Huarun Spent Three Years To Digest Tesco's Community Business

With the impact of the electricity supplier's impact, physical retailing has become no longer sexy today. In the key to this change, as one of China's largest retail groups, the success of Huarun's transformation will represent the future trend of China's physical retail industry in a sense.

In February 8th, Huarun Wan announced the launch of a new brand of red "Huarun Wanjia" brand. The new logo will gradually replace the existing logo of all Huarun stores and Tesco (Le Gou) joint ventures.

The retail giant with 4127 stores in China and sales of 104 billion yuan in 2014 has entered the era of "late" new layout -- an era of downstairs supermarkets.

　　 wipe out Tesco It takes three years to digest?

It is undeniable that Huarun Wanjia is a huge monster, even though it has not eaten Tesco.

Statistics show that, as a chain supermarket with 30 years of retail experience, the sales volume of Huarun's self operated stores in 2014 reached 104 billion yuan, and the total number of self owned stores reached 4127. Huarun Wanjia has entered 31 provinces, autonomous regions, municipalities directly under the central government and the Special Administrative Region, 264 cities, and the number of employees exceeds 300 thousand. It has formed more than 10000 Huarun, Su Guo, happy song, Hua Runtang, Ole', blt, VanGO, Voi_la, VIVO, Pacific Coffee and so on. brand 。

In October 2014, Huarun's parent company Huarun venture and the Tesco group, the third largest retail company in the world, signed a joint venture agreement to form a joint venture. Tesco subscribed to 134 stores and 19 shopping malls and cash HK $4 billion 325 million for 20% of the joint venture company, and Huarun VENTURE HOLDINGS 80%.

According to Huarun's CEO Hong Jie, Huarun has become the largest supermarket chain in China. Some analysts predict that the sales revenue generated after the merger will be the sum of the total operating income of WAL-MART and Carrefour in China.

In other words, in other words, it is also a congratulation to this merger. Hong Jie said that this is the opportunity to integrate with international practice.

However, this acquisition is in the industry's view, but it is the rhythm of 1+1<2.

One direct evidence is Huarun's third quarter of 2014. achievement In the report, Huarun shop lost 700 million yuan in the retail business, due to the loss of Tesco shops.

The reasons for this result are manifold, and one of the key points is the left and right beat of the two combinations.

After entering the Chinese market in 2014, Tesco has experienced a high-speed opening period. In 2007, Tao Erkang, chief executive of Tesco Tesco, said: "200 stores will open in 5 years." At that time, Tesco had 90 stores in China, that is, 22 new businesses a year to meet demand. In the process of high-speed expansion, a large number of stores are in a state of urgent opening because of improper location, goods not meeting the needs of local consumers.

Huarun Wanjia has also gone through such a detour. Media reports reported that Huarun has closed three stores in Hebei, Shijiazhuang and Tangshan recently. In eastern China, some Tesco shops were forced to close.

Similar detours also led to store stacking problems. To this end, vice president of Huarun Wan, President of Huadong District, Zhang Hua said: "after the acquisition of Tesco, there is no need for a street to open two stores simultaneously." This is the solution, and it is also the key problem that must be solved after M & A.

Downsizing has become the main way of digestion after mergers and acquisitions, while Huarun plans to spend 3 years to complete the docking and integration of Huarun and Tesco in all stores across the country.

But in the process of losing weight, Huarun's focus is not on the large stores, and the reason for its acquisition of Tesco is really uncovered.

　　 Small format: the supermarket downstairs is coming.

In the acquisition of Tesco, Huarun Wan's real layout intention is also unfolding. On the face of it, there is not much intersection with Tesco.

According to the National Bureau of statistics, professional stores, supermarkets and department stores increased by 5.8%, 5.5% and 4.1% in 2014, respectively, but they fell 1.7, 2.8 and 6.2 percentage points respectively over the previous year. It is obvious that the entire traditional retail industry has entered a period of growth.

But last year, Huarun Wanjia expanded against the trend, opened 65 stores (excluding Ole', VanGo, etc.), and 14 home opened, and the market gradually penetrated into the three or four tier cities. On the surface, the number of Huarun's roads is not very special. Before that, Tesco also had the same operation. It was a new blue sea move to avoid the hot competition in the first tier cities and the industry, and to dig into the three or four line cities.

However, in terms of practical operation, Huarun has lowered its focus to a lower level. The hypermarket is just the pioneer force in Huarun's strategy.

The strategic intentions of Huarun have already been launched in the first tier cities, and after the gathering of considerable brand energy in the hypermarket, it will radiate to other Huarun brands. According to the intention of Huarun Wanjia, retail stores in the first tier market will be mainly characterized by the miniaturization of formats. For example, in January 27th, Huarun Wan opened the first "new generation VanGO convenience store" in Hangzhou with its retail brand "VanGO" as a pilot project.

According to media reports, because the surrounding residential areas and commercial office buildings, the new generation of VanGO convenience stores increased the proportion of hot and fresh food products. In the space of 126 square meters, besides common stuffed bun, soya bean milk, Guan Dongzhu and lunch, customers can buy freshly ground coffee in the new generation of VanGO convenience store, including 6 classic tastes, such as American style, latte and so on. Combined with the needs of the surrounding business district office buildings and single apartment consumption groups, the number of family products (edible oil, seasoning, etc.) increased in the new stores. In addition, there are many payment services such as mobile phones, traffic violation, water and electricity charges, and China Digital TV.

Obviously, such a layout is no longer a traditional retail mode, but has become a kind of community life space. Tailor-made according to the location of the shop, in fact, is the concentrated expression of Huarun's "small format".

Vertical, functional and miniaturization are the basic characteristics of small format. But what Huarun wants to do is obviously to form a brand in its large stores, and then use the "small format" to attack all kinds of business circles, targeted layout, provide convenient service for life, and further extend the radiation to form a complementary business chain. It can be regarded as an upgraded version of "canteen" or a supermarket group combination of N.

In today's brand competitiveness of the second tier cities, the layout of Huarun's "small format" is bound to form rapid replication, while the three or four tier cities copy the modules of the first tier cities, starting from the main store, and so on. The acquisition of Tesco is not just to expand the overall size of the store, but rather to realize the new brand layout of Huarun in the vacuum area of Huarun, and accelerate the "replication" cycle as a catalyst.

Therefore, the purpose of this kind of size matching is to adapt to the new consumption demand of young people. Especially for the invasion of e-commerce, differentiated sales of goods. In short, it is to sell life services that are difficult to provide directly on the Internet, especially at the moment when O2O is still in the exploratory stage. Huarun's "small format" inserted into various business circles can become a recent supplier of life services, or a supermarket downstairs for consumers.

On this basis, the strategy of Huarun Wanjia's electric business will start.