advantages for traditional single integrated department stores. Through industry segmentation and complementary advantages, the sales level of top grade single store has been raised.

Although the business model of top grade discount and the natural separation of community retail stores make themselves have no competitors in a sense. However, many high-end department stores have increased sales promotion in recent years, especially in the overall economic downturn and people's consumption has weakened. Traditional department stores have tried to wring the last drop of price sponges for consumers. At this point, the top grade discount price no longer has a prominent advantage. In terms of shopping experience and timeliness, there is a gap between top grade discounts and department stores.

Although high-end discount stores are still in the ascendant, the trend of transformation has begun to emerge. After all, it is still a business mode controlled by others. In recent years, Taghit has begun to gradually reduce its national brands sold by discount stores, instead of selling Taghit's own brands, especially those specially designed by designers. In the future, top grade discounts also need to continuously improve the business model that has already been successful.