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The New Retail Hits The Consumer Downgrade, How To Open The Consumer's Wallet?
- Oct 10, 2018 -

The Taoist classic "Wenzi" has a good saying: "It is good for the people, not for the ancients; for the week, it doesn't have to be customary." The meaning is probably that if the people can benefit, it is not necessary to follow the ancient rules; Doing things properly does not have to follow the common law. No matter what field or industry, it has been like this for thousands of years.


Society develops in change, and the person as the subject is also changing and developing, so everything related to it changes like a chain reaction. Take the retail industry as an example. The retail industry has only developed for 150 years, but there have been various new formats. Department stores, grocery stores, supermarkets, convenience stores, shopping malls, online sales and other formats have affected or even occupied the market. The dominant position. Although these new formats are created by the innovation of merchants, they are all in order to comply with the development of society and the needs of consumers.


In recent years, we can feel this change more clearly. The development of e-commerce, the change of payment methods, the sharing economy, and the unmanned economy have made the retail field extremely active and deeply affect people's lives. . But in the end, it will be able to develop and grow, and there will undoubtedly be only changes and innovations that benefit the people and the Zhou.


New retail is a revolution and change, especially after the concept is put forward, the retail sector and even all areas are undergoing a rectification of new technologies, new channels, new services and other elements. But two years have passed, and the new retail is still struggling. Why? Probably because it still can't really benefit the people and the week.


New retail persists in failure


Why are new retailers being offered a variety of explanations, or because e-commerce traffic sees the limit, or that they are eyeing the cake in the fresh market, Ali means to share this experience after running away from this model? Peer. However, we have seen that the new retail proposal is nine months behind the opening of the first box of fresh horses, so it is not excluded to create a gimmick for the box horse. Only everyone liked this trend very much, so they pushed it a hand, and then the new retail fire, the box horse fresh and other participants also fired.


On September 17, Box Horse CEO Hou Yi announced the first transcript of Box Horse at the Ali Investors Conference: As of July 31, 2018, Box Horse has 64 stores in 14 cities across the country, serving more than 1,000 stores. 10,000 consumers; 7 mature stores with more than 1.5 years of operation, the average daily sales of single stores exceeds 800,000 yuan; with an average business area of 4,000 square meters, the single store has more than 50,000 yuan, equivalent to similar supermarkets 3 More than double; online sales accounted for more than 60%; pure online member spending, slightly higher than the pure line members; online and offline have members of consumption, monthly spending of 575 yuan.


The data looks quite powerful, but there is no mention of profit geometry. Obviously this is not what the box horse wants to mention. From this point of view, perhaps the profitability of Box Horse is not so optimistic.


In contrast, Yonghui super species is even more unbearable. Since the establishment of the new retail direction, Yonghui Supermarket has been expanding rapidly. Especially this year, during the first half of the year, Yonghui opened 45 boutique supermarkets and 19 super-species, and the number of stores opened far more than the same period last year. However, the return is inversely proportional to the investment. In the semi-annual report released by Yonghui Supermarket this year, in the first half of 2018, Yonghui Supermarket’s new retail business Yonghui Yunchuang’s revenue was 905 million yuan, and the total expenditure was 1.294 billion yuan. The profit loss was 389 million yuan, and the impact on the net profit of Yonghui Supermarket reached 191 million yuan. The loss did not start from this year. In 2016, Yonghui Yunchuang lost a loss of 116 million yuan. And its 2017 full-year financial report data shows that Yonghui's innovative super-species and Yunchuang, which belongs to Yonghui Life, have increased their investment but the profit cycle is unclear, with a loss of 267 million yuan. What we can see is that Yonghui Yunchuang’s losses are increasing.


Box horse fresh and super species are still the same, what about other new retail players? According to the first half of the 2018 financial report released by 14 supermarket listed companies, the six companies achieved revenue and net profit, while the four revenues declined but the net profit increased. One revenue and net profit declined. 3 increase in income does not increase profits. Among them, the Xinhuadu and Sanjiang shopping of the Ali Department have improved their revenues, but the net profit has dropped sharply. The net profit growth of Gaoxin Retail is also much lower than that of the first half of last year. Only Lianhua Supermarket is deducting the profit from closing the unprofitable stores. Realized a turnaround into profit.


In general, the new retail reforms of both Internet companies and traditional retail companies have not achieved good returns. What is the reason?


Consumption is weak, China is experiencing consumption downgrade


Indeed, the new retail model has greatly improved the consumer experience. On the one hand, omni-channel access has indeed satisfied customers with different consumption habits; on the other hand, efficiency has saved customers a lot of time; at the same time, diversification, Can even achieve personalized service. For example, the advantages of the above points have made the new retail market attract the attention of many consumers, but the customer retention rate and repurchase rate are not very high.


Take box horse fresh life as an example. If members use the box horse service online and offline, the member's monthly cost is about 575 yuan. Members who consume purely online spend 279 yuan per month, and members who consume under pure line spend 228 yuan per month. If the online order customer price is 75 yuan, the offline customer price is 113 yuan as the standard. Even if the online and offline lines are added up, the members will not spend six times a month. According to the data obtained by Lianshang.com, the average monthly repurchase rate of Boxma Fresh Life is only 4.5 times.


In fact, the main problem today is not that the services provided by the company are not good enough, but whether the consumers can afford it or whether they are willing to spend it regularly. This should take into account the current social consumption situation, whether it is upgrade or downgrade.


Is China in the midst of consumption upgrading or consumption degradation? This is a hot topic in recent years. Everyone has no idea. Different companies give different answers to this topic according to the positioning of their products. They also have their own reasons. However, the author agrees with the view that consumption is downgraded, at least in terms of food and consumer essentials consumption, which is a downgrade of consumption.


According to the National Bureau of Statistics, since 2011, the growth rate of zero consumption in China's society has been declining, from 18.5% in 2011 to 10% in 2018. Judging from the changes in the consumption structure of Chinese residents in recent years, people's spending on housing, automobile, education, culture and entertainment has increased, while the proportion of consumption of food, tobacco, clothing and other necessities has been decreasing year by year.


From the point of view of the phenomenon, Taobao can grow and develop, not only because of the advantages of diversification of commodities and fragmentation of shopping, but more importantly, the concessions of its products, which is the most important reason why the double eleven can cause shopping for the whole people. Recently, when we thought that consumption was upgraded, the sudden increase in popularity made us see that low prices can still be the object of people's pursuit. If this part of consumers comes from low-tier cities and is not representative, then the phenomenon that brands such as Netease's strict selection, MUJI, and famous products are popular for cost-effectiveness can tell us that there are also a large number of people in first- and second-tier cities. The concept of consumption is changing. That is to say, people are more and more inclined to cost-effective and more affordable products than brand names.


In contrast, the new retail formats such as box horse fresh and super species, in addition to standardization and high efficiency, the price is not dominant. We can assume that if there is a choice that meets the requirements of standardization, high efficiency, and relatively affordable, then the box of fresh and super species will likely be replaced. If the farmer's market is standardized and the distribution model is at the same time, it may fly. If the supermarket price is more favorable and the quality is better, it may also dominate the market.


Just because most people are degrading their consumption, and new retails such as box horse fresh and super species are doing the consumption upgrade model, it is not surprising that it is difficult to make a profit.


Zhang Xuansong, chairman of Yonghui Supermarket, once said at the Yonghui Investor Exchange Conference, the main reasons for the loss of Yonghui Yunchuang are three points: First, Yonghui Yunchuang covers a number of key cities across the country; Second, backstage construction and labor costs High; third, the gross profit margin is too low and restricts profitability. It can be seen that even in high-end consumer cities, consumers can only attract consumers through low gross profit margins.


Therefore, if you want to get through the mode, it will be accepted by more people, and new retailers have to change their minds. Instead of hoping that consumers will become rich overnight and no longer care about consumer spending, it is better to think about how to cater to more consumers.


New ideas for new retail


New retailers have to solve the problem of profitability, and they still need to increase revenue and reduce expenditure. On the one hand, reducing investment is conducive to improving corporate profits, on the other hand, it can also reduce the costs attached to consumers and provide consumers with more favorable products.


Yonghui handed over the task of “open source and thrifty” to the partnership team, “open source” by encouraging the partnership team to improve performance, and “throttle” by saving manpower investment. The specific practice is that employees implement hourly salary system to improve people's effectiveness. .


In addition to the above two methods, you can also consider the following aspects:


First, optimize the supply chain. First of all, through the crowd portraits, to sell, let consumers buy the products that are satisfactory, and also improve the inventory turnover rate; Secondly, through the direct source, factory direct mining and other modes, you can purchase preferential and quality products, the most The main thing is to reduce the intermediate circulation, reduce the loss and cost, improve efficiency, etc. In addition, through the development of its own brand can also reduce procurement costs, provide personalized products, which may become a new retail product program.


Second, reinvent the store. Reduce the store, while adding a number of front positions, in the form of stars and months. This can reduce the problem of excessive cost and low utilization rate of a single store, and can also expand the coverage. In fact, as the proportion of online orders increases, the proportion of store sales decreases, and offline stores will become more and more like a warehouse, and it is a hugely built warehouse. At the same time, it is limited by scope and it is difficult to cover further areas.


The above two points are throttling, and open source needs to be implemented by upgrading services. In fact, the problem of the forced use of APP by Box Ma has been criticized a lot, and the low level of service of the waiters has also caused many consumers to dispel the idea of going to the door again. In addition, there are also many consumers who spit out the on-site processing level in general. Such problems will affect the customer's willingness to consume. Only by making the service more professional, thoughtful and caring, can consumers be happy to visit and enjoy consumption.


In the end, the main body of consumption is still people, only people-centered, from products to services to achieve perfection, in order to get consumer recognition. This is probably the so-called "good for the people" and "weekly things".


Rather than saying that this is a new idea, it is better to say that the new retail should be.