Suning Store: Is it “child’s play” or represents the future? | inter win slot, comma style haircut

■Written by Yan Juyang

Suning Store lost 300 million yuan in the first seven months of this year. According to a public statement by Bao Junwei, the person in charge of Suning Store, on July 28, the number of Suning Store stores will reach 1,200 by the end of July. Calculated based on this apportionment, each Suning store probably suffered an average loss of about 250,000 yuan.

For Suning stores, the market’s views are polarized. I am not optimistic about it, mainly because the current operation and management of Suning stores seem to be relatively extensive. After a quick copy, there are many operational-level contents that have not been kept up.

Those who are optimistic believe that the strategy is no problem. As long as Suning Group can persevere and there will be no "repetition" in future operations, in the convenience store market, Suning Store and Meiyijia will likely become the two major local national brands.

"Business Observer" tends to agree with the latter. We believe that the timing of Suning Store's entry into the market is OK. Expansion through direct sales is another operating model to "avoid" falling into the "red ocean" competition of the existing franchise system of convenience stores. At present, the franchise system of some regional convenience store operators has been unable to expand, and it is difficult to expand across regions because the market competition is fierce and the profit space for franchisees is limited.

From this perspective, if Suning Store expands through franchising, it may not be able to achieve its goal of opening a store at all. Franchise operators may not have the patience to accompany you to cultivate the market. Suning chose the direct operation method to introduce the market, probably because it planned its business from a layout perspective.

A model that means stronger control through large-scale direct sales is an operating method based on current technological advancements.

Theoretically, the direct operation system can achieve better data return, operate the business through the system and data, and use data to select products and configure the supply chain. This is a new business direction. As some people in the market currently say, "Franchising is realizing cash, and direct operation is compounding interest."

The basis of "compound interest" is that a store is not only a business of purchasing and selling price differences, but also a business of monetizing online and offline traffic. After the digitization of offline stores, it is still a business introduced by digital marketing tools (advertising), and based on data accumulation, it becomes a business introduced by consumer finance.

Of course, to achieve this, it will test your financial capabilities and subsequent improvement capabilities. The direct operation model must be fully implemented.

One

Question

Let’s talk about the problem first.

"Opening a store regardless of cost" is the present continuous tense of Suning Store.

Entertaining land was once the expansion gesture of many retailers. But currently only Suning Store has turned this into an extreme sport.

Some industry leaders who have been in the retail industry for a long time described Suning Store’s current practice as “people are stupid and have too much money.” “Perhaps the only ones who are happy are the developers of Suning Store, they are the only ones celebrating the New Year. ”

In many cities, Suning Store's horse racing has left a "crazy" reputation. “For a site that originally had a rent of 400,000 yuan, Suning Store just sold out a high rent of 600,000 yuan in order to grab space. "A person in the East China market said that there were countless such examples in the first half of this year. Whenever a new store is opened, Suning Store will win it at any cost, almost to the point of "not being picky or picky."

According to Suning Store’s announcement, Suning Store’s revenue from January to July 2018 was 143 million yuan. Since more than 700 stores are opened here, it does not make much sense to calculate sales per store. However, an unnamed industry insider who is paying attention to Suning Store provided a set of data to the "Business Observer": the single-day sales of a mature Suning Store is only about 1,700 yuan. This figure is far from the general level of the national industry. According to data from the China Chain Store and Franchise Association, the average daily sales of a single convenience store nationwide is 4,500 yuan.

The daily sales figure of 1,700 yuan for a single store still includes the average performance of Dia Tiantian acquired by Suning Store.

Some executives in the convenience store industry are skeptical about the expansion speed of Suning Store, saying that the number of opened stores announced by Suning Store is "very watery." “The real daily average per store may be even lower. "In order to increase the number of stores, Suning Stores took back all the convenience store properties in Suning.com Plaza. However, most surveys show that it is normal for brand convenience stores to operate with daily sales of tens of thousands, but Suning Stores often take over and their performance drops sharply, even by as much as half.

Relevant people close to Suning Store said that according to their understanding, the highest daily sales of Suning Store in the country is only 4,000 yuan.

“Even if one store loses 1,000 yuan a day, 5,000 stores will lose 2 billion yuan a year. Add in the investment of 500,000 yuan per store, and the cash flow will be reduced by 6-7 billion yuan a year. "Some insiders have calculated Suning Store's "3-year 5,000 store plan" and said, "Suning Store's cash flow may be under great pressure. ”

“Small stores operating a direct sales model are making the mistake of thinking that others are stupid and that they are the smartest. "A convenience store industry insider told the Business Observer that small stores and convenience stores are engaged in small business district business. A store is a business district of 50 meters or 100 meters. In addition to location, the core competency is goods and services. "Opening stores blindly will not bring any value except for making some people (store operators) rich first." ”

Two

Business

With the rapid development, Suning Store also encountered many problems at the operational level.

What the "Business Observer" has seen across the country is that all regional markets have more or less problems.

In Shenzhen, a store manager said that in a Suning store that has been open for more than two or three months, most of the store's shelves have not yet been filled. Entering the door, "Business Observer" thought it was a store preparing to open a new one. The number of merchandise items in the store is probably less than 1,000, and many duplicate categories account for a large proportion.of noodles.

In Shanghai, there are almost 16 convenience stores, community stores, and grocery stores on a 50-meter-long community street in Shanghai. The Suning store is squeezed in between the fresh food community store and the stores of FamilyMart and Lawson. During the half hour that Business Observer visited the store, the customer flow at Suning's store was relatively sparse.

In Beijing, a Suning store has taken over a store next to a community fresh food store that specializes in fresh food. However, there are still two counters of vegetables and fruits in the store, and the latter look wilted. The clerk told the Commercial Observer that there is a community fresh food store next to the store. There are few fresh food patrons in the store, and there are mostly elderly customers in the surrounding communities. However, the Suning store cannot select store products according to the surrounding customer groups, and all are in accordance with the instructions of the headquarters. The clerk also said that the loss of fresh food was very large, but he was helpless.

Suning Store gives industry insiders the feeling that as long as there is space for a new store, Suning Store will be the first to take it. Regardless of the cost, Suning Store has become a de facto policy.

Relevant people close to Suning Store told "Business Observer" that Suning Store is a strategic layout of Suning Group from top to bottom. Suning believes that small stores will be the mainstream channel in the future and positions small stores as the traffic entrance of Suning Group. Since Suning focused its main efforts on e-commerce and O2O in the past two years, the essence of Suning's large-scale development strategy was a bit late. Once Suning determines its strategy, it hopes to make up for the missed opportunities in the previous two years through rapid expansion.

“The operators and developers within Suning Store are under great pressure, and the goals set by the group headquarters have become the only assessment indicators.”

Bao Junwei, head of Suning Store business, once admitted to the Business Observer that he was under great pressure and completing the store opening target planned at the beginning of the year became the only assessment goal. Because store expansion has become the only requirement, store operations and management, including personnel training, have no time to take into account.

Many Suning store managers told the Business Observer that the stores are expanding too fast and there are large vacancies for store staff. New employees can be hired immediately without any training from the company.

While Suning Group, which is known for its execution, only pursues the number of store openings, the rising number of store openings of Suning Stores is completely beyond the rules of the retail industry in the eyes of the retail industry. At present, FamilyMart convenience stores have only 2,500 stores after more than 10 years of operation. Meiyijia, the king of local convenience stores, also spent 20 years on its 10,000-store plan.

Now, Suning Store wants to complete this store opening goal in one or two years.

Relevant insiders told the Business Observer that the operators of the Suning store project were under great pressure. In order to achieve the goals set by the group, some Suning Plaza brand convenience stores were even required not to move equipment when they closed their stores and let the headquarters complete the assessment of a store.

On October 15, Suning Store, which had debts of 653 million yuan in one year, announced that it had received a US$300 million capital increase. The investors are Great Matrix, Great Momentum and Suning International held by Zhang Jindong’s son Zhang Kangyang. After this round of "replenishment", Zhang Kangyang became the actual controller of 65% of Suning Store's shares. Suning Store has since divested Suning.com, a listed company, and will no longer be included in the company's consolidated statements in the future.

This move also triggered many voices in the market.

Some insiders said that after the capital increase, if Suning Store "presses the brakes" and returns to store operations, the store may still be saved. If trueJust like child's play, the crazy "fun" towards 5,000 direct-operated stores a year, it is estimated that the battle of Suning stores will end in the first half of next year.

However, some market participants believe that there is no problem with Suning's direct sales expansion. Now that the strategy has been announced, it needs to stick to it. Of course, store operations need to keep up in a timely manner.

Three

Opportunity

Suning also has the foundation for running a small store.

Backed by Suning Group, it has financial capabilities that other convenience store operators do not have. Convenience stores are an asset-heavy industry, and financial capabilities are still very critical.

Suning's existing logistics capabilities, as well as its online product and traffic base, are also a resource for its small store business operations. When expanding the market, its related resources may be readily available.

But the most important thing is actually digital capabilities. This is actually a very critical reason that determines the future success of Suning Store.

In the current market, many companies have begun direct sales initiatives. It is not that they do not know what the franchise means for convenience store operations. They may just think that under the current market conditions, it is time to introduce digital capabilities to small stores. To realize this capability, direct sales may be more efficient and faster at the moment. Have better data reflow performance.

Suning is so "radical" probably because other companies are also making plans, such as JD.com, Bianlifeng, etc. Suning wants to run fast to win market opportunities, and the problem that arises from this is definitely "extensive" operations.

From this perspective, "Business Observer" also interviewed some related companies. Some companies believe that Suning is "copying" them, and they regard Suning as a major competitor. They did not even list traditional Japanese convenience store companies and local loose convenience store companies as their main competitors.

So, what are the market opportunities for the introduction of digital capabilities.

The store will not only be a business of purchasing and selling price differences, but also a business of monetizing online and offline traffic. In the future, the cost of online traffic will become higher and higher. If there are offline traffic resources and a connection can be established to successfully convert offline traffic to online, then Suning will optimize its overall cost. Therefore, in the future, Suning Store will definitely focus on high-demand, high-frequency fast-selling business.

Secondly, by digitizing stores, store operations will be simpler and standardized. It will reduce dependence on manpower, and model formation is helpful for cross-regional replication and scale effects.

Furthermore, the digitization of stores uses data to select, allocate goods, and supply chains, changing the supply chain model that was dominated by suppliers in the past. With the accumulation and precipitation of data, and the improvement of related digital capabilities, corruption will be reduced and the store product structure will be optimized. After this area reaches a certain level, the efficiency may enter a significant improvement channel.

Finally, at the level of incremental revenue. After offline stores are digitized, more digital marketing tools (advertising) can be introduced, and based on data accumulation, consumer finance business can be introduced. These are incremental businesses that can guide consumer demand and are high-margin and high-yield businesses. To achieve this, we need to digitally connect online and offline, from operations, members to products. Therefore, we need to control goods and processes.

After this model matures, Suning Store can also be exported to the outside world and become a B-side business.service platform.

"Business Observer" believes that Suning Store's business model may be in this direction, and there may be no problem with the direction. The only problem may be the implementation process, that is, whether it can be achieved.

[Source: Business Observer]