The trend has changed in turn. The paid membership store model, once regarded as unsuited to local conditions, has become a rare bright color in today's depressed retail industry. Metro, which entered China the same year as Sam and also opened the market with the paid membership model, is still exploring.
After the round test from the cancellation of membership system to the transformation of hypermarkets, Metro has always followed the trend of the retail market, but it has inevitably taken many detours.
Over the years, Metro has made a big circle, but when looking back, it found that the most suitable model was the original membership store model.
However, today's Metro Club is no longer just entering China in 1996. Metro, once only engaged in B-end business, began to embrace C-end users and observe the consumption scenarios of middle-class families. The speed of store layout began to accelerate gradually, and store location began to try to be close to consumers. "Consumer demand" has also become the core theme repeatedly emphasized by Metro.
The development of Metro has also become a classic observation sample from the B-end membership store to the membership store that focuses on both ends of the BC. After 27 years of ups and downs and repeated exploration in a variety of business formats, today's membership stores are also facing different opportunities and challenges.
Having led the trend and experienced the downturn, can Metro fight a turnaround with this transformation?
27 years into China, still exploring
In 1996, Metro, with the aura of "the second largest retail and wholesale supermarket group in Europe and the third largest in the world", entered the Chinese market in its infancy by means of Cash&Carry, which is a way of self selection in warehouse stores.
Metro once became the darling of the global retail industry with its huge stores covering an area of 10000 to 20000 square meters, large stores like storage factories, cost-effective products and self-service wholesale shopping. However, Metro's pure ToB business model has greatly limited its own development. According to the regulations, only enterprise legal persons can become members.
Nevertheless, Metro, like other foreign retailers, tried to seize the early dividend period. According to Metro's financial report, in 1999, the number of its stores in China has reached 6, with sales reaching 2.6 billion yuan. In the list of China's Top 100 Chain Stores in 1999 released by the China Chain Store Association, Metro China ranked sixth. Carrefour and Wal Mart, which had just entered China at that time, were not even on the list.
In 2008, even in the context of the global economic crisis, Metro still achieved a revenue of 65.529 billion euros (worldwide), with 754 stores worldwide, including 99 stores in mainland China.
However, with the rapid rise of Chinese e-commerce after 2010, a large number of offline retail models, including paid membership stores, have been impacted.
In order to keep up with the changes in the Chinese market, Metro opened the electronic chain store "Wandecheng" in 2010; In 2012, Metro China opened individual member registration; In 2014, Metro officially adjusted its business structure to focus on five businesses, including e-commerce, business support, Fuli products, food distribution, cash and carry wholesale malls. Even tested the convenience store business in Shanghai
However, repeated attempts did not help Metro out of the downturn. In April 2020, Metro sold its Chinese business to Wumart.
Behind Metro's repeated failure, it deeply reflects the changes brought about by the rapid growth of the Chinese market, which is unexpected.
"Before I came to China, I served as the president of Metro in Italy. During the three years in Italy, from the first day I took office to the day I left, the habits of competitors and consumers in the market have hardly changed. But in China, such changes may occur in a few months." Claude Sarraleh, former president of Metro China He once described the Chinese market in this way.
Today, such rapid changes continue, and Metro's exploration has not stopped.
"We have different store types in different regions." According to Chen Zhiyu, the vice CEO of Metro, after exploring many different store types such as large stores, small stores, first tier cities and second tier cities, the current preliminary conclusion is that Metro is still suitable for larger stores, with higher efficiency and better standardization. And Metro has also made good achievements in second and third tier cities such as Dongguan, Changzhou and Changchun.
Among them, the ToB business, which accounts for nearly half of the sales volume, especially needs the support of large stores - the B-end customers not only have more requirements for the quantity of goods, but also need infrastructure facilities such as processing rooms to pretreat the goods.
However, the biggest challenge still comes from the transformation from pure ToB business to compatible B-end and C-end.
The first challenge comes from brand image. As a retail enterprise with a strong ToB service gene, Metro's B-end business attribute has been deeply rooted in the hearts of people over the past 20 years. The biggest problem in the overall transformation to the C-end business from 2021 is how to change people's minds. Only holding a business license can you apply for a membership card, and can't open brand awareness to consumers who have daily shopping needs in family life.
In order to change this impression, Metro introduced McBear IP, and tried to make the logo and brand image more soft and friendly.
In addition, it is the adjustment and transformation of supply chain capacity.
In the past, Metro's product packaging was often larger than Costco and Sam's because it had to deal with the demand of enterprise procurement. Now, it is necessary to develop home wear products according to the family procurement needs.
For the typical consumer group of Metro, "mothers in middle income families", how to meet their requirements for health, quality, speed and convenience, as well as various trade-offs and concerns in terms of consumption upgrading, budget and cost performance.
After all, facing the C end means dealing with a more complex and diversified market.
What does the membership store sell?
From a "foreign product" format that few people paid attention to, to the popular fried chicken and paid membership stores, the track has been crowded.
But behind the popularity of the market, what are paid membership stores selling?
"The core is what consumers can get from it?" In Chen Zhiyu's opinion, in the past, stores sold the same things. The essence of the popularity of paid membership stores today is that the products should be competitive and differentiated.
However, although more and more businesses are aware of this, their understanding of differentiation is still limited. Changing the packaging, changing the taste or so-called sugar reduction is not enough to attract consumers to visit the store again.
Therefore, compared with traditional supermarkets with 20000 to 30000 SKUs, paid member stores with only a few thousand SKUs use subtraction to reflect the brand's understanding of commodity power and consumption scenarios.
For example, there are many ways to teach people to choose tremella in the market, but why should consumers understand these?
"What is the principle of subtracting from the membership store? It is to provide consumers with the best goods and reduce the cost of choice." In Chen Zhiyu's opinion, too many choices will consume energy, and consumers should spend time, energy and money on more meaningful things.
But this is also the biggest challenge. From product selection, supply chain to price, every link has no small pressure.
If the sales volume of the flower category in a supermarket is low, it will lead to a lot of losses, and the cost of losses will eventually be converted into the selling price; On the contrary, if the sales of flowers are good, the transportation and loss will be reduced accordingly, and the final price may be even cheaper than the flower shop.
This requires close cooperation from the sales end to the supply chain.
"Although consumers want to reduce the cost of choice, they don't want to pay for it, but these two conditions are not necessarily contradictory. Good things don't have to be expensive, and high costs are not caused by the goods themselves, but by inefficient supply chains." Although the reason is very simple, Chen Zhiyu has to admit that he wants to establish "good things and inexpensive" And form positive market feedback, which requires long-term accumulation.
Retail has never been a fast business. Behind the growth, it has often experienced several years of accumulation of consumer reputation and supply chain.
What's more, besides price, consumption scenario is another key indicator influencing consumption decisions.
In the first tier cities, consumers like to buy fresh grain fed beef in Metro so that they can go home to fry steak; But in the second and third tier cities, the most mainstream beef product is frozen grass fed beef, because consumers here are more accustomed to making Chinese stewed beef. In this scenario, it would be wasteful to encourage them to buy 180g grain feed steak imported from Australia here, and this excessive consumption upgrade may also overdraw their future consumption capacity.
Finding the most cost-effective product for the target consumer group is the core proposition of paid membership stores. After more than ten years of retailing, Chen Zhiyu felt that in China, a big manufacturing country, there is no bottom line for price comparison. For customers who care about product quality, although they are unwilling to pay more, they are not so sensitive to price.
"For this customer group, it is only necessary to have a relative price advantage, but it is not necessary to make an absolute low price. Don't compromise quality because of low price," said Chen Zhiyu.
Online sales accounted for 30%
Having experienced the baptism of e-commerce for more than 10 years, for today's retail industry, expanding online business has long been not a multiple choice question, but a must answer question.
Taking Sam, who has been promoting online business most rapidly, as an example, the market speculates that the proportion of e-commerce sales in Sam's stores is about 60%, and as an important guarantee of online business, Sam's China front warehouse may reach 500, with an annual sales of 33+billion yuan. Almost every Sam's front warehouse can make a profit, and has achieved overall large-scale profits. Based on this calculation, Sam's front warehouse business may have become the first brand in China.
With the cooperation of the front warehouse, the products of Sam's Club can be delivered to consumers within 30 minutes at the fastest, making great contributions to the rapid growth of the number of members.
The achievements brought by online business are obvious to all, and Metro is also following up online layout at an extremely fast speed. In just two years, the online sales volume of Metro's C terminal has reached 30%.
However, as an important part of supporting online business operation, warehousing and distribution capacity almost determines the final success or failure of this module.
It is reported that at present, Metro's distribution mainly covers 15 kilometers around the store. It is planned that in 2024, efforts will be made to develop the front warehouse business.
How can you succeed and how can you defeat. Some people are defeated by the front position business, while others can make money from each front position. This is a business that needs careful calculation.
"What you sell to consumers is quality, speed, service or commodity. It is impossible to match all of them. You have to choose the most important one." According to Chen Zhiyu's experience, if you want to do a good job in front warehouse, you must first know the group of people you serve, and then, you must do a good job in the profit model of each unit in each front warehouse. You cannot blindly scale up, There is no one size fits all solution.
The service standard is in contrast to the user's scenario - if it is a stocking scenario, it can also be delivered the next day; If it is the scene of cooking and entertaining, the frozen or fresh products must be delivered within one hour.
In the market environment where the traditional retailer's model of surpassing the past is becoming more and more difficult, although the paid membership store model is becoming the industry vane, the models of the supermarket and the pure membership store still have the logic of differentiation in terms of stores, selection, pricing, and supply chain.
In the retail industry, with the change of consumer demand, it will continue to appear, but some essential characteristics of the retail industry have never changed. Commodity power, service power and supply chain need to be taken into account regardless of the business type. From this point of view, the competitors of the retail format are never each other, and consumers' preferences determine the flow direction of the tide.
"We are more concerned about what other needs of the target consumer groups Metro cannot meet," said Chen Zhiyu. (This article was first published on titanium media APP by | Xie Xuan, editor | Fang Yu)
