Wal-Mart is trying to strategically shrink from first-and second-tier cities and expand its overall layout in third-and fourth-tier cities.

On 20 13 12.29, Wal-Mart Kunshan Store quietly closed. Wal-Mart said that closing the store was a comprehensive decision.

In fact, Wal-Mart China has planned to close its stores with poor performance since 20 13. Last year, Wal-Mart closed more than a dozen stores in China, which was the highest integration of foreign retail in China market last year. It is reported that Wal-Mart plans to close 15 to 30 stores in China in the next two years. The number of these stores accounts for about 9% of its total stores in China, while sales only account for 2%.

However, while closing stores, Wal-Mart is also concentrating on expanding its layout in third-and fourth-tier cities. In the next three years, Wal-Mart plans to open 1 10 stores in China, including hypermarkets, Sam member stores and distribution centers.

It is not difficult to find that Wal-Mart is trying to strategically shrink from first-and second-tier cities and expand its overall layout in third-and fourth-tier cities. In the low tide of the retail industry, this increase or decrease shows Wal-Mart's determination to embark on the road of change in the China market. It can be said that Wal-Mart's store network, logistics system and procurement system are all being rearranged.

Developmental pain

Earlier, some media reported that the business of Wal-Mart Kunshan Store was acceptable at the beginning of its opening, but after competitors such as Carrefour and Auchan successively entered Kunshan, the business of Wal-Mart Kunshan Store began to decline.

It is reported that Wal-Mart's reputation in Kunshan is not good. Despite the slogan of "parity every day", in the eyes of consumers, its products are not cheap, and the quantity of fresh food is not much, not too fresh. These factors make consumers in Kunshan gradually move away from Wal-Mart.

In fact, the world's highest revenue retailer has been stumbling in the China market. Wal-Mart entered China from 65438 to 0996, and its first stop was in China. At that time, Wal-Mart copied the American model and opened the first Wal-Mart shopping plaza and Sam member store in Shenzhen. At present, Wal-Mart has three formats in China: Wal-Mart Shopping Plaza, Sam Member Store and Wal-Mart Community Store.

Wal-Mart has been in China for more than ten years, and its online and offline business seems to have become acclimatized. In the game between American experience and consumption habits in China market, Wal-Mart's performance in China, an emerging market, is not satisfactory, which is not consistent with its position as the global retail overlord.

To a certain extent, it is the factory in China that supports Wal-Mart's low-cost global supply chain, making it handy in controlling the production process; On the other hand, when Wal-Mart tried to sell products to consumers in China, it found that it was much more difficult than manufacturing products in China.

This is caused by many factors. First of all, this is related to the competitive environment in China market. As we all know, the retail market in China is extremely competitive and it is one of the most difficult markets in the world. Wal-Mart has to face not only foreign retailers such as Carrefour, Tesco and Metro, but also Japanese, Korean and Taiwan Province retailers. In addition, a large number of local competitors in the market are also pressing hard.

Many times, Wal-Mart products are famous for their low prices. In China, shops and vendors can be seen everywhere, and customers have many choices to buy low-priced products. Moreover, in the past period, the economic growth of the entire emerging market has slowed down.

In addition to the competitive environment, Wal-Mart's "inadaptability" in China is also related to its scale of operation. Up to now, Wal-Mart has opened about 400 stores in China, and Carrefour has more than 200 stores. These figures are far from the saturation of the market and the number of stores in their home countries-you know, Wal-Mart has about 4,500 stores in the United States and Carrefour has about 4,500 stores in France. In other words, these retailers cannot operate on a large scale in China. However, the insufficient number of stores also makes it difficult for Wal-Mart's proud information logistics system to give full play to its advantages and the cost remains high.

In addition, whether or not to add more local features to stores is another problem that foreign retailers face in China. This means that foreign retailers need to choose between "top-down standardized management" and "bottom-up flexible management".

The strategy of Wal-Mart China in the past few years is to give up the top-down decision-making control of the headquarters to some extent and give more autonomy to stores all over the country. However, in October12, 165438 10, Wal-Mart merged 30 national procurement offices into 8 regional procurement offices. 2013 5438+June 00, Wal-Mart expanded the scope of centralized procurement, and some small suppliers were eliminated.

One of the important reasons for Wal-Mart to speed up the "right collection of procurement system" is the successive food safety incidents. 20 1 1 In September, Wal-Mart was forced to apologize for being exposed to "low-priced ordinary cold meat and counterfeit high-priced green food" in three branches in Chongqing. On 20 13 12, Wal-Mart Jinan Store was exposed as "selling cheap fox meat as cooked beef and donkey meat", and Wal-Mart apologized again for this; 20 14, 14 In June, CCTV once again broke the news that Wal-Mart had specially approved "unqualified products" to enter the market and issued 200 passes in seven years.

Obviously, strict policies and procedures will further ensure the quality of suppliers and products after the rights are taken over, but centralized management may also weaken Wal-Mart's competitiveness in individual cities.

"For Wal-Mart, the difficulty lies in how to adapt to the characteristics of China and grasp the boundary between norms and flexibility." Ren Guoqiang, a partner of roland berger Management Consulting Company, pointed out to the reporter of 2 1 Century Business Herald, "For the organizational structure, which links can be decentralized, how to release them, and can't be chaotic; What categories must be managed by the headquarters and what are the standards for collecting rights? These need to be treated specifically. "

In addition to the design of business model, foreign chain retailers will face other problems in China, ranging from the lack of qualified staff to uneven infrastructure, and the lack of a suitable and reliable cold chain distribution network.

In fact, not only Wal-Mart, but also international retailers such as Carrefour, Tesco and Metro have experienced growth pains in China in recent years.

structural adjustment

Throughout 20 13, the news of the integration of domestic retail enterprises is endless.

According to the closing statistics of major chain retail enterprises in lianshang 20 13. Com, in 20 13, the total number of major foreign retail stores closed reached 3 1 home (excluding household appliances), among which Wal-Mart closed stores in China in 20 13, which was the largest among major foreign retail enterprises. Tesco closed three stores in China last year due to operational problems, and CP Lotus closed two stores. As far as domestic major chain retail enterprises are concerned, the total number of closed stores reached 35 last year.

Among the reasons for closing stores, the most common ones are lease expiration, mode adjustment, weak profitability, strategic closing stores, transformation and poor management. Ray Bracy, senior vice president of Wal-Mart in China, told the media, "We closed some stores because we were too obsessed with pursuing expansion in China. In some cases, we are more concerned with expansion than efficiency. In the future, we will not make such mistakes again. "

Greg Foran, President and CEO of Wal-Mart China, said that in the future, "in the process of developing 1 10 new stores, we will also close some stores with poor performance according to strict market evaluation. Taking such measures meets the requirements of enterprise management and can also help us develop in the China market with better quality. "

In Ren Guoqiang's view, Wal-Mart's store closing measures are generally the right choice. "In terms of economic benefits, it is normal to close some stores with poor profits and transfer limited resources to stores with good performance. There is no need to do too much calculation." "After all, the business districts in first-and second-tier cities are saturated, property rents have risen beyond expectations, and per capita wages and rents have risen at the same time, which is squeezing the profit margin of the retail industry. The key is whether Wal-Mart can find a suitable expansion method after trial and error. "

Wal-Mart's strategy is to restart its expansion in third-and fourth-tier cities while closing stores in first-and second-tier cities. 20 13 On June 5438+00, Wal-Mart announced a series of plans for its development in China. The company plans to add 1 10 sites in China in the next three years, including shopping malls and distribution centers. At the same time, Wal-Mart said that 45 existing stores were renovated on 20 13. In 20 14 and 20 15, Wal-Mart plans to renovate 55 and 65 existing stores respectively.

In 20 13, Wal-Mart opened 30 new stores and expanded its layout in emerging cities. Only in the fourth quarter of 20 13, Wal-Mart has opened new stores 14 in Hunan, Sichuan, Guangdong, Hebei, Jiangxi, Henan, Hubei, Yunnan, Shanxi and other provinces and cities, of which more than 75% are located in third-and fourth-tier cities. In addition, Wal-Mart's new distribution center has also been put into use. On August 20 13, Wal-Mart Hubei Wuhan Distribution Center was officially put into use. In June, 1 1, Liaoning Shenyang distribution center was put into use.

On this basis, Wal-Mart has set up seven fresh food distribution centers in Beijing, Shanghai, Guangzhou and other cities. 20 14 More distribution centers will be put into use. Wal-Mart plans to cover all Wal-Mart stores in China by the end of 20 14.

At the same time, Wal-Mart plans to strengthen the import of food on the basis of the existing commodity structure. In 20 13, the exhibition area of imported goods in Wal-Mart supermarkets increased by 40% on average compared with 20 12, and the sales increased by more than 60%. Dozens of commodities, including red wine, chocolate and pistachios, have been directly imported.

In addition to accelerating the layout in inland cities, Wal-Mart is actively expanding in another way, that is, accelerating the opening plan of Sam member stores in China. Unlike ordinary Wal-Mart stores, Sam member stores are aimed at increasingly affluent consumers in first-tier cities.

This is also part of Wal-Mart's "restructuring" of its business in China. With the rising rents of downtown shops, retailers such as Wal-Mart and IKEA have to move from the urban areas to the suburbs. Therefore, these retailers began to try to attract richer car owners and try to provide them with unique services.

Generally, Sam's member stores have much fewer kinds of goods than ordinary hypermarkets, only about 4,000 kinds. The stores mainly promote some selected high-priced goods, especially imported goods. This means that member stores in Sam usually sell goods that local supermarkets cannot provide, such as dried cranberries imported from the United States, cherries imported from Chile or French red wine.

According to anecdotal data, these imported goods account for about 30% of the sales of China Sam member stores, while in Wal-Mart, the sales of imported goods only account for 5%. Greg Foran, President and CEO of Wal-Mart China, said earlier that in the coming year, the sales of imported food in Wal-Mart shopping centers will double, while the sales of direct imported goods in Wal-Mart Sam member stores are expected to increase fivefold.

It is worth mentioning that the profit of Sam's member stores mainly depends on collecting annual membership card fees, rather than selling goods. The income from selling goods in Sam's member stores is only enough to offset the operating costs of each store. In China, the annual fee for a membership card is 150 yuan. According to Wal-Mart, Sam member stores currently have more than 654.38 billion members in China.

Obviously, the development of Sam member stores in China is far below Wal-Mart's expectations. As early as 1996, Wal-Mart opened its first Sam member store in Shenzhen, China, but today, there are only 10 member stores in Sam, China, which is far from Wal-Mart's 400 stores. In the future, Wal-Mart plans to open two new Sam member stores in China every year.

Innovation and challenge

For Wal-Mart, the resistance to deeply ploughing inland cities is not small. Previously, Carrefour, Metro and other retail giants invariably regarded "channel sinking" as a growth driver–compared with these foreign retailers, local competitors seem to be more threatening. As a latecomer, Wal-Mart will face more and more fierce competition.

Greg Foran, President and CEO of Wal-Mart China, said at the end of 20 13, "If we can find a suitable address to open a store and have a very experienced manager to manage this store, we will be very confident to compete with other competitors."

But in Ren Guoqiang's view, many foreign retailers, including Wal-Mart, have not "successfully opened the mainland market". In contrast, local retailers have a deeper understanding and understanding of local consumers.

"I don't think foreign retailers have played such an important role in third-and fourth-tier cities in China." Ren Guoqiang said, "Local retailers quickly learned the advantages of Wal-Mart, but Wal-Mart did not learn the advantages of others."

Ren Guoqiang pointed out that in a mainland city, Wal-Mart lived next door to another local retailer, and as a result, the retailer's sales performance was better than that of Wal-Mart. "To a certain extent, Wal-Mart has not mastered the secret recipe of store management in China, including product introduction, price, promotion and employee incentives. I think it should learn more from local shops. "

As for the Sam member store, "if it is well run, it can really support part of Wal-Mart's growth in China, but to what extent it can support Wal-Mart's entire blueprint in the China market is still uncertain." Ren Guoqiang pointed out that "whether Wal-Mart can really take root in the China market depends on its' classic' store business."

Apart from rebuilding offline stores, whether Wal-Mart can exert its strength in the field of e-commerce is another important factor for Wal-Mart to take the lead in China. It is reported that Wal-Mart's sales in China account for about 65,438+00% of the whole international business, and the e-commerce channel will be an important breakthrough point for Wal-Mart's business in China.

The development of Wal-Mart's e-commerce business in China will largely depend on the performance of 1 store. In 20 12, Wal-Mart's shareholding in 1 store increased from 17.7% to 510.3%, and it officially became the controlling shareholder of the latter. Wal-Mart's acquisition of 1 Store was directly promoted by Wal-Mart's global headquarters. Although its e-commerce strategy in China started late, it is optimistic about the online shopping market in China, which continues to blow out.

With the help of 1 store, Wal-Mart is trying to integrate online and offline business in China. At present, the teams of the two sides have begun to dock, and in the future, the two sides will cooperate in many aspects such as supply chain, warehousing, logistics and private brand goods. In the eyes of some people in the industry, Wal-Mart has a good eye for choosing 1 store. After the acquisition, 1 store has greatly enhanced its management ability in the categories of washing and care, beverages and so on.

Even so, Wal-Mart cannot sit back and relax. For it, whether the Store 1 can be successfully integrated is still a big variable.

As we all know, the e-commerce market in China is quite special. After several years of rapid growth, Taobao, Tmall, JD.COM and Suning.cn have almost formed a "winner takes all" situation. 1 although the transaction volume of the store has increased rapidly year after year, it still fails to make a profit. In other words, 1 store has not fully established its independent viability.

More importantly, the online and offline interaction (O2O) between Wal-Mart and 1 stores is not enough. "What we are seeing now is that, as affiliated enterprises, Wal-Mart and 1 store have only achieved synergy in the procurement field; However, there is no substantive action in terms of passenger flow guidance and business model innovation. " Ren Guoqiang said.