WAL-MART Is Transformed Into A Commercial Real Estate Developer. The Largest Retailing Business Is Closed.

The continued downturn in the retail market is raging again under the hedge of high rent. Even before, the ambition of WAL-MART's real estate layout by leasing the Chinese market has been gradually activated.

Reporters learned from WAL-MART that WAL-MART announced that 600 million of Zhuhai's "Le world" will be completed in 2016. This is the first high-profile announcement of WAL-MART's involvement in shopping centers. Facing the new pressure brought by the soaring rent and the increase in labor costs, with the increasingly competitive advantage of Huarun Wanjia and other domestic retail giants, the embarrassing situation of WAL-MART China has become increasingly prominent.

　　 First commercial real estate

In the context of soaring rental and competitive weaknesses, WAL-MART, which has been leased to the Chinese market, has finally chosen the layout shopping center to resist the pressure of high rent.

In the early September, Wal-Mart China announced that its shopping center, which was developed, built and managed in China, held a foundation laying ceremony in Zhuhai recently. The shopping center planned to invest 600 million yuan, with a building area of about 100 thousand square meters. According to the reporter, this is the first shopping center that WAL-MART has developed, built and managed in China since its entry into China.

Related information shows that in 2011, Gao Fu Lan acted as WAL-MART Asia president and CEO, and established the Asian Real Estate Co., Ltd. in the same year, mainly developing commercial real estate with the core of hypermarkets and Sam member stores. But 3 years later, Gao Fu Lan has returned to the US. WAL-MART's first report card in China, the Zhuhai project, came to the surface.

In response, a number of industry insiders interviewed by reporters said that after 18 years in China, WAL-MART came late and entered the commercial real estate for the first time. It was also the need to increase the new profit source caused by the rapid rise in rents and the downturn in the retail industry.

The world famous commercial real estate agency, CB Richard Ellis, released the "evolution of China's retail industry structure" report. In 2013, China's major listed department stores operating profit margins declined for 3 consecutive years, from 13.6% in 2010 to 12.4% in 2013.

In contrast, the rent and labor rose. From 2011 to 2013, the average data of 6 traditional department stores, such as Parkson commerce, Maui department store and new world department store, showed that property rents and staff costs rose by 14% and 18.5% respectively, but operating income increased by only 8.8%.

In September 26th, the "China Times" reporter gave a call to WAL-MART's responsible person about whether WAL-MART entered commercial real estate because of rent pressure. The person in charge did not deny that the company had no relevant publicly available data at present. The official also told reporters that the company's real estate sector was established, because the company's framework has been adjusted many times until this year, it has become one of the main departments of the company's development.

In fact, WAL-MART's cross-border commercial real estate is only one of the representatives of the retail industry.

As early as 2012, a survey conducted by China Chain Store Association showed that more than half of the domestic retail businesses were involved in commercial real estate, and the practice of subsidizing the retail industry has become a common practice. According to relevant information, as early as 2012, Yurun Group, which has many plates business such as food, department stores and hotels, announced the completion of the construction of 50 commercial complexes in 2015. In 2013, Hongxing commercial group of Hongxing Mei Kai Long group, which entered commercial real estate, said it would complete the construction of 100 shopping centers in Aegean Sea in 2020. The IKEA Shopping Center Group invested 10 billion yuan to develop shopping centers in Beijing, Wuxi and Wuhan.

"They are all forced out by commercial real estate." A retailer, who is not willing to be named, told reporters that the reason is very simple. The cash flow of the retail industry is ample, but the profit is very thin. In the past two years, the rent of the commercial property has doubled, and the rent of the commercial property has also risen.

Many industry analysts interviewed by reporters said that whether it is to boost corporate confidence or improve profitability structure, WAL-MART is in urgent need of efforts to expand new businesses to resist the continued downturn in the retail industry.

Multiple predicament intertwined

In fact, the soaring price of housing is not the main reason why WAL-MART has been trapped in the development dilemma in recent two years. The interweaving of various factors such as "quality gate" and "frequent shop closing tide" has led to the loss of the first retail throne. A number of reporters interviewed the industry analysis.

According to the reporter, WAL-MART has been making great adjustments to domestic stores since 2013. Statistics show that in 2014, the number of stores expected to close in WAL-MART China accounted for 9% of the existing number of WAL-MART stores in China. And the speed of opening a shop is relatively fast, only in September this month. Wal-Mart 6 stores in Hunan Youxian, Guangxi Nanning, Yunnan Wenshan and Maitreya, Sichuan Guanghan and Guangdong Guangdong opened one after another. According to WAL-MART's plan, 30 high quality retail stores will be opened in 2014.

In response, many industry analysts told reporters that although WAL-MART stores were designed to adjust, the frequent loss of customers and new store customers needed time, but eventually the loss of large quantities of consumers had undoubtedly become a new dilemma for WAL-MART in the past two years.

In the earnings report released in February this year, the net sales of WAL-MART's international sector fell by 0.4% compared with the same period last year. China is almost the only straw in international business.

In response, a number of industry insiders interviewed by reporters said that the intertwined multiple predicament led to the slow growth of WAL-MART performance in China's region, and ultimately only to find new growth points by expanding new businesses.

Most of the industry experts are not optimistic about WAL-MART's entry into commercial real estate.

An insider who asked not to be named told reporters that the problem of large-scale retail facilities construction is more serious than that of the wholesale market. When China's commercial real estate has become saturated, WAL-MART will face many challenges at this time.

The above analysis told reporters that from last year to now, the retailing closing tide is the "liquidation" of the retailer's "horse race enclosure" which has led to commercial saturation.

According to the statistics of China's debt and credit statistics, in the first half of 2014, the domestic supermarket business closed 146 stores, and the department stores closed 13.

And then Wal-Mart Whether to enter commercial real estate is an opportunity or a challenge to be observed.