The golden age of foreign retail giants
Get together and leave, sometimes, nothing is immortal!
According to Reuters confirmed from Metro, Metro is negotiating with the bank to find a partner for its Chinese business.
It is said that Fosun International is currently negotiating to acquire the shares of Metro. Of course, Alibaba and others are also on the list of takeovers.
After Carrefour, Metro, the first retailer and supermarket group in Germany, second in Europe and third in the world, has finally turned its Chinese business into a person!
Today, 23 years ago, Metro at the time was sure to imagine that there would be such a sad day.
In the 1990s, in the Chinese retail market, the standardization of large-scale commercial supermarkets was basically in a blank. In addition, when the government set up special economic zones to introduce foreign capital, the temptation of the Chinese market could not be resisted for foreign retail giants such as Metro.
As a result, international retail giants have sneaked in:
In 1992, Sino-Japanese joint venture Shanghai First Yaohan opened in Pudong, which is the first Sino-foreign joint venture commercial retail enterprise in China;
In 1995, French retail giant Carrefour took the lead in entering China, and the first stop was in Beijing;
Also in 1995, Metro and Shanghai Jinjiang Group reached a cooperation and officially entered China;
In 1996, Wal-Mart, the largest retailer in the United States, opened its first store in Shenzhen.
In 1997, Yichu Lotus, a subsidiary of Thailand Zhengda Group, entered Shanghai;
In 1998, RT-Mart in Taiwan opened the first store in mainland China in Shanghai;
In 1999, French retail brand Auchan established its bridgehead in China in Shanghai.
Think about it, those years are really the golden age of foreign retail giants in China.
The sword of domestic retail industry
When foreign retail giants stepped up their efforts to lay out the Chinese market, China’s retail “snakes” also began to expand.
In 1994, Wanjia Department Store tested the largest warehouse-style “supermarket + department store” model in the country at the time of testing in Shenzhen;
In 1997, Shanghai Agricultural Industrial and Commercial Supermarket opened its first large-scale store in Qingpu District, and pioneered the creation of a fresh-sales store model in the country;
In 1997, Zhongbai Warehousing was established. This is one of the earliest large supermarkets in China that surrounds “rice tables, rice bags, oil bottles, and vegetable baskets.”
Of course, in the process of entering the rushing hypermarket industry in China, the domestic retail industry is also a sword, especially after a large number of foreign-funded enterprises enter the domestic market, they quickly completed the early “enclosure movement” with abundant capital. What came up was the climax of a wave of mergers and acquisitions:
In 2007, Wal-Mart acquired a 35% stake in BCL, a subsidiary of the supermarket.
In 2008, Lotte Supermarket acquired the China Trade Union Wankelong Chain Supermarket;
In 2009, British retail giant TESCO acquired the remaining shares of Dingxin International and achieved full control of Tesco China.
Capital players who have expanded their hypermarkets may not realize that a huge crisis is slowly approaching them!
Metro is so cautious, still can’t escape!
In fact, compared to the radicals of their peers in China, Metro has been relatively cautious after entering the Chinese market, taking a relatively gentle route.
In the 18 years since 1995, when it entered China and began to feel the hardship of the world in 2013, Metro has only expanded 63 stores in China, with an average of fewer than 4 new stores a year, while Carrefour and Wal-Mart stores in China during the same period. The number has reached 240 and more than 400 respectively.
Around 2008, the financial crisis originating from Europe and the United States swept the world, and the first and foremost was a large number of large enterprises in Europe and America.
After the financial crisis, large international retail companies faced great challenges in maintaining the hypermarket model at the expense of high costs. Metro subsequently announced that it would cut costs globally and “slim down” by closing stores in the local market.
However, in China, under the stimulation of 4 trillion consumer red envelopes, some large stores actually exchanged strange blisters, which also made some foreign retail giants hope for the Chinese market, and then made a fatal strategic misjudgment.
In 2012, Metro China’s sales reached a new high, up nearly 30% compared with the previous year. Compared with the domestic market, such achievements are undoubtedly exciting, which also makes Metro see the hope of coming out of the fog.
But the miracle did not happen in the end.
Since 2014, Metro China’s growth has narrowed year after year, with growth of only 1% in 2015 and 2016.
If you stop the loss at this time and withdraw from China, Metro will be much better today, but unfortunately, the decision to sell the Chinese business was only made five years later.
Prior to this, a large number of foreign retail enterprises have already bid farewell to the Chinese market in advance:
In 2013, the UK Tesco Supermarket (TESCO) injected its Chinese business into China Resources Vanguard;
In 2014, the British Kingfisher Group sold 70% of the shares of China B&Q to Wumart Group;
In 2017, Spain Dia Day sold all its stores in China to Suning;
At the beginning of 2018, Carrefour announced a strategic cooperation agreement with Tencent in China.
Compared with the peers who have long been fleeing, Metro can be up to now, it is very valuable!
Why can’t Metro make up in China?
Many people say that they are chasing the two biggest killers of retail giants such as Metro, one is a convenience store and the other is an E-Commerce.
Let’s talk about convenience stores first. The advantage is that the location is flexible, you can see the needles, and become the “supermarket in the pocket” of the residents. Moreover, the convenience store products are concentrated, and basic necessities can be bought at convenience stores.
As of the end of 2015, Rosen had 461 stores in Shanghai, and the whole family convenience store under the Dingxin Group had nearly 1,000 stores in Shanghai. Meiyijia was blooming in some places in the south. I have gone through a lot of business in large stores.
Let me talk about another major role in the coffers hypermarket: E-Commerce.
The emergence of E-Commerce satisfies all the fantasies of lazy consumption, and does not go out of the house to buy the world, who will go to the old, inefficient, and sometimes go to the big store that can not buy the right things for most of the day?
In March 2016, Alibaba China’s total retail transactions exceeded Wal-Mart, which has been cultivated for more than half a century in the traditional business sector, and became the world’s largest retailer.
What’s even worse is that the merchants who originally worked closely with the hypermarkets have also betrayed at this time. They took the opportunity to withdraw from the hypermarket and turned around and opened their flagship store on the E-Commerce platform.
The big store that is backed by the enemy will certainly want to fight back.
First, test the convenience store.
For example, Metro tried to pass the convenience store “He Maijia”, but “He Maijia” only opened 4 in Shanghai, and finally died.
Second, shutting down stores and renovating stores.
For example, in recent years, Wal-Mart, Carrefour, etc. have been reducing the number of Chinese stores to reduce costs; at the same time investing a large amount of funds to transform and upgrade stores to enhance the consumer shopping experience.
Third, develop its own brand.
For example, in the products sold by Wal-Mart, the price of “Huiyi” own brand is far lower than other similar products, and it also achieves a good sales, and its own brand has become another magic weapon for profit generation.
But overall, the effects of these measures are limited, probably because of the in-depth development of mobile Internet and mobile payment, the golden age of hypermarkets is already an old dream for many people.
Metro, in the 23rd year of entering China, only left the song, in this song from the song, some people miss, some people sigh, and life, has long turned around and gone forward!