On March 25, the membership-based supermarket brand " Sam's Member Store " under Wal-Mart in the United States announced that it will open a flagship store in Shanghai and is expected to open in 2021. And this is Sam's third store in Shanghai and its first flagship store in China. It is reported that the building volume of the flagship store will reach 70,000 square meters, with more than 1,100 member-only parking spaces, and it will be the largest Sam's Club in China.
is worthy of deep taste, after first settled in Shanghai Pudong in 2010, Sam only opened his second store in June 2019. However, two months later, Costco, the world's largest membership-based warehouse supermarket chain, landed in Shanghai for the first time in August of that year. Moreover, the Costco store, which covers a total area of 20,000 square meters in Minhang District, Shanghai, is only about 14 kilometers away from the Sam Qingpu store. At that time, Costco Chief Financial Officer Richard Galanti also stated in an interview with the media that Costco plans to open a second store in Shanghai at the end of 2020 or early 2021.
According to information from Tianyan Check, Costco's three companies are located in Shanghai Minhang, Shanghai Pudong and Suzhou. According to Costco's market planning information in mainland China, Costco's second store is still located in Shanghai, only about 13 kilometers away from Sam's Club, and only one subway station away from Disneyland. The third branch may open in Suzhou. Huirong Plaza. And Jiangsu, is where Sam's Club frequently has several "heavy deployments".
Regarding this, from the industry's perspective, Sam opened flagship stores and Costco accelerated the opening of stores to make another success in the Chinese market, but in the eyes of the public, there is a strong smell of gunpowder that Sam and Costco declared war on each other. Under the "provocation" of Costco's entry into China, Sam and Costco seem to have a battle.
However, the strength of Sam's Club in Shanghai since last year and Costco's grabbing into China, as well as the current momentum of the two sides competing to open stores, have also allowed everyone to smell the "spring breath" of offline membership-based supermarkets. With the maturity of the Chinese market, changes in consumer awareness, and the rise of the new middle class, after the multinational retail giants have stalled and lost to China, foreign giants seem to be making a comeback in the membership-based business super model.
In the past year, Costco was quickly shut down a few hours after its opening, and almost everyone was rushed. Next, the head-to-head confrontation between the two major membership manufacturers, the super giants Costco and Sam's Club, will probably be inevitable. So, for urban white-collar workers who yearn for a better life, grandpa and aunt who like to join in the fun, is it time to pick up the bargain again?
has been guilty for twenty years, "Uncle Sam" is not easy
Although Costco's "Grabbing Moutai" and "Grabbing Hermes" during the opening of Costco made a sensation, but when it comes to the membership-based super model, the first thing to mention is Walmart. High-end brand Sam's Club.
On August 12, 1996, the first Sam's Club store in China settled in Shenzhen. This kind of "supermarket where only paying for a membership card can enter shopping" was born in China, and it also created a precedent for foreign membership retailers to open stores in mainland China. However, unlike many foreign retail giants, Sam's Club chose to "test the waters" in the reform and opening up test field Shenzhen, rather than Shanghai, which is a more developed business and economy.
But it is strange that this membership-based business super model, which "has been popular in the European and American markets for more than ten years at the time," did not immediately make waves in China. Even after entering China, Sam's Club was still in a quiet state. As of 2011, Sam had only 6 stores nationwide.
When the industry thought that Sam was "just that way", in 2016, Sam's Club began to "become an explosion." This high-end multinational supermarket chain, backed by Wal-Mart's parent company, which makes people feel a little arrogant, finally ushered in market growth. In 2016, Sam's Club rapidly expanded to 16 stores. As of now, Sam membersThe store has 26 stores in China. According to the company's plan, it is estimated that by the end of 2022 there will be 40 to 45 stores that have opened and are under construction in China.
However, he was not so lucky when he entered the paid membership store in China almost like Sam. For example, membership manufacturers such as Metro , Pricemart, and Wankelong did not adhere to the paid membership model, and some even withdrew from the Chinese market. As early as March 2005, Pricemart was completely closed in China due to capital chain problems. And Wankelong later changed its name to CP Lotus, and then turned into a hypermarket, and the membership model came to an end. Metro also "cannot survive" in 2010, canceling the paid membership system of the service merchant model, allowing corporate customers and individuals to directly enter the store to shop. Moreover, Metro's China business is now acquired by Wu Mart Group and has become a member of Chinese companies.
As of now, among the foreign retail giants that entered China in the early days, only Sam's Club still adheres to the paid membership system and has achieved development. Therefore, the years that Sam's Club has been dormant in China have also allowed everyone to see the ups and downs of the foreign giants' membership system Supermarket in the prosperous business community in China.
Among them, the number of Sam's stores in China has been doubled and expanded. On the one hand, Sam’s persistence based on strategy, and on the other hand, Sam’s deep ploughing in the Chinese market and finally “save the cloud and see the moonlight” and achieved sales. increase. According to data, Wal-Mart China's total sales in the fourth quarter of 2016 increased by 5.4%. Among them, the main drivers of Wal-Mart's sales growth came from hypermarkets and Sam's Club. And Sam's Futian store in Shenzhen, once ranked No. 1 in global sales for 12 consecutive years. This is closely related to the first establishment of Sam's Club and the deepening of the Shenzhen market. It's not too late for a gentleman to take revenge for ten years. After more than 20 years of dormancy, Sam's Club has entered the Chinese market in the 1990s and has developed since the 1990s. It has more than 800 stores around the world, becoming one of the world's largest membership-only stores and its parent company, Wal-Mart. The best "card" under its banner.
According to the 2020 full-year and fourth quarter financial report released by Wal-Mart on February 18, Wal-Mart’s total revenue in the fourth quarter was US$141.7 billion, an increase of US$2.9 billion over the same period, a year-on-year increase of 2.1%; net profit was US$4.141 billion. The same period last year was 3.687 billion US dollars. Among them, the sales of Sam's Club store increased by 0.8%, compared with the 0.6% sales growth in the third quarter, the performance was stable and rising, and it performed better in the Chinese market. It is worth noting that the quarter’s financial report also showed that Wal-Mart’s e-commerce sales in the United States increased by 37% year-on-year. Among them, the sales of Sam’s member e-commerce companies also increased by 33%, and performance growth was obvious.
"Costco" Chinese-style premiere: Big Wisdom
is different from Wal-Mart’s Sam’s Club, which has been “undercover” in China for more than 20 years, as the “No. Costco, the seventh largest retailer, takes a completely different strategy. In the eyes of the "big retailer" Costco, instead of testing the waters and waiting for the opportunity, it is better to see the opportunity and "snap hit" like a boxer.
On August 27, 2019, Costco's first store in China opened in Shanghai. However, Costco only lasted 5 hours when it opened that day, and it was forced to announce a suspension of operations due to excessive passenger traffic. Moreover, it was still a working day. For this reason, Costco issued an announcement on the same day that from August 28th, there will be a limit of 2,000 people... The crowds and panic buying scenes completed the first show in China. Everyone rushed to tell us about the promotion efforts of the well-known American brand Costco's first store opening day. For example, the market price of 3,000 yuan Maotai only sells for 1,498 yuan, Wuliangye is only 919 yuan, Hermes, Chanel and other luxury goods super Low prices are snapped up, and there are many products that have been surprised to see the "cabbage price"... This kind of public opinion momentum, I am afraid that the "Double Eleven Promotion" has never appeared in many years, even more soHow many business businesses dream of.
, on the one hand, is the almost crazy queuing of Chinese consumers to buy, on the other hand, Costco quickly gained the commanding heights of public opinion and rushed new members in China. At that time, Costco's first show opened overnight, while Costco's stock price soared 5% overnight, and its market value soared by US$6.12 billion, or approximately RMB 43 billion, with a total market value of 128.6 billion.
And through this wave of "sweet operations", which is almost "profitability", more Chinese consumers are aware of this global retail giant: Costco adopts membership management and has more than 700 stores worldwide. More than 92 million members, with a per capita spending of US$136, 25% of consumers have a unit price of between US$100 and US$200, and the membership renewal rate is 88%, but the overall gross margin of the store is lower than 14%...
It is reported that, Costco, which has never advertised, relied on membership fees to support its annual profit of more than 3.1 billion US dollars. According to the financial report, the company’s annual merchandise sales revenue in 2018 was US$138.434 billion, accounting for 97.78% of total revenue, and membership fee revenue was US$3.142 billion, accounting for 2.22% of total revenue; however, its final attributable net profit was 3.134 billion US dollars, slightly lower than membership fee revenue. It can be seen that Costco's main source of profit is membership fees, rather than relying mainly on the difference in commodity prices.
According to statistics, in Shanghai Costco stores, the price of department store products is 30% to 60% lower than the market price, while food products can be 10% to 20% lower. While traditional Chinese supermarkets are still struggling to make a profit by earning the difference, Costco has "broken the game" with the new business model of earning a membership system like an "intermediary". For example, at Costco, the price increase of any product must not exceed 14%, and the retail price of its own brand "Cokeland" products must not exceed 15% of its cost. Therefore, the opening of Costco's first store in Shanghai locks in people's sensitivity to price promotions, and its inexhaustible means of winning have undoubtedly launched a wave of "bright advertisements" at low cost.
However, Costco is not only quick and accurate like a boxer, but also "planning and moving." Behind the opening of Costco's first store in Shanghai, there is an in-depth understanding of the Chinese market environment and consumer expectations. Because Costco entered Tmall Global as early as October 2014, and in September 2017 it also launched the official Tmall flagship store. From the online "market bottoming" to the offline "strikes", in fact, it has been well thought out.
As the third largest retailer in the United States after Amazon and Wal-Mart, Costco's performance is obvious to all, and of course it is not based on extensive operations and temporary luck. Costco focuses on the big and small things, full of humanity and commercial considerations.
For example, if consumers want to enter Costco to shop, they need to apply for a paid membership card, but if they don’t want to apply for a card for the time being, friends with a membership card can also be brought into the store. However, based on the advantages of its high-quality, low-priced products and membership services, this "old members bring new" approach is often effective. More importantly, based on the scale of commodity gross profit margins lower than 14%, Costco also tries to actively reduce prices every year, adopting a series of measures to reduce costs in order to achieve lower commodity prices and improve user satisfaction. To put it bluntly, Costco does not seem to intend to make money by selling things.
Moreover, Costco's employee benefits are second to none in the industry, 88% of its employees are covered by the company's health insurance, and the employee turnover rate is only 5%. For example, there have been reports that a cashier at Costco earns US$20.89 an hour, almost twice that of Wal-Mart and three times that of ordinary supermarket employees.
"big guys have wisdom." There is no unreasonable love and hate in the world, just like many people can't resist Costco's membership-based warehouse-style supermarket model, which places equal emphasis on price and service. It is reported that Costco has always been an important stock of Warren Buffett, which shows its magic.
Sam VS Costco: Low-key and noisy
As the saying goes, one mountain can accommodate two tigers? However, in the field of global membership-based hyper-chains, Costco and Sam have existed and developed like this. You know, the current US membership-based supermarket market has been monopolized by these two giants.
As far as the membership system is concerned, Sam's membership is similar to Costco, but Sam is slightly "high-end". The annual fee for ordinary members of Sam's Club is 260 yuan, and the annual fee for excellent members is 680 yuan. Members can enjoy one main card and one family and friend card. Members can also bring 2 non-member guests into the store for shopping. The Costco Shanghai store membership fee is 299 yuan, if you include the 100 yuan voucher when it opens, the actual price is equivalent to 199 yuan. And if you have a Costco membership card, you can also apply for a family card at the store’s service desk for free. Both cards can bring two companions to enter. That is, one membership card can actually make six people go to the store to spend.
is always in a commotion, and those who are favored have no fear. On the one hand, the two have different positioning, both have their own advantages, and have their own "die loyal fans"; on the other hand, both sides are enemies and friends, both have their own online and offline stores, and both are trying to increase consumption. Experience, together promotes a greater consumer recognition of the membership-based business super model in the world.
First of all, the brand positioning of the two is different, allowing consumers on both sides to choose and divert naturally. In the eyes of common consumers, Sam caters to low-key and petty bourgeoisie, while Costco is carefree, simple and crude.
Globally, most of Costco's stores choose to be located in relatively remote locations, with warehouse management of goods racks, and parking lots. The main focus is on cheap "one-stop shopping". In terms of consumer positioning, Costco is targeting the middle class who prefer "hoarding". These people have obvious household consumption behaviors, and they are also particular about the quality of life. Oversized dolls, 1 kilograms of potato chips, cheap and delicious roast chicken and mass-selling pastries, Prada, Hermès, Chanel bags, and even diamond jewelry, etc. Costco can provide. Moreover, as long as they engage in activities, Costco will provide large portions of tasting.
However, although it is only possible to enter with a membership card or a membership belt, Costco does not intend to become a high-end boutique supermarket, and even more is to give people extensive management, and strive to give people real concessions. feel. For example, its shelf display rules are not very orderly, even some popular products are placed or hidden at will, and consumers are asked to "treasure hunt" to create "Wow moments". When there is a large passenger flow, people will feel crowded. Noisy, noisy is the sense of sight. Earlier, Costco's first store opening in Shanghai last year was crowded and looted. For this reason, although Costco accounts for the "eyeball effect" of "low prices", it is often labeled low by some people. And it's no wonder that in the American TV series "Modern Family", as a lawyer, Mitch dislikes Costco, is reluctant to walk in, and even rolls his eyes frequently.
Relatively speaking, as a high-end brand under Wal-Mart, the operation of Sam's Club is relatively "steady", and it is more attractive to those who claim to "understand life and pursue quality of life". As soon as Costco opened, the extremely hot price advantage and rush news were all over the sky, while the Sam's Club, which has been in China for more than 20 years and has more than 20 stores, is surprisingly low-key. Compared with the extremely vigorous Costco, although Sam has a larger scale and more stores in China, many people often know about the membership-based super giant "Sam" because of the reputation in the circle or the establishment of stores near home.
For this reason, compared to Costco’s more, the more the better, Sam’s Club is more inclined to promote to specific groups and strive to attract more high-quality members. Or based on this positioning and consumer group choice, Sam's Club has existed in China for more than 20 years and also sells super cost-effective imported goods, but there are very few cases of queuing and chaos out of control. In the Sam's Club, you can hardly see exaggerated low-price promotions like Costco, and there are no famous brand bags such as Hermes displayed by Costco. But in the eyes of more people, it is convenient, comfortable, good and inexpensive, and large parking lot.
secondly, have a commonThe membership-based sales model, whether it is the "extensive" Costco, or the "petty bourgeoisie" Sam, are committed to promoting a common business model and the development of more consumer habits.
For most aunts and aunts who are fresh and like to pick up the bargain, these warehouse member stores in Costco or Sam's Club may be "not their dishes"; but for those who are busy with work and have no time to shop and shop. For working people, especially those petty middle-class and above families who "have requirements for life but pursue cost-effectiveness", Costco or Sam's Club is a shopping paradise. Because only members can shop and checkout, compared to those supermarkets where anyone can enter and exit at will, membership supermarkets are relatively less crowded, and the products are complete and reliable, cost-effective, and the selection of selected products is not entangled. The key is to have enough supporting parking spaces. . This is why so many Chinese people spend hundreds of yuan to buy a membership card for shopping even if they have many choices of online and offline shopping channels.
It can be seen that the membership system has always been the "bait" for businesses and consumers to maintain an intimate relationship. When "you" walks into the store and becomes a member, the distance to achieving continued transactions has been reduced by half. Therefore, despite their different styles, the two membership-based super giants, Costco and Sam, have reached the same goal by different means. Both are blatantly extracting profits from paying members to form a "reservoir" and achieve continuous and effective value realization.
dig deep into the “moat” of surplus value, and the addictive membership magic
exists is the last word. Although many people are still not used to or even accepting paid memberships for consumption, the popularity of paid memberships is an indisputable fact.
radish and cabbage have their own love. The traditional supermarkets follow their own "yangguan roads", and the membership-based supermarkets follow their own "single-plank bridges". The reason why membership-based supermarkets and traditional supermarkets can go hand in hand is that each has a specific user group. However, compared to traditional supermarkets and even Internet e-commerce, aside from nearby and low-cost shopping options, exclusive products, private-label products, explosive products and considerate services, the membership-based consumption model is indeed addictive.
There is a concept in economics called "switching cost", that is, the one-time cost incurred when consumers switch from one supplier of a product or service to another. And businesses will always try their best to make you "don't want to go out when you come in" to form a barrier to competition for their companies. The membership-based business super model is to create such barriers to competition. In fact, warehouse-style supermarket chains such as Costco or Sam's Club, whose products and services cover all aspects of life, and a membership card can affect the whole body.
Moreover, in addition to daily fast-moving consumer goods, membership-based supermarkets are constantly exploring other consumption scenarios of their members in order to capture greater surplus value of member consumption. Take Costco as an example. There are gas stations next to many Costco stores in the United States. The price of gas is cheaper than that in the urban area. There are the largest auto dealers in the United States. They can also provide additional services such as medical examinations, vision checks, photo washing, tire repairs, and insurance. Even, Costco has travel websites that can provide discounts to members.
It is reported that as early as 2016, Costco sold 465,000 cars, becoming the second largest car dealership in the United States. Moreover, Costco is the largest organic vegetable market in the United States and retail channels such as red wine.
In this regard, everyone probably understands why Costco's membership renewal rate can be as high as 88%, because once the consumption habits of becoming a Costco member are developed, their consumption is too sticky, and the user's "conversion cost" is indeed high.
And Sam's Club is the same. With a good shopping environment and consumption experience, as well as preferred products and quality assurance, members' consumption stickiness is also very strong. If Costco's low-price display is almost simple and rude, then the Sam's Club is a sales guide everywhere, and the shopping guide will enthusiastically introduce product features, demonstrate and invite trials, and there are many tastings in the food area. In the food section, there are often discounts on imported beef, deep-sea frozen seafood and fruits, making members feel that the membership fee is very worthwhile.
In addition, membership-based merchants super carefully select and optimize in-store merchandise, which not only achieves centralized shopping to reduce procurement and logistics costs, but also greatly saves customers' selection time and stay in the store, and improves the floor efficiency ratio and inventory turnover rate. . In Costco, in addition to the surprisingly low price and generous membership system, there is also an ultra-low SKU (stock-keeping unit) strategy that has been adopted. It is reported that Costco currently only provides about 4,000 active single products. If you want to increase SKU, you must get the consent of the founder. The Sam's Club also declared, "Only provide more than 4,000 high-quality products, strictly control SKU, and have an annual replacement rate of 30-40%." In contrast, the SKU of Wal-Mart supermarket can reach 100,000.
For this reason, Costco and Sam's Club, both from the US retail giants, are "capturing their respective diehard fans" with business ideas that seem to run counter to traditional retail companies. Even NBA Lakers player Jared Dudley tweeted on March 17th that the movie poster P picture said, "I am on my way to Costco."
As far as the development history of the enterprise is concerned, the membership-based business super model can break through the cracks of the traditional retail format, which is destined to have an inherent "magic". Because member stores such as Costco and Sam rarely advertise, their marketing costs are almost negligible, and the savings can also benefit consumers and build stronger consumer stickiness and market competitiveness. Even during the new crown pneumonia epidemic, the prices of products at Costco and Sam's Club have been stable.
In terms of after-sales service, compared with Sam’s Club’s “7-day no-reason return” policy, Costco has done even more “extremely”. Except for electronic products, which have a 90-day period, other products have almost no clear time limit for return. It can be returned anytime, anywhere, anytime. Theoretically speaking, the food that you can't finish eating, and the clothes you wear, can be returned at any time. Of course, this is also based on the principles of mutual trust and reasonable reasons, because some members have been "cancelled their membership" for returning products that have been used for many years. This unwritten "blacklist" system has cracked down on users who "want to take advantage of loopholes" and defended the rights and interests of enterprises. At the same time, it is actually screening more long-term quality customers.
strictly selects product control SKUs, continuously reduces gross profit to achieve price reduction, and more comprehensive and in-place member services build a safe shopping environment and trust. This can be understood as the "moat" constructed by member stores such as Costco and Sam in the industry. Of course, businesses and businesses are bloodthirsty in pursuit of profit. Based on such a "moat", members are the "fish" in the river. After the enterprise is raised in captivity, it can continue to explore greater consumer surplus value. Of course, this is nothing but "Zhou Yu's fight against Huang Gai", one willing to fight and one willing to suffer.
American membership-based manufacturers over the golden decade and "China's highlight moment"
So, since membership-based warehouse stores have unique competitive advantages, why have they stalled in China before? So that, including "Metro, Pricemart, Wankelong " and other foreign retail giants that entered China in the 1990s, they all came home without exception. Only Sam's Club became a "survivor" and still After adhering to the paid membership system for 20 years, it has still been tepid, and has not achieved substantial development until 2016?
This can be traced back to the emergence of foreign membership-based stores and the ten years of rapid development, as well as the corresponding changes in the Chinese market environment.
According to public information, membership-based supermarkets in the United States began in the 1950s. Only members can shop in these supermarkets. They have warehouse-style decoration, more categories, fewer SKUs, and cost-effective products. These features have also established the current membership-based warehouse-style supermarkets. Prototype. In the 1980s and early 1990s, these membership-based supermarkets entered a period of explosive growth, which can be regarded as the "golden decade" for the development of membership-based supermarkets.
The two giants, Costco and Sam, who are currently monopolizing the membership of the United States, were also founded in this period. Since April 1983, the first Sam's Club opened in Midwest City, Oklahoma, USA. In September of the same year, Costco opened its first warehouse store in Seattle, Washington. According to statistics, in the 1990s, the average annual sales growth rates of Costco and Sam's Club were as high as 13% and 15% respectively.
The reason why American membership-based supermarkets will experience rapid growth in the 1980s and 1990s is related to the economic environment at that time. Since the 1980s, the American national income gap has been widening. In 1988, the "Gini coefficient" of household income in the United States exceeded the 0.4 warning line. Subsequently, the "Gini coefficient" continued to rise and the gap between the rich and the poor in the United States widened. At that time, the decline in the income of low- and middle-income families in the United States also directly stimulated the change of national consumption concepts, and began to weaken the awareness of famous brands and advocate cost-effectiveness. At that time, the membership-based hypermarkets, which declared rational consumption and cost-effectiveness, came into being, which happened to be on the "train of the times".
Take Costco as an example. Costco, which was founded in the 1980s, did not have the ability to compete head-on with the old supermarket giants. Therefore, under the trend of rational consumption, it gradually embarked on a development model different from traditional supermarkets such as Wal-Mart. That is to implement a membership system, executive members and non-executive members pay different membership fees, enjoy different discounts and rebates, in order to attract users in the traditional commercial retail environment, to achieve "grabbing". Therefore, focusing on members, providing more high-quality and low-cost selected products, with differentiated operations, extremely "vigorous" concessions, and with the benefit of membership fees, Costco has gradually supported "the largest chain membership system in the United States. The expansion of the “supermarket”.
And time goes to 2016, when China's per capita GDP level was very similar to that of the United States in the early 1980s. Moreover, from an index point of view, China's Gini coefficient has crossed 0.4 for a time since 2000, and it also climbed to 0.465 in 2004. Therefore, under the trend of "rational consumption concept awakening" of Chinese consumers pursuing quality and cost-effectiveness, the membership-based super giant Sam's Club, which has been lurking for many years in China, has gradually ushered in the spring of development, and Costco was also unable to hold back in 2014. Entered Tmall International and opened an overseas flagship store to "test the Chinese market". At the same time, fast fashion brand businesses such as Uniqlo, Zara, and H&M, which are also cost-effective, have begun to flourish in mainland China.
laymen watch the excitement, experts watch the doorway. From the stagnation of Sam’s Clubs in China 20 years ago to the continuous efforts in recent years, and last year, Costco finally couldn’t help but "shoot" in Shanghai. It can be seen that the period of accelerated development of the membership-based supermodel in the Chinese market has been arrival.
In 2019, Costco Asia President Zhang Sihan said in an interview with the media, “Costco’s target users are the middle class with certain spending power. There are seven international schools in the business district of Minhang District, which means that there are high spending power nearby. There are a large number of middle-class groups in Costco, which is in line with Costco’s sales strategy. Previously, the cooperation between Costco and Tmall International showed that Costco’s mainland buyers were mainly from East China, with the largest number in Shanghai, which is why it chose to open first in Shanghai One of the reasons for the store.”
It can be seen that just when various public opinions are pointing to Costco, whether they are optimistic or pessimistic, Costco, which has seen it, has already "weighed and weighed." Moreover, Zhang Sihan also publicly stated that the Chinese market is gradually maturing and consumers have improved shopping capabilities, and will continue to increase the pace of opening stores in China.
However, I don't know if you still remember that the "new thing" of paid membership was once resisted by everyone. As a result, many consumers still believe that they don’t want to pay if they are free. After all, it was only in recent years that the consumption of paid membership mode began to win the recognition of consumers on a larger scale. Under the trend of promoting rational consumption and the Internet economy, offline super members such as Sam and Costco, online videos such as Youku, iQiyi, Taobao, JD.com, and e-commerce platform VIP members pay, and Luo Zhenyu "gets", etc. With the rise of payment models for knowledge content on many platforms in the first and second tier markets, paying to become a member of a certain merchant or platform has become the choice of rational consumption and even quality consumption.
and this also just showsNow, the mature paid membership business model that has been tested abroad is entering the golden age of rapid development belonging to the Chinese market.
Costco strikes the mountain and shakes the tiger. Sam's members are deeply involved in the market, and must be wary of wolves
. If Costco is entering the Chinese market with a high profile, the Sam's Club, which has been in China for more than 20 years, is low-key enough. I don’t know if it is Sam’s Club, which has been deeply involved in the Chinese market for more than 20 years, or Costco’s “one-stop” approach, but the next Chinese retail business is still full of variables.
On the one hand, China’s Internet economy is still accelerating, and business models such as O2O and new retail are emerging. Paid membership is at best one of the commercial forms; on the other hand, in recent years, retailers such as Carrefour and Lotte Mart The failure of industry giants to leave China, Suning’s continued efforts to acquire Carrefour, Wumart’s entry into Metro and other Chinese companies, whether multinational giants can regain their glory and make a comeback with the membership-based business super model is not yet known.
Besides, the existing business structure and consumption inertia are difficult to be quickly broken in a short time after all. Membership-based supermarkets have once again ushered in a period of development, but for the time being, let's not talk about the subversive effect. After all, whether this good momentum will be short-lived is yet to be known.
It is worth noting that Costco's debut in Shanghai, China, has won enough public opinion and public attention in China. But recently, it has fallen into a whirlpool of public opinion questioning its poor performance.
According to Costco's fiscal 2020 second quarter financial report released on March 6, the company’s total revenue in the second quarter was 39.07 billion U.S. dollars, a year-on-year increase of 10.39%; net profit was 931 million U.S. dollars, a growth rate of 4.72%, of which, Membership fee income was US$816 million, an increase of 6.3%, and membership fee income was roughly the same as net profit. However, sharp-eyed media compared Costco’s “single quarterly growth rate of net profit in the past three years” and found that Costco’s single-quarter growth rate of net profit has dropped from 28.44% in Q3 of fiscal 2017 to 4.72%, a decline of more than 20%. . So Costco's stock price fell by 1.55% on the day of the earnings report, closing at $315.76, with a total market value of $139.5 billion. Moreover, in just two days, Costco's market value fell by US$4.2 billion, or nearly RMB 30 billion.
In this regard, the extreme gross profit margin and membership fee contributed to the main profit, which was once a "retail industry myth" that Costco was proud of. Customers are screened through the membership system, and SKUs are selected to take into account both quality and cost performance, so that excellent consumer satisfaction can build a benign business closed loop. Costco's membership renewal rate and customer unit price are high enough to be enviable. But Costco, which pursues extreme profits with low gross margins, also has hidden concerns. Will this "Costco profit model" that has been used for decades be broken due to changes in the times and market environment? Recently, the slowdown in single-quarter net profit growth and the sharp drop in market value shown in the financial report are a wake-up call for Costco? According to data from
, Shanghai Costco sold 160,000 membership cards on the day it opened. At a unit price of 299 yuan, the sales of membership cards alone reached 47.84 million. But the problem that cannot be ignored is that with the sale of ultra-low-priced celebrity products that opened, Costco encountered a wave of card refunds within a week of opening. In the face of extremely savvy Chinese consumers with more choices, Costco, which is the first to deploy China's offline market, seems to be unable to calm down. Because, relying only on a momentary force to promote profit promotion and pull newness is always only a measure of "draining" and "drawing new" rights. How to achieve sustainable profit growth and user retention has become Costco's next further expansion process in China. China must face up to the problem.
Currently, Costco has 785 stores worldwide, 546 stores in the United States and Puerto Rico, 100 stores in Canada, 26 stores in Japan, 16 stores in South Korea, but only one store in mainland China. Next, it will inevitably accelerate the expansion of the Chinese regional market after the water test in Shanghai matures, but whether it can subvert the existing one has been rooted in China for a long time.Can the Sam’s Club continue to compete with China’s e-commerce and new retail formats? The scene is still not very optimistic.
Moreover, although Chinese media once compared Costco with Walmart's Sam's Club, as far as the Chinese market is concerned, in terms of the scale of the store in China and the actual operating performance, Costco as a whole is still with the "world's largest supermarket." There are some gaps in Wal-Mart. Compared with Wal-Mart’s low price and scale effect, Sam’s high-end membership and high-quality positioning, it is not difficult for Costco to detonate the Chinese market with a “low price”, but how to continue to “go down” requires more thought.
Especially in the current rapid development of China's Internet economy, the layout of e-commerce channels has become a topic that various retail giants "cannot bypass". However, Costco's layout in e-commerce is obviously somewhat inadequate. According to eMarketer survey data, among the top ten e-commerce companies in the U.S. market in 2019, Wal-Mart ranks third after Amazon, eBay, and Costco ranks ninth.
Of course, in China, Costco and Sam's Club’s biggest competitors are not only each other, but also the “wolves” born and raised in China. For example, e-commerce platforms such as Taobao, Tmall, JD.com, Pinduoduo, and Suning.com play an important role in China's retail industry. Moreover, the online membership business performance of these e-commerce giants is also quite impressive. JD PLUS, Taobao and Tmall's 88VIP, Suning Super members are blooming everywhere, and the number of members has continued to soar in recent years. According to the number of PLUS members announced by JD.com for the first time, as of September 6, 2018, the number of JD PLUS members in mainland China alone has exceeded 10 million.
The road ahead is vast, and there are tigers and wolves behind. Yes, in recent years, with the rise of China’s new middle class and changes in consumer awareness, membership-based business models have blossomed everywhere. More and more Chinese people agree with this approach of "paying first to become a member before enjoying shopping discounts and additional value-added experience" . However, membership-based manufacturers are overweight and have accelerated their growth. This is mainly related to the changes in the Chinese market environment in recent years. Moreover, under the attack of online e-commerce giants and offline traditional retailers, whether foreign membership-based giants can Under the trend of the times, the realization of "return of the king" on curve overtaking is still unknown.
The story of the tiger losing to the pack of wolves is still being staged in the land of China, and it is also worthy of the multinational giants to "taste" carefully.
Under the tremendous changes in the industry, the epidemic has been blocked: challenges continue, waiting for the wind... At the moment, Wal-Mart’s Sam’s Club is stepping up its openings, and Costco is certainly aware of the market trend. As far as China's membership-based consumer market has become popular in recent years, it is inevitable that short-handedness is inevitable, and it is not ruled out that more multinational companies will come to "grab". So, who is the best? Who controls the ups and downs? I'm afraid, only the left is king.
will accomplish everything in one go. As the first "springboard" for foreign retail giants to enter the Chinese mainland market, Shanghai, with a population of more than 20 million, has caused the retail giants of various countries to keep pressing the "accelerator". Germany’s Metro took the lead in “staking the beach” in Shanghai in 1996, Thailand’s Lotus and South Korea’s Emart in 1997 successively “entered”, Sweden’s IKEA, France’s Auchan, Britain’s Tesco, and the United States’ Best Buy in 1998, 1999, 2004 and 2004, respectively. "Joined the battle group" in 2007, Germany's Olezi and American Costco landed in Shanghai in 2019...Foreign retail has entered China through Shanghai and has never stopped, but it has already been a lot of new personnel.
In this regard, the reason why the Chinese market is regarded as a “war among the military” by various multinational giants is that it has the largest population in the world, and has the most growth potential and explosive market and space. However, this is also a thorny jungle to be reclaimed and multi-strengthened.
On the one hand, traditional retailers' hyper-business operations are still the mainstay of the Chinese retail market, but they are facing challenges. For example, in 2018, Wal-Mart China was plagued by the "store closures" and closed 16 stores in half a year. On the other hand, the popularity of e-commerce channels continues to rise sharply, and membership-based supermarkets have also begun to become popular.Many retail giants such as Wal-Mart have set a "three-step" strategic direction for traditional supermarkets, high-end membership-based supermarkets and e-commerce.
is just that, with the intensification of consumer market upgrades, the profit margins supported by extensive expansion in the past will become smaller and smaller. In the past, there will be fewer and fewer "low-hanging fruits" that merchants can obtain with scale or advertising promotion. . This at least explains the important reason why "French Carrefour loses out of China, Japan's Aeon, Thailand's CP Lotus and other traditional chain retailers frequently close stores". Previously, such as "Metro, Pricemart, Makro, etc., have failed in the membership-based business model" "Leading Lessons", also left Sam's Club and Costco more room for reflection.
cannot be ignored. At present, China's e-commerce forces are extremely vigorous, and "new retail" businesses based on O2O online and offline linkage are also blooming everywhere, which brings greater challenges to the expansion of foreign retail giants in China. As far as Costco is concerned, although sustainable and stable development can be achieved by virtue of low prices and net membership fees, for the more complex Chinese market, Costco needs to "go to the country and do what it is" in addition to "copying" the American model. More "profit support points" and "commercial moats" with Chinese characteristics.
At present, Taobao and Tmall have accumulated a huge user base, and the rising star Pinduoduo has 600 million users. Jingdong, which has a huge market volume, even uses its "Jingxi" social e-commerce platform to spend money to buy new user. Moreover, under the influence of the epidemic, the market penetration rate of China's e-commerce and new retail has exploded, especially the surge in fresh food e-commerce business and home service orders. While JD.com, Suning, etc. relied on the advantages of self-built logistics and rapid distribution, and they performed even better during the epidemic. According to the fourth quarter and full-year results of 2019 released by Jingdong Group on March 2, the annual net income of Jingdong Group in 2019 was 576.9 billion yuan, a year-on-year increase of 24.9%; of which, the annual net service income was 66.2 billion yuan Renminbi, a year-on-year increase of 44.1%.
Moreover, the "players" from China understand the Chinese market better and their play styles are also very flexible. For example, in 2019, Taobao, Tmall, JD, Pinduoduo, etc., in order to grab the market dividend brought by the sinking of channels, they launched a number of tens of billions of subsidies to "burn money" battles. Therefore, China's new middle class has too many shopping channels to choose from, and large quantities and benefits are no longer the exclusive advantage of foreign retail giants.
At the same time, just as the world is fighting the epidemic now, no one can escape the globalization of the retail market. Moreover, for business owners in many industries, 2020 will be a torment.
Recently, Costco handed over low-score financial reports during the epidemic, and the continued global epidemic prevention and anti-epidemic, people panic buying led to the sale of goods, but also may have adverse effects. For example, Costco stores are currently forced to restrict the flow of people. For example, as early as February 5th, Costco Shanghai stores have adjusted their business hours from 9 am to 7 pm, and stopped selling some Internet celebrities and hot-selling products, with real-time flow restriction The number of people has also been adjusted from 2,000 to 1,000, and the current limit has been lowered to 500 since March 1.
Or, anti-epidemic and epidemic prevention is very busy, and life has to continue. We can be fortunate that we are not alone, but we must be soberly aware that there may always be people who cannot survive.
However, the trend of nationwide consumption upgrade, rational consumption, and channel sinking is irreversible, and the subsequent retaliatory consumption after the epidemic is still worth looking forward to. Moreover, during the outbreak of the epidemic, online and offline businesses have achieved new upgrades in survival and polished their internal strength in the predicament. Of course, even if the pace of business and business is disrupted, the planned plan will continue as scheduled. For example, the news that the Sam's Club flagship store will open in Shanghai next year will still be officially announced in the near future.
Therefore, no matter whether the epidemic can fade away more quickly, no matter what the market environment is, whether it is a multinational giant or a local business owner, everyone can still wait for the wind with relative cautious optimism.
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