Gu Guojian: Entity Retailers Return To The Essence Of Business, The Key Is Action.

20 years ago, China's retail industry began to import chain operation mode to carry out large-scale operation. According to the normal commercial development law, the commercial organization of scale will continue to supply more benefits to consumers and promote the development of upstream industry through the integration of supply chain under the premise of adhering to the commercial nature.

However, due to various reasons (such as lagging behind in market legal system, small scale of retail enterprises, lack of funds for development, out of control of foreign capital management, and dross factors in traditional culture), China's retail enterprises, especially chain enterprises, have weakened their self operation ability, and the profit pattern has been serious. The scale of chain operation alienation has been "diseconomy". This alienation phenomenon is rare in the history of world retailing development.

From the essence of the current business situation in China, it belongs to the "property based nature" rather than "the value creation nature of the supply chain", which can explain that when the chain enterprises develop on a large scale, the independent single store retail formats still develop very fast and have certain advantages in the same brand price. Chinese retailers have not been making good use of the "made in China" world resources at home. For a long time, the products made in China are sold all over the world, and the Chinese people buy them from abroad even lower than the domestic market prices. When the retail sales are developing rapidly, the physical retailers are being beaten "without words" for a considerable period of time. This is not due to the fact that online retailing is too strong, but it is the fact that physical retailers lose the ability to integrate supply chain. Although many retailers are small in scale, their actual business capability is too weak.

Nowadays, the physical retailers have really awakened. In 2014, the major retail giants of China's retail Leadership Summit sponsored by the China Chain Store Association thoroughly expressed their determination to return to the nature of business. I was very moved by this determination. Since 2005, I have organized and promoted chain supermarkets to change their business mode, set up a joint purchasing organization (Shanghai Jia Lian Hui Ying Co., Ltd.), in 2006, drove the supermarket enterprises to pick up fresh food and go along the way of "agricultural super docking". In 2007, the organization established a joint meeting of China supermarket joint procurement transactions. In 2008, the chain supermarkets were organized to export the processing trade enterprises to carry out the "internal and foreign trade docking" mode of transaction. It can be said that the difficulty of pushing is far beyond the imagination. Because it is impossible for me to change the way of operation and the profit mode trading rules on the strength of one of my own.

Today, I see the hope of change because the consumer has changed, and the business environment has changed. In the Internet age of the new technological revolution, the rapid rise of online retailing has changed the living conditions of physical retailing. But the most fundamental change is the change in the minds of retail leaders. Only when these leaders change, can China's retail industry return to the essence of business to become a reality, so that we can move from the screaming of thinkers to the actions of entrepreneurs.

Please take a look at their actions and listen to their deafening bluntly:

Chen Xiaohong, chairman of Shanghai Bailian Group, said to me, "the passage fee is opium". This is the most popular vernacular I have heard so far as the leader of a large commercial group is the most profitable leader in the retail business. Opium is hurting the human body and is extremely difficult to quit. When the passage fee becomes a profit model that the retailing industry relies on, its role as an opium will seriously damage the business organism of the enterprise, but there is no hope that the retail industry will not be resolutely removed. Lianhua supermarket, a subsidiary of Bailian Group, has been building a proprietary system since last year, especially focusing on breakthroughs in food products.

First, we should intensify efforts to build production bases on the basis of fresh food self-management. We should choose three core categories: green leafy vegetables, aquatic products and pork to carry out the base construction, grasp the three core commodity elements of safety, quality and price, and strengthen the scientific management and control of the purchasing system, build the national price information network of fresh agricultural products, collect and compare price information through 4 channels, namely, the trading market, the wholesale market, the base and the farmers, and squeeze out the "cat's water" with transparent information.

Second, we should change the procurement pattern of sub regional sub sectors in normal temperature food and core fast moving consumer goods, and carry out unified procurement across the country in many formats. Self run direct mining will continue to be the theme of Lianhua Supermarket's transformation and development next year.

Zhang Xuansong, chairman of Yonghui supermarket, said to me, "the core issue of the development of China's retail industry is corruption." I am very sympathetic to this. In the past ten years, I found this disease that hinders the development of China's retail industry in the joint procurement research, which is now popular in China's circulation industry and has been extended to other industries, such as "channel fees". This transaction rule has caused the prevalence of corruption in the domestic commercial and trade circulation field, and the breadth and depth of its flooding will not be worse than that of today's officialdom.

Just imagine, when any transaction can be "profitable" and become the main "profit mode" by paying the "passage fee", the pattern of the profiters will be varied. With the "cost rate" in the transaction contract, there will be a "cost rate" for private individuals or enterprises to manage the whole link for OTC transactions. The grey income generated by the "toll fee" outside China's retail business revenue system is astonishing. The "hidden rules" of many transactions in the domestic commercial and trading market are now wasting a lot of "borers", which have hurt the vast numbers of Chinese people.

Zhang Xuansong's chairman's astounding speech almost speaks the voice of the majority of the retail business people. Not everyone does not know it, but rather does not want to talk about this topic, because when the retail business has not yet transferred to the real independent operation, it must rely on the profit model of the channel fee, and the reliance on the profit mode of the channel fee will surely result in corruption. Without changing this trading system, corruption will always exist, and internal control and inspection can not avoid corruption, because the trading system has not changed.

The change of Yonghui starts from four aspects:

First, we should increase the intensity and speed of copying the fresh food self-supporting and direct mining to other commodities, even if the sales decline should be a consistent direction.

Second, we should deepen the management of commodity category within the enterprise, and express all the data of the goods in the internal departments and sectors from the technical and data levels. At the same time, all kinds of data in the category management will expose all kinds of unreasonable hidden rules and grey areas similar to the data of the financial audit. We can say that category management provides an internal audit tool from the angle of commodities, which is very effective for preventing corruption inside enterprises.

Third, increase the intensity of private brand development and the scale and speed of shops.

Fourth, the data of commodity purchase price and so on take the method of online benchmarking. If the Internet's greatest fairness is the immediacy and openness of information, each enterprise's purchasing behavior has formed a public information platform's benchmarking. This kind of benchmarking is a kind of supervision and checks and balances for non-standard purchasing behavior. The marking of purchasing data on public information platform is a very good anti-corruption function of the Internet.

Yonghui will change the pattern of past development in the future. While maintaining the speed of opening shops, it will actively cooperate with regional retailers in all parts of the country to undertake joint procurement. From opening shop competition to procurement cooperation, it is possible to integrate the supply chain with the scale of joint procurement among enterprises, which may be one of the development directions of China's retail industry in the future. This joint procurement method is simple and clear, and the cooperative enterprises will match the purchasing and sales data, and jointly select the dominant categories and varieties of goods that have the advantages of procurement, and jointly purchase the enterprises. Dutch treatment Each participating enterprise only undertakes the cost of its own purchase quantity, and the enterprise that undertakes the specific procurement business does not add any cost and profit to itself. The advantage of the joint purchase of these two or more enterprises is that the benchmarking of the commodity data will enable the participating enterprises to squeeze out the grey interests arising from the procurement process, and the non competitive enterprises will expand the profits in the commodity operation, which is worth looking forward to.

Wang Tian, chairman of BBK group, said to me, "we must heal the wounded and rebuild the retail procurement system". Chairman Wang Tian's remarks were painless. In December 26, 2013, BBK's e-commerce platform was launched on the line. It originally wanted to rely on the existing commodity procurement system of BBK commercial company to dock with BBK's electronic business platform. It turned out that the entity store procurement system could not butt up the electronic business platform, for many reasons, the main reason was that the price of goods did not have advantages compared with the current large number of e-commerce platforms, and the pricing power of many commodities was not in the retail business, which also occurred frequently in the early business of many entity retailers.

In recent years, imports of goods in China market BBK is highly aware that China's retail industry must use global resources to develop entity stores and e-commerce businesses in the world. It is imminent to establish a global procurement system. As a listed private enterprise, though there is no obstacle to the reform of the system and mechanism, it is better to rebuild the existing procurement system by reconstructing a new procurement system according to the new trading rules and operation mode.

The so-called "scrape and heal" is a painful decision to change the original established on the basis of independent operation and channel costs of these ways of operation and profit mode of procurement transactions, changing the underlying rules of trading, to eliminate gray income to create a new procurement supply chain.

The future change of BBK is to build a large platform strategy for commodity, information, logistics and services represented by cloud monkey network. It breaks through the boundaries of retail and crossover, and becomes a regional comprehensive social service provider. BBK is based on the development of electric business within the company to push the development and transformation of the entity store, which requires great courage and wisdom. At the same time, BBK is also working closely with the brotherhood in the industry to share data and share resources, and begin to establish a global market procurement system.

　　 Wuhan Liu Cong, chairman of China 100 group, said to me, "China's retail industry must revolutionize its business mode". Wuhan Zhongbai warehousing is one of the first supermarket companies to establish fresh food self-management in China. "Vegetable picking fields and fruit picking branches" have become the industry's favorite words for a while. But in recent years, the fruit and vegetable booths have been reduced to the supplier's "joint marketing" platform. Some of the purchasing managers set up their own sales companies as agents or distributors to supply hundreds of warehouses in Wuhan.

According to the supplier, Wuhan Zhongbai warehouse is the most ruthless company in China Southern supermarket, and sales decline has declined. Liu Cong, chairman of the new Wuhan Zhong Bai group, believes that Wuhan does not change its way of operation. It is faced with the danger of survival. Many people wrongly believe that Liu Cong is in transition to China. But Liu Cong firmly said to me, "I must change the hundred of Wuhan today. It is necessary to slam down." Let's wait and see.

Tang Jianian, President of Carrefour China, said to me in Chinese, "Carrefour now feels that the cost of access is too high. Many sales of goods that have paid a high pass fee are not good enough, and many of the small and medium-sized businesses are selling well.