Alibaba’s new retail renovation has been improved for more than a year.

Since 2017, Alibaba has invested in a number of offline retailers with investment as its main means, accelerating the “Ali-style transformation” of the retail industry through “new retail” means, such as the generalization of traffic empowerment. Then, more than a year has passed since the time, and Ali’s new retail has played a big role in the offline retail enterprises, and it is time to take the “interim exam” inventory.

We will first look at the Shangchao industry. Starting from 2018, Ali Investment’s Gaoxin Retail, Xinhuadu and Sanjiang Shopping have started a large-scale “new retail” project promotion. The three companies have also accelerated the store and Taoxingda. The integration of Ali’s traffic, we focus on the gains and losses of “Ali New Retail” in the field of business super-communication from the 2018 interim financial report of the three companies.

Revenue growth and profit margins have not been fundamentally improved

We have compiled the revenue and gross profit growth of the three companies in the first half of 2018 and the retail business in 2017, as shown in the following figure:

Source: Gaoxin Retail, Xinhuadu, Sanjiang Shopping Report (Note: Sanjiang Shopping divested its cigarette business in 2017, resulting in negative revenue growth in the current period)

According to the National Bureau of Statistics, China’s total retail sales of consumer goods in the period from January to June 2018 was 1,801.8 billion yuan, a year-on-year increase of 9.4%. The national online retail sales amounted to 4,081 billion yuan, a year-on-year increase of 30.1%.

Through the comparison of these two sets of data, we can see that the above three companies are underperforming the growth rate.

In addition, in order to confirm the improvement of store operation capacity, we observed the operation of Xinhuadu store compared to the same year, see the chart below.

Excerpted from the first half of the Xinhuadu 2018 financial report, where the comparable store refers to the direct store opened before January 1, 2017.

In the first half of the financial report of Gaoxin Retail, the operation of the store was also disclosed: the same store sales growth was -1.56%, and in 2017 the data was -0.9%.

Combining the two charts and other relevant data, we can clearly see that after deep access to the “new retail” system, retail companies have changed significantly from mature store operations to gross profit growth, even in stores. There is a danger of continued decline in operating capacity. For example, the absolute value of Gaoxin retail stores has increased, and the total revenue has declined. Sanjiang Shopping’s relatively aggressive store opening measures are an important factor in its revenue growth.

So, where is the new retail in the retail business? Where is the online traffic going?

In the 2018 semi-annual report of Xinhuadu, we found that in the current period, it paid a total of 4.267 million yuan for software and platform services to Alibaba Group. Alibaba also provided 770,000 yuan to Sanjiang Shopping for promotional services, in addition to more than 3 million yuan. Logistics costs, which means that in the cooperation between the two sides, Ali has played a more role in traffic output, that is, on the one hand, providing precious online traffic to Shangchao, on the other hand, Ali is also in sales and supply chain management. Continuous output, such as Sanjiang Shopping has begun to introduce the hanging chain system of Box Horse Fresh.

Excerpted from Sanjiang Shopping 2018 first half earnings report

Since Ali has already comprehensively blessed the retail industry in terms of traffic and software, why is the retail performance still not satisfactory? We believe that: 1. The transformation of new retail should be a long-term continuous process, which is not only Because the user-side changes in shopping habits are relatively lagging, it is also the inevitable cycle of the retail industry to change the self-innovation of the business model. This also makes us not to conclude the advantages and disadvantages of the new retail, but it is listed as the reason for long-term observation;

2. Shangchao retail industry has a certain degree of zero-sum effect due to the dense store, online traffic does not bring absolute value increment, but includes some transactions that belong to the offline, which is also the introduction line. The main reason for the upper flow, but the total amount has not changed much. In addition, although the three companies have Amoy Da Blessing, but the US group, hungry has already expanded the supermarket and fresh food distribution to the supermarket industry, the traffic advantage of the hand-pick online has also been greatly diluted, in other words, from the short-term camp The cooperation between the company and Ali does not bring a real premium;

3. Retail enterprises are passively accepted for “new retail” and have not fully followed the development of the industry in operation. For example, after the introduction of Ali traffic, Sanjiang Shopping’s fresh business revenue growth rate reached 30.24%, and gross profit increased by 0.96%. Xinhua The growth rate of food business revenue also reached 17.44%, but the company has not fully acted in accordance with online rules. Taking Xinhuadu as an example, although the growth rate of food products is obvious, the growth rate of supermarket comparable stores is -10.77%, indicating that the category adjustment has not been implemented immediately in the store setting, while Sanjiang Shopping continues to increase the number of students. Fresh ratio, but the effect often has a certain lag.

4. It is also the most important. As of now, Ali-style online marketing is still a low-cost user. For example, Xinhuadu Foods has a revenue growth of 17.44%, but its gross profit has decreased by 0.44%. Deeply bound Gaoxin retail, single store ping effect continues to decline, the proportion of low-cost promotions is still very large, Sanjiang Shopping has launched a series of products such as fresh food, daily fresh, Jiang chef, but the growth rate of gross profit is behind Hui (the current user’s fresh and processing business gross profit growth reached 2%), the price is inhibited larger.

For Ali’s new retail system, the next step is to gradually enter the deep water area, that is, not only “selling water”, but also to profoundly change the industry operating rules, which is quite difficult. But overall, the retail industry should not regard “new retail” as a panacea, and believe that as long as access to traffic is all right, the facts prove that the performance of these three companies is difficult to say is excellent.

Where is the key to the new retail dreams?

From the data of the first half of this year, the performance of the above three companies is flat, so can Ali’s “new retail” still bring dreams into reality?

We believe that there are three main points of difficulty:

First, Ali wants to reduce the dependence on the flow revenue path.

As mentioned above, Xinhuadu’s traffic and software service fees in the first half of this year alone reached more than 4 million, which undoubtedly increased the burden of sales expenses for enterprises, and the profitability and growth of the retail industry have entered a serious bottleneck period. Gross profit is difficult to increase, sales expenses increase, and short-term will inevitably affect profit margins, weakening the incentive for enterprises to further carry out online and offline linkage marketing.

At present, Ali’s “new retail” empowerment effect is still controversial, and the industry needs further observation. At this time, Ali should reduce the burden of current businesses, reduce the cost of traffic, and give enterprises more room to move.

Fundamentally, Ali is still a traffic-realizing enterprise, but its value to Shangchao has not yet fully reflected. If the cost of the enterprise is not reduced, there will be a risk of exhaustion and fishing.

Second, businesses should be more calm towards “new retail.”

In a considerable number of discourse systems, the problem encountered offline is because of the lack of online traffic, but as of now, after the introduction of online traffic, it has not fundamentally reversed the trend.

For the future, the retail industry should not be overly optimistic. Especially after the introduction of Ali, most of the company’s stock prices are conceptually sought after, causing operators to lose their way.

Online traffic is important, but access to online traffic is more defensive. After all, the entire industry is online, but online does not mean improving core competitiveness. Introducing traffic, comprehensively adjusting the operating concept or the only way to the right path, such as Yonghui Supermarket, using high-margin and high-frequency fresh as the core strategy, effectively improving profitability and becoming a leader in the business super industry.

Xinhuadu and Sanjiang Shopping, which are represented by weaker innovation companies, still use department store sales. When durable goods are difficult to establish core competitiveness, and the zero-sumness of online traffic, growth is extremely slow.

Since the launch of the new retail, various industries have used this concept as an innovation, but at the same time there are many misunderstandings and problems. The Shangchao industry is only one of them. Since then, we will continue to observe changes and problems in other industries. .