Source of this article: Times Finance Author: Zhang Xuemei
Source: Figure Worm Creative
On Douban, there is a “I love food during the period” group with more than 90,000 members.
In the group, everyone recommended each other discount stores in various cities and shared their shopping experience. Chen Yi has a very popular post. The content is that she bought 43 items at a discount store for 125 yuan, with an average of less than 3 yuan per item. Many young people who were with her in Beijing commented: “I must go shopping, I am so happy” “I went to the Sanlitun store before and bought a big bag for more than 70 yuan.”
In the past two years, discount stores have sprung up like mushrooms after a rain. Good Deals, which sells on-due and low-priced food, was established in 2020, and currently has more than 500 stores; Hema will enter fresh food discount stores in 2021, and has now deployed in more than ten cities, with Jiajiayue and Renrenle topping the list. The Ministry of Commerce has also opened a number of discount stores.
Recently, Wumart Group also quietly opened a discount store “Meitao” at the exit passage of a Wumart hypermarket in Beijing, with an area of about 80 square meters. From the Wumart Supermarket, but at a lower price. As a large supermarket operator in China, Wumart owns brands such as Wumart Hypermarket and Metro.
In addition to these retail giants, many young people also choose to open their own stores. Fan Xianggan, a post-90s generation, is one of them. He will open his first discount store in 2021. At present, there are nearly 80 directly-operated and franchised stores under the company.
20 yuan to buy 11 items, young people fall in love with discount stores
In 2019, ALDI, a well-known German discount supermarket, opened its first store in Shanghai. As of October this year, the number of its stores in China exceeded 30.
In 2020, domestic brands will join the competition. In the same year, the temporary food discount store Haodian was established; the following year, Hi Tego was established. According to media reports, Haodai plans to open 2,000 stores in 2023. Liu Kai, head of its supply chain middle office, said that currently Haodai is mainly located in first-tier cities, including about 150 in Shanghai and about 100 in Beijing.
Good Deals Store Source: Times Finance
Dai Yue, who works in Beijing, is a frequent customer of discount stores. “A 1L bottle of iced black tea costs more than 2 yuan, and matcha pudding and wafer biscuits cost more than 1 yuan. I bought a bag of snacks, and 11 pieces cost only 20 yuan.” She told Times Finance and Economics that occasionally when she went shopping on weekdays, there were a lot of people in the store.
Zhou Zhou, who is in Guangzhou, also feels the penetration of good deals into his life. Since the beginning of this year, she has often seen passengers carrying red and white shopping bags for sale at the subway station, and she herself has become a frequent customer in the store. “Every time I pass by, I will go in and draw a few blind boxes, which cost about 20 yuan each. It’s 2/3 cheaper than the market price, and there are also big IPs such as Onmyoji, One Piece, SpongeBob SquarePants, and Harry Potter.” After pumping out the blind box, she would also stop by the snack area.
Times Finance visited a good outlet store in Tianhe District, Guangzhou. The store is located on the first floor of the shopping mall, close to McDonald’s and MINISO, and has a large flow of people. Every ten minutes or so, the clerk in red overalls in front of the store will loudly attract customers: “Welcome to the special sale, all the products are 10% off, welcome to buy in the store”.
The clerk told Times Finance that the store opened at the end of December last year, and he also joined the job at that time. There are 6 clerks in the store, 6 during the day and 3 at night, with a monthly income of about 5,000 yuan. “Weekends There will be more customers, basically young people.”
Senior retail expert Wang Guoping told Times Finance that the reason for the rise of discount stores is that the high cost of commodity marketing in the market leads to higher and higher prices. The phenomenon of replacement of the brand (small brand with no reputation). “The channel with the strict selection function has become a bridge between the white brand and the consumer, and the discount store has played this function.”
According to the observation of Times Finance and Economics, more than two years after its establishment, Douban’s “I love food during the period” group still maintains an active discussion level. Whether it’s Adolph shampoo for more than 20 yuan, milk that will expire in two days, or discounted fruit, the team members are happy to share and find various ways to cut wool. Young people no longer care about whether it is shameful to buy expiring food, but are seriously calculating how to get more discounts. “It’s delicious, super cheap, and really satisfying”, is a common evaluation of the food group in the expiry period.
The post-90s start a business and open more than 80 discount stores a year
When buying discounted items becomes a trend, many young people who love to visit discount stores see business opportunities and become the “middlemen” of the discount store format.
Fan Xiangqian, born in the 1990s, is one of the entrepreneurs. He has been paying attention to the discount store format since 2020, and will start it in March 2021.
According to Fan Xiangqian, the company currently has discount store brands such as Huibixuan and Yangxiaopu, which are divided into two models: direct-operated discount stores and franchised discount stores. There are two models of large stores with more than square meters. The sales categories include snack food, beverages, convenience food, personal care home cleaning and children’s food, etc. “The price of all our products must be 20% off the traditional supermarket convenience store, only those that meet this requirement We will only make purchases if requested,” he said.
“There is no essential difference between the supply of discount stores and traditional retail. The main difference is that the original model has been changed, and any fees from dealers, agents, and brands, such as entry fees, barcode fees, etc., are no longer charged. In addition, we use The capital efficiency is exchanged for the low price of the commodity, and the cash is directly purchased, and the supplier is no longer asked for the billing period.” Based on this, discount store items can get lower prices.
However, Wang Guoping pointed out that my country has a strong food manufacturing capacity and can continuously improve diversified products, but the quality is generally not high, and consumers can only choose the quality by choosing the brand. Therefore, discount stores are often prone to misunderstandings. Purchasing products are often based on the products that dealers can provide. When negotiating, they usually focus on cooperation policies (such as deductions, entry fees, etc.), and it is easy to ignore the construction of their own strict selection capabilities. In other words, the products that buyers can choose from are limited, and their appeal to consumers is correspondingly reduced.
In fact, the current development of domestic discount stores is mixed. Established in 2020, the online celebrity discount store Prosperity Market has stated that its business has stopped and is preparing to file for bankruptcy; another temporary food discount collection store, Bengong Snacks Creation and Research Institute, the operator of Beijing Bengong Food Co., Ltd., was listed as dishonest and executed. people, and have been involved in many lawsuits and disputes.
According to iiMedia Research, the market size of my country’s discount retail industry will reach 1.62 trillion yuan in 2021, but the market share of TOP20 discount retailers is only 7%, far lower than the 24% in the United States, and has not yet run out of TJX, TAEGET and ROSS and other mature top offline discount retail companies, so the industry is still in a period of reshuffle and expansion.
The top supermarkets have also opened discount stores, and fresh food accounts for the majority
It is worth mentioning that the leading supermarkets with strong supply chains and inventory reserves are also eyeing this cake. With their inherent advantages, Hema and Wumart have set up discount store formats one after another.
In August 2021, Renrenle will open 2 member discount stores in Shenzhen and Tianjin. The stores focus on the concept of branding and warehousing and display, and the store is divided into sections, including seasonal fresh food, Internet celebrity snacks, grain and oil seasonings, laundry care home cleaning and daily necessities. Department stores, etc. Among them, the price of 5 liters of Nongfu Spring mineral water is 8 yuan, and the price of Kyoho grapes is 4.99 yuan/catties. According to the financial report of Renrenle (SZ002336), as of June 30, 2022, the number of its member discount stores has reached 10.
In October of the same year, Jiajiayue opened its first discount store in Shouguang Wanda Plaza, Weifang, Shandong. The store covers an area of more than 6,000 square meters, including daily necessities, maternal and child products, fresh fruits and vegetables and other categories. In July this year, it opened a 3,000-square-meter discount store in Jining.
Among the supermarkets, Hema is undoubtedly the most aggressive. In October 2021, Hema’s first fresh food outlet store opened in Shanghai, with an area of about 480 square meters and the slogan “Outlets in the fresh food industry”. Since the launch of the first store, Hema has launched outlet stores nationwide. Up to now, it has established stores in Beijing, Shanghai, Guangzhou, Shenzhen, Suzhou, Hangzhou, Wuhan, Chengdu, Chongqing, Changsha, Qingdao, Guiyang and other cities. The number exceeds 20.
Hema told Times Finance that Fresh Outlet is a supplement to Hema’s existing business format, and it is positioned as a Hema quality discount store to help Hema reduce the loss of processing centers and stores. Fresh products from Outlet include Hema Xiansheng, Hema Neighborhood and other short-term products, as well as daily fresh (Hema’s own brand) fresh products that had minor bumps during transportation and were not sold out on the same day. The goods arrived at the fresh produce outlet that night, and the next day brought them to the surrounding residents at a “discounted price for the people”.
Among them, the proportion of fresh products is very high, and the discounts on in-store products range from 30% off to 20% off. Depending on the category and the validity period of different products, the discount will be different, but the overall price will be lower than the average market price of the same quality.
Currently, Hema Outlets are mainly located in first- and second-tier cities. “The layout of Hema Outlets needs to revolve around Hema Fresh Store, based on Hema’s existing supply chain capabilities and operational capabilities.” Hema said, “‘Going down’ is still in the exploration period. The business format has also been making some quantitative adjustments.”
Wang Guoping told Times Finance and Economics that for discount stores, the window of opportunity in recent years is to use strict selection instead of rough selection, and white-label quality to replace brands. This is based on the resonance of channel opportunity window, consumer demand window, and quality improvement in the manufacturing segment. , In order to gain consumer trust, it depends on whether the discount store can adhere to the ability to strictly select channels, and whether it has a strong bargaining power for selection and purchase.
(The interviewees in this article are all pseudonyms except Wang Guoping and Fan Xiangqian)