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Hot To Shut Shop! What's The Inspiration For China's Hypermarket By Directly Hitting The Opening Site Of Costco's First Store?

2019/8/28 11:16:00 4

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In August 27th, the second largest retailer in the United States, Costco, the first store in mainland China (hereinafter referred to as "open market") was officially opened and located at No. 235 Zhu Jian Road, Minhang District, Shanghai.

It is understood that the opening area is 20 thousand square meters, the indoor shopping area is nearly 14 thousand, and the floor space of the first floor is the same as that of the American store. The parking space can accommodate 1200 indoor and outdoor parking spaces. It is worth noting that the membership of the open market can not be done by non member users. At present, there are two kinds of membership cards: the members of Venus and the members of enterprises. The annual fees are 299 yuan / year (before promotion price is 199 yuan), both of them can apply for free family card and enterprise Deputy card. In addition, the opening membership card is universal and overseas stores can also be used in mainland stores. At present, there are more than 96 million members worldwide.

The opening of the first store in mainland China apparently aroused great enthusiasm from consumers in Shanghai. In the process of driving to the opening market, it experienced nearly two hours of congestion. From 9 a.m., traffic announcements in Shanghai continue to issue traffic warnings. There has been a large area of congestion near Lian you road, Zhu Jianlu and Beiqing highway near the opening of the market. As of press release, the announcement of the opening of the passenger market said that the congestion will be suspended in the afternoon due to congestion in the market. Because the road is too congested, we choose to get off at Zhu Jian Road and walk 500 meters to open the store.

The sign at the junction indicates that the parking lot is full, and it takes three hours to wait. Many consumers stop their private cars in the distance and choose to walk there.

The opening of the customer shop road has been restricted. Public security and security guards are maintaining order.

Apart from the open shop, the opening of the market is a member center, providing membership services.

There are long queues outside the store. It is worth mentioning that, because consumers gather more, the two entrance of the opening market only opens one entrance, and the other entrance only goes out.

At the only open entrance, consumers need to line up the stairs, enter the staircase, cross the parking lot, and take the escalator down to the first floor before entering the indoor store. It is noted that many consumers reflect that the process of entering the shopping mall is rather cumbersome and lacks explicit guidance information, which makes it easy for consumers to take a detour.

In addition, the weather in Shanghai is very hot today. At noon, Shanghai issued a high temperature yellow warning signal. It is estimated that the maximum temperature in most regions will exceed 35 degrees Celsius today. At the scene, many elderly people are also climbing the stairs, and the scene is very congested. For the risk of the elderly, on-site staff did not remind and advise.

The opening hours of the opening customers are 9:00-21:30. At present, the commodities of Shanghai Minhang store are divided into electronic products, automobile department stores, office buildings, hardware, horticulture, home textiles, sports wear, jewelry, books, seasonal goods, toys, medical beauty, groceries, fruits and vegetables, food and wine, etc., with hearing center, tire conservation center, Western food and beverage department, etc. In the display of opening stores, imported goods accounted for 40%, and the SKU number was fixed below 4000.

As a member chain store chain, all the commodities of the open market are transported by the original pallet, and the layout of the store is also simplified. In addition, self-service is used in stores, and the products purchased by members are packed in empty cartons.

The location of the entrance is computer / electronic products, small appliances and other sales areas, with sample display, the main brands are Hisense, Samsung, Dajin, SHARP, PHILPS, western data, SanDisk and so on.

Take PHILPS 75 inch 4K TV as an example, the price is 11999.9 yuan. Retrieval of an electronic business platform, the same model sells for 13999 yuan. By contrast, the price of opening stores is nearly 2000 yuan.

In addition, there are luxury areas in the entrance of the store, including Parada, Chanel, MCM and other perfume accessories, as well as Chloe, Burberry, Boss and other perfume brands. The perfume brands 30ml or 50ml are sold at a price of 399.9 yuan. Take the same Chloe perfume sold by sale, for example, the price of 30 ml is as high as 660 yuan.

Take FURLA portable bucket as an example. The opening price is 2159.9 yuan, and the price of an electronic business platform is between 3000-5000.

The scene is crowded with people, and consumers are pushing the shopping cart full of long queues, forming a wall.

Open markets such as fruits and vegetables, cakes, bread and so on. In the region, we saw the Kirkland of its own brand. It is understood that Kirkland has covered foods, groceries, clothing, health care, beauty and other categories.

Alcoholic beverages are provided with spirits, beer, wine, carbonated drinks, etc. Take Pepsi Cola 2.5L * 6 as an example, the price of an electronic business platform is 43 yuan / box, the opening price is 33.9 yuan / box, the price is quite competitive.

Take Paris water inflatable natural mineral water 500ML * 24 for example, the price is 149.9 yuan / box, the price of an electronic business platform is 176 yuan. It can be seen that compared with several commodities, the price of opening customers is lower than that of the electronic business platform.

In addition, Moutai and Wuliangye are sold in this area, and each bottle is restricted to one bottle. However, when it arrived, it was already sold out.

In the cashier area, 22 personal cash registers are fully opened, and the cashier is very busy. Many consumers have long queues, sometimes between teams and teams. Some consumers say queuing time is very long. Many consumers choose to pay for Alipay and WeChat in order to save time. But due to crowd crowding, the store signal is weak, which leads to the extension of checkout time.

There are listening service centers, optical glasses Department, tire department and so on. The hearing service center provides free hearing test service to assist members of consumers in matching hearing aids. The optical glasses Department provides free eye inspection and professional glasses service. The tire Department sells a number of brand tires, and members can enjoy free nitrogen filling service.

The western food and beverage department opposite the cashier offers hot dogs, pizza, ice cream, latte and so on. Many consumers also choose to eat nearby when they buy food.

Interviewed many consumers found that in addition to the customers who live near the opening market, there are also some consumers from Nanxiang, Xujiahui, Pudong, Yangpu and other places.

In the eyes of consumers, Chiang Kai Shek, it is very likely that the opening market will subvert the traditional stores in China. According to Ms. Jiang, his parents, sisters and brothers are currently in Taiwan, Japan and the United States, but they are all members of the open market, and they renew their fees every year. She thinks that the strength of the market is very strong. Before the market opened, Tmall opened the flagship store.

"Moreover, the products of the opening market are very popular. Even Moutai and Wuliangye are sold. The manufacturers of cooperation are all powerful manufacturers in China. In terms of category, the mainland stores and the rest of the world are very close, and their products and brands will be integrated with local manufacturers. Jiang said. Why did the investors choose Shanghai?

Shanghai is China's economic center as well as a window to observe China's economic development. Many foreign brands will also take Shanghai as the first stop to enter the Chinese mainland market. When it comes to why Shanghai opened the market, Zhang Sihan, President of the Asia Pacific region, said that in order to enter the Chinese market, the market opened up more than ten years ago. The Tmall flagship store, which opened in 2014, has provided ample experience.

According to Zhang Sihan, in the opening of the Tmall flagship store, the largest number of orders came from Shanghai, of which Minhang and Pudong accounted for almost the same number of orders, so the opening shop opened the first store in Shanghai. It is understood that since the opening of membership applications in July 1st, the Minhang store has sold 160 thousand members and its membership is increasing. Zhang Sihan said: "the number of members of the Minhang store has exceeded expectations. "

The choice of opening a shop in Shanghai is also related to the market layout of the opening market. Zhang Sihan said that the new store's opening plan will be temporarily concentrated in the East China region. In the industry view, the purpose of opening the market in Shanghai is to test its development effect in the East China market, and then judge the future market development according to the specific effect.

In the view of Zhou Yong, director of the senior consultant group, Shanghai has a strong consumption power and radiation. It is a wise choice for many good stores to settle in Shanghai. Minhang is also remote, with a relatively concentrated population. It is far away from the city centre and near the place of residence, closer to the real customers.

A group of latest statistics released by the Shanghai Municipal Bureau of statistics showed that the total retail sales of consumer goods in Shanghai reached 770 billion 500 million yuan in the 1-7 months of this year, an increase of 7.8% over the same period last year. Among them, the retail sales of 122 foreign-funded enterprises above designated size increased by 9% compared to the same period last year, and the growth rate was 1.2 percentage points higher than that of Shanghai's total retail sales of social consumer goods.

Does the store pay membership? Will consumers buy it?

Unlike mainland stores in China, many foreign stores still copy foreign models to China and implement membership. Starting from the opening of the paid membership system in WAL-MART Sam's member store in 1996, many brands such as Metro have tried the membership system, but the effect is not good enough. At present, there are still Sam member stores which still carry out membership system, and the annual fee is less than the opening market, which is 260 yuan.

It can be seen that opening membership in mainland China is only an extension of its global business. After all, the main revenue of opening customers is membership fees. The results of the 2018 fiscal year released by the open market show that the membership fee is $3 billion 142 million, with a total profit of $3 billion 134 million, and the membership fee is almost all in net profit.

At present, there are more than 770 stores in the open market, including 535 in the United States and Puerto Rico, 100 in Canada, 26 in Asia, 15 in Korea, 13 in China's Taiwan region, and 1 in mainland China. Data show that the retention rate of customers in the North American market and the China Taiwan market is as high as 90%.

The view of Kayu consumer index is that apart from the core product selection and efficient operation, the membership service is also one of the important factors to maintain customer loyalty. At present, there are four kinds of classic member services such as western food and beverage service, audible service center, optical glasses Department and tire repair center in Shanghai Minhang store. There may be more localization in the future.

And the membership service of the open market seems to be attracting consumers. In Zhang Sihan's opinion, the strategy of opening the market is to provide high quality goods and services to members at the lowest possible price. The data provided by him show that the prices of non food department stores are 30% to 60% below the market price and 10% to 20% for food products. "Every item, we will compare with our competitors. If the price can not be lower than the opponent, then do not sell this product. Zhang Sihan said.

Zhou Yong thinks that the 299 yuan membership fee seems a bit expensive, but the key is to look at goods and prices, which may extend the business of "borrowing card consumption". But the fee membership is not long enough to start in China. No one knows how well it is. With good products and favorable prices, consumers will buy them. But for Chinese consumers who are aging, the desire to buy is actually decreasing.

Is the SKU number smaller?

Compared with the SKU of tens of thousands of domestic stores, the number of SKU stores will remain below 4000, which is similar to that of Sam's. Then, will the number of SKU of the opening customers be too small?

Zhou Yong said that for the opening of the market, the 4000 SKU is enough, and whether you can enjoy it. There are more than 4000 SKU in the United States, and they will make appropriate adjustments after they arrive in China. It is not known whether the Hakka electricity and automobile related products will sell well or well in China. But localization is extremely important. The most important thing is to respect Chinese consumption habits and respect Chinese laws and Chinese employees and consumers.

Kay consumer index believes that the choice of product mix is the biggest advantage in the opening business mode. The importance of opening its own brand, Kirkland, is also rising. On the one hand, its own brand Kirkland attracts consumers to buy with high quality and high price. On the other hand, the overall operating cost of its own brand is relatively low, which will be an important growth point besides the membership fee.

The study found that in 2018, the average sales contribution of retailers in China's Taiwan market was 2%, while in the opening sales, the contribution level of private brand Kirkland was as high as 20%, much higher than that of other retailers. Private brand Kirkland covers three main categories of fresh milk, healthy food and toilet paper, attracting customers. This shows that the private brand of opening customers will play an important role in Shanghai Minhang store.

What is the reference for Chinese stores?

The opening up of customers today is also a hot topic for Chinese retail practitioners. In the view of Lin Yongqiang, chairman of the supermarket, the impact of opening up to the Chinese consumer market must be the return of retail, which is commodity strength. Wang Yongping, President of the commercial real estate research association of the real estate association of Hong Kong, said that behind the opening of the opening ceremony of the real estate business is a commodity. The high cost performance and differentiated products are the key. This is worth reflecting on the Chinese business reflection of traffic and mode.

Zhang Zhiqiang, a senior retail expert, argues that the success of the opening business is due to the higher operating level of the customers, not the good American products. There are two main categories of retail business technology, namely, the technology of "selling right" and the technology of improving the efficiency of "delivery of goods", and the experience that these customers have in these two aspects is the core and key point for China's retail industry.

Wang Guoping, a member of the joint senior advisory group, believes that the impact of opening customers on Chinese stores can be viewed from two levels: membership and commodity. From the perspective of membership system, there will be no great impact. China's warehousing membership is subject to property and there will be no big leap forward.

From the commodity level, the customers will lead the high frequency trade and change the traditional commodity structure in the same millennium. Similar to the impact of fast fashion on traditional costumes, the new market will impact traditional supermarkets' deep-rooted practices. On the high frequency, it will force manufacturers to move from scale pipelining to small batch customization mode, thus promoting the transformation of upstream manufacturers.

In addition, the concept of quality and selection will also impact the existing middle class market. Some overlapping supermarkets will start to accelerate their learning to the open market. In order to avoid costs such as taxes and transportation and other costs, some customers will accelerate local production and further promote the transformation of manufacturers. The experience of factory opening will also spread among many supermarkets and retailers, which will affect the development of China's retail industry.

He said that the customer base of the opening market was larger than that of Sam's member store. Metro B positioning is also more in line with China's current development.

Although customers can afford to serve a large number of middle and end customers in Shanghai, they can also change the retail environment. But it can not sink rapidly. In the short term, it can only be developed in pilot cities on the line.

However, in view of the popularity of the opening market, it is still necessary to return to the saying: the essence of retail has remained unchanged, that is, providing cost-effective products and good services.