Picture source @Visual China
Text | Zinc Scale, author | Xingwan, editor | Gaozhi
At the end of the year, the survival dynamics of major supermarkets are constantly updated, and the celebrity in the membership-based supermarkets - Jiading of Sam's Club The store has opened, and many new stores are being prepared in the future. However, BYD, which was the first to enter the hard-discount supermarket industry, failed to spend Christmas Eve safely and is about to withdraw from the Chinese market before 2024.
In addition, there is Hema, which has been making new moves in the past six months. After being unable to move the "mountain", it seems that it has decided to let go of its obsession with membership. Just recently, some netizens said that they could not activate or renew their membership. In response to this, Hema Xiansheng’s official customer service responded: “Due to business adjustments, opening or renewing Hema membership is temporarily not supported. Membership rights that have been previously opened and have not expired can be used normally, and expired diamond or gold memberships are temporarily unavailable. Can't renew."
This is another big move by Hema after suspending its listing plan. It has just been three years since Hema opened its first x membership store in Shanghai in 2020. The membership model was once the focus of Hema’s development. Hou Yi, CEO of Hema, once said publicly, "Hema's warehouse-style membership store is China's first project to compete with Costco and Sam's Club." It is enough to show that the membership system has been in Hema's planning. It is a long-term and focused plan.
However, after the discount reform was launched, the membership system was the first to go offline. Perhaps this is a major move by Hema to lower the threshold for consumption, and its target has changed from Sam’s to discount stores?
paid membership, the first to be abandoned
When launching the x member store plan, Hou Yi confidently talked about Hema’s absolute advantage in personalized products, “Hema’s warehouse-style membership system x member stores have the vast majority of special offers R&D products can perfectly compete with Costco."
Hema x member store membership fee is 258 yuan/year or 658 yuan/year, and you can enjoy a 12% discount. Compared with Sam's membership fee of 269 yuan/year and 680 yuan/year, and Costco's membership fee of 299 yuan/year, Hema's membership fee is actually not an advantage. However, within three years, Hema still gained nearly 3 million paying users.
So why was a model that had internal expectations and achieved pretty good results in a short period of time canceled? This is a part that must be abandoned in Hema's discount reform.
This summer, Hema publicly competed with Sam’s with its “mountain-moving price”, hoping to snatch Sam’s membership. But among them, Hema’s old members became the first victims. Some Hema members complain that exclusive offline prices and membership discounts cannot be combined. People who top up the annual fee choose to pay for the additional benefits, but now the offline discount price makes paying members and ordinary members get the same price. , paying members have become a big grievance.
At that time, in order to calm the anger of members, Hema responded: "The reason for the different prices online and offline is mainly to guide customers to consume in Hema stores. It is only in trial operation now. If there are too many similar complaints from customers, there may be more in the future. Changes."
But judging from the final outcome, Hema chose to continue discounting, and the accumulated paid memberships can only be gradually forgotten.
At the 2022 Hema New Retail Conference, Hema CEO Hou Yi said, "Commodity power is the only core competitiveness in today's retail industry." A year later, Hou Yi believed that building price competitiveness was the core goal of Hema, so he launched a drastic discount reform.
Hema has also carried out reforms from the store end and back end, not only reducing the prices of more than 5,000 products by 20%, but also cutting the number of SKUs in standard stores from 8,000 to 5,000. In addition, Hema's commodity purchasing department has been adjusted into two major departments: the finished product department and the fresh product department, and the purchasing rights and management rights have been separated. Changing the traditional purchasing model has become an important part of Hema's transformation.
's various measures only illustrate one thing, and that is the path of discounting. Hema intends to continue to follow this path firmly. Whether it is members or partners, all factors that will affect the acceleration of discounting will be repositioned.
As for the longer-term goal, it is actually still to go public. Some professionals analyzed that one of the important reasons for Hema to bind Sam is to give the capital market a reference mark before going public in order to obtain a higher valuation. After all, due to various factors such as the economic environment and policy adjustments, the sentiment of consumer stocks has been weak, and Hema's valuation has shrunk significantly from US$10 billion to US$6 billion.
Hema, which keeps struggling, is still waiting for the opportunity to go public.
Entering the Deep Water Zone of Transformation
Although the consumption attitude of the entire society has changed, the public's pursuit of quality life has not diminished, but rational thinking has only increased.
The "2023 Global Consumer Insights Survey" released by PricewaterhouseCoopers shows that 51% of Chinese consumers are reducing their spending on non-necessities, and for necessities, people are beginning to choose cheaper ways to purchase them. In other words, products and channels with higher cost performance will become more and more popular among consumers. After
became aware of this trend, Hema once responded, "Hema's discount operation is not a discount store model. It is not about selling cheap goods, but selling good and top-notch goods at affordable prices." There is nothing wrong with the idea of
, but why does Hema always give people a "four different" feeling? Exploring various business formats, adjusting supply chains, and reforming management... Hema is always on the road to change, but if you look closely, Hema has never had a clear positioning among similar competing products. From any point of view, Hema seems to be irreplaceable.
Even in the past exploration of the membership model and the construction of its own products, it can only be seen as an imitator, but no more eye-catching features can be seen. Coupled with changing strategies and backstabbing of members, reputation has gradually declined.
Nowadays, Hema, which has implemented the discount reform more thoroughly, seems to be using its advantage of "high quality and low price" to compete with "Sam's" for the middle class crowd, but in fact it has also fallen into a larger competition queue. For example, going deep into discount stores in community consumption scenarios and reducing the unit price of big-name products in small or large packages is also a model to improve cost performance.
In addition to the survival dilemma of being ambushed from all sides, the quality issues that Hema often talks about also need to be further improved. Just recently, the Wuhou Xincheng Branch of Chengdu Hema Xiansheng Network Technology Co., Ltd. was accused of selling products that did not meet food safety standards. The national standard "longan" was fined 70,000 yuan by the Wuhou District Market Supervision and Administration Bureau and its illegal gains were confiscated.
If it is difficult to show outstanding strength in model, service, and quality, then it will be difficult for Hema's revolution to reach the threshold of success. After all, Hema’s competitors are accelerating and upgrading, and both Sam’s and Costco are accelerating store expansion. Yonghui Supermarket, a traditional supermarket, also stated that it will add "authentic discount stores" in its stores across the country, and simultaneously add discount areas on online apps and mini-programs to provide surprising discounts on food and supplies.
Low price and high quality have become the "new ticket" in this business war. The giants have collectively entered the game, and Hema's challenge has just begun.
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