Wal-Mart and pulled out of the Jinan market, hypermarket business is not doing well?

Walmart has evacuated another city.

Walmart's Jinan Quancheng Road store recently posted a notice saying that the store will stop operating from June 17, 2019, according to a report by Lianshang.com. This is Walmart's only store in Jinan, which has been open for nearly 16 years.

Although the withdrawal of Jinan because of the expiration of the lease contract and will not be renewed, but before this, Walmart has withdrawn from a number of cities in Shandong. March Walmart Qingdao Taidong store closed; April Walmart Weifang Dongfeng East Street store closed, Walmart has withdrawn from Qingdao and Weifang market.

That's not all. The Quancheng Road store has become the 11th Wal-Mart store to close nationwide so far this year, after Wal-Mart has withdrawn from 10 cities including Qingdao, Nanchang, Haining, Lishui, Weifang, Zhenjiang, Fengcheng, Xuzhou, Rugao and Tongxiang.

Walmart's wave of store closures has been going on for years. According to reports from previous years, Walmart closed 13 stores in China in 2016, of which 6 were located in Anhui Province, and most of the rest were located in northern cities such as Heilongjiang, Hebei, Shandong, etc.; 24 stores were closed in 2017, with nearly half of them in eastern China; 21 stores were closed in 2018, involving 4 cities such as Wuhu, Tangshan, Shaoxing, and Harbin. As the earliest batch of large supermarkets to enter the Chinese market, Walmart, which is now constantly experiencing a wave of store closures, seems to have released a signal that it has encountered a bottleneck in the Chinese market.

But in fact, this does not indicate that Wal-Mart in China debacle. While closing stores, Walmart has also been opening new stores, such as Sam's, a high-end membership store, and Huichang, a small-format smart supermarket; Walmart China has also said that it will open more stores in China.The continuous wave of store closures has brought the industry more questions about the survival of this retail format of hypermarkets--All but one of the Wal-Mart stores that have closed in recent years have been traditional big box stores.

Hypermarkets have become one of the most pressurized formats in the retail industry. Hypermarket area of 10,000m² or so, store leases are generally about 15 to 20 years, the expiration of the lease retailers often face exponentially higher rents, forcing Walmart to rely on extremely low gross margins to make money to give up the lease renewal; on the other hand, under the impact of e-commerce and new formats, the retail market environment and consumer demand changes, the younger generation of consumer power was transferred, the choice of SKU less, more refined products, and more selective retailers. of strictly selected retailers, and hypermarkets have basically become shopping places for middle-aged and elderly people.

Walmart under heavy pressure of performance began to seek a compact store transformation, the March 2018 opening of the Huichang store is one of Walmart's important initiatives. Huichang store covers an area of about 1,000m², only one-tenth of the hypermarket format, the number of goods has also been streamlined from tens of thousands to more than 6,500 kinds of vegetables, fresh food and frozen food in the form of the former warehouse placed in a more conspicuous area of the store.This is Walmart's first layout of "community small business stores", but also the smallest store format in the Chinese market.

The transformation from "big, comprehensive and few" to "small, fine and many" is not only the path that Walmart, Carrefour and Auchan must go through, but also the direction of the transformation of new retail fresh food stores such as Boxmart Fresh Life and 7FRESH.

Taking BoxMa as an example, from the convenience store format BoxMa F2, the front warehouse BoxMa mini station, the small store BoxMa mini, to BoxMa vegetable market, the size of the store is getting smaller and smaller, controlled within 1,000m². While 7FRESH's innovative business Seven Fans (harmonic "eating") covers an area of about 600~1,000m², distributed around office buildings to meet white-collar catering, fruit and daily consumption needs; Seven Fresh Life covers an area of only 200~300m², mainly providing brunch and all kinds of convenience products.

The most important thing for brick-and-mortar retailers to increase store attendance and improve profitability is to be close enough to the community, close enough to consumers, form a dense enough store network, and increase the frequency of interaction between stores and consumers. This means that the hypermarket format or will continue to shrink, and in the near future, more selected SKUs, higher degree of digitization of small business boutiques will emerge.

Another trend that deserves attention is that, compared with the entity retailers who keep narrowing the front of the big business, the vertical front warehouse fresh food e-commerce companies represented by Daily Fresh are accelerating the penetration of online, but they are thinking of opening up the online business to be big enough and complete, and the new online delivery commodity categories include breakfast, hot food bento, coffee and so on.

Continuously expanding the commodity category of Daily Yufu, want to build a more efficient near-field infrastructure than the big box stores, while following the low gross margins of the big box stores. Jun Wang, partner and CFO of Daily Yufu, once told 36 Krypton that Daily Yufu's fresh food categories are cheaper than supermarkets by more than 10%.

The transformation path of the new retail store Convenience Bee is also roughly the same as Daily Fresh, adding a new "Bee Supermarket" entrance to its online platform, selling commodities in addition to the convenience store's original commodities, including vegetables, fruits, meat and eggs, and other SKUs richer fresh commodities to make up for some of the shortcomings in the number of commodities in the convenience store.

While brick-and-mortar retailers continue to make small businesses, vertical e-commerce companies want to be online hypermarkets, and they are starting new explorations in each other's fields.