The Last "Selling Body"? Can Wumi Join Metro'S Foreign Capital Store?

With Metro's selling of Wuming dust this month, foreign retail outlets are fading out of the Chinese market. Looking back at the ups and downs of foreign retail in China, Metro, Carrefour and so on have witnessed the transformation of China's retail development.

"The so-called foreign monks will chant scriptures. In the 90s of last century, they learned foreign capital retail mode, and the talents of foreign capital and retail business became the Chinese local retail entrepreneurs at that time. Compared with Japan and South Korea retail enterprises, European and American brands such as Carrefour and WAL-MART continue to expand their influence in China, but localization is a real problem that all foreign retailers need to face. Chen Liping, Professor of business administration at Capital University of Economics and Business, told reporters on twenty-first Century economic report.

According to the data released by the National Bureau of statistics in October 18th, the retail sales of consumer goods totaled 296674 billion yuan in the first three quarters, an increase of 8.2% over the same period last year. The total retail sales of social consumer goods after deducting automobiles increased by 9.1%. With the continuous development of consumer and retail industry and the Internet age, China's retail industry has also changed dramatically. With the rise of online e-commerce, traditional physical retailing in China has also been impacted unprecedentedly. In the past, it was difficult for the hypermarket model to work. Under this background, the foreign giants were gradually showing signs of acclimatization.

Overtaking in curve

In recent years, the keyword around the foreign retailers, especially the hypermarket operators, has become "sell". China's retail industry has also changed from the continuous input stage of the past foreign investment mode to the global retail vane. Tang Jianian, former president of Carrefour China, has admitted to reporters including the twenty-first Century economic report that China's retail industry has become a global retail experimental field. The attempt in the Chinese market to some extent guides Carrefour's global business strategy, Thierry GARNIER.

In October 11, 2019, Metro Group, Wumart group and multi-point Dmall jointly announced that Wumart signed the final agreement with Metro Group to acquire Metro China holding rights. This means that Metro, which has a place in China with B terminal storage membership system, will also join the circle of friends who fade out of the Chinese market.

After the completion of the transaction, Wumart group will hold 80% shares in the joint venture set up by both sides, and metro will continue to hold 20% shares. Many points will become Metro China's technology partners. Wumart group and Metro Group will play their leading role in the market. Both sides have their own advantages in the wholesale and retail fields. Multi point Dmall digital technology will accelerate the development and digitalization of Metro China.

In October 18th, Zhang Wenzhong, the founder of the Wumart group and chairman of multi-point Dmall, sent an internal letter to Metro China. In the internal letter, Zhang Wenzhong said that the new equity relationship will closely link Metro with Wumart, with the support of more powerful technology development and implementation capabilities, accelerate the digitalization process, and enhance the Metro China's operation efficiency and the online and offline integrated customer experience.

Metro's entry into China in 1995 has been smooth sailing for the first few years. At that time, Metro's profits rose year by year. In 2008, Metro achieved the highest revenue of 65 billion 529 million euros in history. But from 2008, its business growth began to slow down. Then, from 2010, Metro's revenue began to go downhill. Pitchbook data showed that net revenue fell 1.6% in 2018 compared with the same period in 2018. In the 2018 fiscal year, the group's total revenue was 36 billion 530 million euros, while the Chinese market accounted for only 7.3% of its total revenue. At present, Metro has 95 shopping malls in 58 cities in China. It has 11 thousand employees and nearly 9 million customers.

Metro is different from other large retailers. Its main business is mainly to B. Metro's initial entry into China is mainly aimed at units and wholesalers, and deep ploughing in the warehouse type membership supermarket.

"Metro to B business accounts for a very high proportion, it is this business for us in the Chinese market has played a decisive stabilizing role." Kant, chief executive of Metro China (Claude Sarrailh) has publicly stated. But the main attack on the B end market and the abandonment of the C terminal market also mean that Metro has missed the demographic dividend of the rapid development of China's Internet in the past ten years. Against the backdrop of the electricity supplier's death, foreign retailers gradually lose the Chinese market advantage.

In addition, it is worth mentioning that unlike other foreign retail enterprises, the use of rental stores is different. Metro has certain real estate resources advantages in China, and many of its shopping sites are concentrated in a second tier city such as Beijing and Shanghai. Facing the rents of commercial real estate rising at the speed of 5%-8% every year, Metro's property has become a scarce asset and has experienced obvious asset appreciation.

Therefore, Metro potential buyers are also "gathering stars". From Fosun international, Tencent, Ali, Da Yun FA, Suning and so on, until the last round of bidding list in July this year, only Yonghui and Wumart were left. Finally, the dust settled this month and Wumart succeeded.

Can I still have dinner?

Coincidentally, the Costco of the Chinese market in Shanghai once again raised a wave of foreign retail sales in August, triggering a looting for a while. Richard Galanti, chief financial officer of Costco, said that the registered members of Shanghai store exceeded 200 thousand, which was higher than the 68000 average level, and record the establishment of Costco in 35 years. Due to its success and long-term plan, Costco will open another second stores in Pudong in early 2021. In the short term, "explosion red" has just won a good start for retail enterprises. Whether we can get a place in long distance running still needs market inspection.

Like metro, Costco is also a way of managing affiliate stores. People in the industry told reporters that warehousing supermarkets were initially recognized at a low level in China, but with the increase of consumption level, they have become the focus of retail businesses in recent years. WAL-MART's Sam, Costco and Metro have had sufficient experience in the field of membership.

From a market perspective, foreign retail outlets still have an enlightening effect on China's retail development.

At present, the domestic retail industry is undoubtedly still in the era of "spring and autumn and Warring States" and "hundred schools of thought contend". At present, the top 100 retail enterprises in China account for only 20% of the physical retail market share, while the top ten of foreign retail enterprises account for 30% of the market share.

In contrast, the offline retail development in the US is relatively mature. According to Rediff Business, in 2010, there were five seats in the world's ten largest retail giants, namely Amazon, Krogh, Costco, home depot and Target. In fact, highly developed offline retailing has also curbed the development of e-commerce. On the contrary, China's total retail sales grew slowly, and the growth rate was less than 20% since 2009. But with Ali as the representative of the electricity supplier to achieve the curve overtaking.

However, the path of digitalization of China's retail industry is not smooth. With the capital recession, subsidies for online subsidies are insufficient, and retail enterprises have to face the problem of loss.

In December 2018, Yonghui supermarket divestiture Yonghui Yun Chuang, Yun Chuang business as a new retail sector attempt, serious losses, accumulated losses in the past 3 years nearly 1 billion yuan, only in the first three quarters of 2018, the loss amounted to 617 million yuan. Even the new retail rush box, Ma Sheng Sheng also slowed down the shop speed. The transformation of retail format is more like a long rally, and the original internal work is still a battle of efficiency.

Returning to the status quo of domestic retail formats, online companies have obvious capital advantages, but lack of offline experience. Under the impact of online businesses, online stores are also facing increasingly difficult situations. Many physical retail owners began to find it increasingly difficult to make supermarkets and sell assets. Moreover, the trend towards the development of the global retail industry also shows a trend of increasing asset concentration. Mergers and acquisitions also play an important role. In 2019, mergers and acquisitions in the retail industry have also become the main theme.