On July 1 1, 2003, the Sam member store under Wal-Mart, the world's largest retail chain group, officially opened in Beijing, which is its fifth member store in China. For Wal-Mart, entering Beijing, the market with the greatest potential and the fiercest competition in China, marks the acceleration of its expansion in northern China. Since 1996 settled in Shenzhen, Wal-Mart has opened 28 chain stores in China in seven years, covering all three formats of Wal-Mart: Sam member stores, shopping centers and community stores. Geographically, these Wal-Mart stores are concentrated in the south of the Yangtze River, and southern cities such as Shenzhen, Dongguan, Shantou, Fuzhou, Xiamen and Kunming account for 75% of all Wal-Mart stores.
The largest customer base of chain retail is ordinary people, but Wal-Mart has positioned the customer base of Beijing member stores as "having cars and houses", which has increased in China, but the proportion is relatively small. Tom McLaughlin, vice president of Wal-Mart China Co., Ltd. Sam Store, believes that "a big city like Beijing is chosen because there are a large number of wealthy people here, and Sam member stores will mainly face highly educated and high-income consumers, many of whom have private cars and their own houses." Wal-Mart is committed to providing affordable goods and meticulous services to these members who have cars and houses, so that customers can enjoy VIP-like treatment even when shopping in supermarkets. Therefore, Wal-Mart's newly opened Sam member store in Beijing is located in Shijingshan District, a western suburb about 40 minutes' drive from the center of Beijing. The store covers an area of10.8 million square meters, with10.3 million parking spaces and 46 cashier channels, ensuring customers to shop quickly and conveniently.
In order to cater to the preferences of Beijing consumers, Wal-Mart has made many adjustments. He, the regional operation director of Wal-Mart China Co., Ltd., pointed out that more than 40,000 kinds of products in Beijing Sam Member Store are carefully selected, best-selling and most suitable for the local area. Among them, Wal-Mart's own brand "MembersMark" is a big advantage of Sam member stores. "These inexpensive products are not available to our members elsewhere." In the newly opened Sam member store, Wal-Mart has specially set up a large fresh food area to supply all kinds of live fish, as well as pizza, roast chicken and various main and non-staple foods made on site, which is exactly what many supermarkets in China have in common. Different from Sam member stores in other countries and regions, a large part of the storefront on the first floor of Beijing Sam member store has been turned into an electronic product sales area, which contains audio-visual equipment, personal computers and various IT products. In Sam's member stores in the United States, electronic products generally only occupy one or two shelves. "We think these electronic products will be very attractive to the rich," said Tom McLaughlin, explaining the reasons for this arrangement. According to Wal-Mart's public relations department, "At present, the number of member stores in Sam, China has reached nearly 300,000, and the member store in Sam, Shenzhen has set a record for the single-day sales of member stores in Sam-6,543,800+million RMB. Shenzhen can be a good member store, and we believe it can be done in Beijing. "
Layout: from south to north, from east to west
Pay a little attention to the development track of Wal-Mart Sam member stores in China, and you will find that these four Wal-Mart member stores are located in "border" cities: Shenzhen, Fuzhou, Kunming and Changchun. This is the first time to open a shop in an inland central city. Some insiders believe that Wal-Mart is likely to cover other surrounding cities with Beijing as the center. In addition, considering that most of Wal-Mart's stores are located in the south, the opening of Sam member stores can also be regarded as a prelude to Wal-Mart's expansion in northern China.
According to Li Chengjie, vice president of Wal-Mart China Co., Ltd., Wal-Mart will open a second store in Beijing at the end of 2004 or early 2005, which will be a community supermarket for more ordinary consumers. This store will be located at 1 km south of Xidan Commercial Street, adjacent to the prosperous sogou Shopping Center.
In addition to northern China, Wal-Mart is expanding its sphere of influence to the east and west. Shanghai, the "Oriental Pearl", and Chongqing, the youngest municipality directly under the Central Government of China, took the lead in entering its field of vision. It is reported that Wal-Mart will open its first store in Shanghai, and the current format is tentatively set as a community store. Just one week before the opening of the Sam member store, the president of Wal-Mart Asia visited Chongqing and announced that Wal-Mart would soon enter the mountain city. From the map, it is obvious that Wal-Mart is developing from south to north in China, but now it has entered the stage of large-scale expansion. It is revealed that Wal-Mart also plans to open seven new stores in China in 2003, bringing the total number of its chain stores in China to 35. With the expansion of scale and the maturity of regional layout, the scale effect of Wal-Mart will be more obvious, and the logistics distribution system will also play a greater role.
Two-step wrong chess
After entering Beijing, Wal-Mart's expansion may be accelerated, but it is not smooth sailing. Shortly before the opening of Beijing Sam member store, Wal-Mart suffered two consecutive defeats in Kunming and Dalian.
On July 4th, 2003, Wal-Mart announced that it would transform Kunming Sam member store into a Wal-Mart shopping plaza. It is planned to stop business and start renovation works on June 10 this year. Why did you decide to change your route? Wal-Mart explained, "In the past few months, through the visits to Sam member stores in Kunming and letters from members, we clearly understand that Kunming members expect different shopping experiences. In view of the demand of local consumers in Kunming, we decided to transform Kunming Sam Member Store into Wal-Mart Shopping Plaza. Wal-Mart Shopping Plaza will better meet the needs of members and friends with more kinds of goods and smaller packaging. "
In Dalian, Wal-Mart failed to get off to a good start, and 17000 Sam members had to accept the card cancellation arrangement. Wal-Mart explained that "due to the owner's breach of contract, he failed to deliver the leased space as scheduled, which led to the delay in the opening of Dalian Sam Member Store. Therefore, Dalian Wal-Mart Store Co., Ltd. has applied to China International Economic and Trade Arbitration Commission for arbitration to terminate the lease contract. " It is understood that at the peak, Dalian Sam member store had 25,000 members, but due to the delay in opening the store, about 8,000 members have now withdrawn their cards. On July 4th, 2003, Wal-Mart officially announced that in order to avoid huge losses in economy and reputation, it would cancel the remaining 6,543,800+7,000 members. Although Wal-Mart is not responsible for the owner's breach of contract, this incident can also reflect that Wal-Mart seems to need more experience to handle the cooperative relationship with China.
The failure of Wal-Mart in Kunming and Dalian seems to indicate that membership stores are not as suitable for China as Wal-Mart imagined. Generally, there are only a few brands to choose from for each kind of goods in member stores. These brands are generally the first or second brands widely recognized by consumers. On the one hand, the purpose of doing this is to let the store greatly reduce the cost through large-scale procurement, and finally let the profit go to the members; On the other hand, by carefully selecting high-quality brands for customers, member stores greatly reduce the time and cost for members to face many brand choices when shopping. This is the difference between membership stores and ordinary supermarkets and hypermarkets. Most people in the industry believe that the transformation of membership stores has precedents even in some developed areas in China, which is not only related to the purchasing power level of local people, but also related to the geographical environment and consumption habits. For example, shopping in a city like Kunming is more convenient, and you don't have to buy many things at once.
In the face of external doubts, Li Chengjie, vice president of Wal-Mart China Co., Ltd. explained: "The standard for us to choose member stores is a big city with sufficient spending power. We believe that this format has enough room for development in China." However, the retail market in China is already overcrowded. Take Beijing as an example. Nearly a thousand supermarkets, large and small, sell the same goods at almost the same price. It's hard to stand out from them.
Wal-Mart's China is unremarkable.
As a giant of the chain business kingdom, Wal-Mart certainly knows the importance of scale. Whether its expansion strategy in China in the next few years is going straight or step by step, it will face restrictions from the policy level. Even if China's retail industry is open to foreign investment, the expansion cost of Wal-Mart may exceed that of international chain retail enterprises such as Carrefour. In fact, Wal-Mart's expansion in China is encountering both external and internal obstacles, including external policy factors and Wal-Mart's own system and system construction.
It is understood that the Ministry of Commerce has approved Wal-Mart to open stores in 38 cities in China, but the number of stores is only 30. In other words, Wal-Mart can only open 30 retail stores in China at most, and its ownership structure must be changed from 3 1 to China. Wal-Mart has been operating in China for seven years, and has been based in Guangdong and Fujian provinces, not only because it is afraid of the red light of the policy, but also because its own procurement system and logistics system can't keep up. Wal-Mart is headquartered in Shenzhen, and other branches are under the jurisdiction of the headquarters. Its finance must also be settled by the headquarters, which will inevitably lead to the tax revenue flowing from the location of the store to Shenzhen, which is one of the reasons why many cities are indifferent to Wal-Mart's presence. The most obvious example is Shanghai. In fact, Wal-Mart talked about opening a store in Shanghai before Carrefour. However, because Wal-Mart insisted on placing the settlement center in Shenzhen, the matter failed for eight years. In the latest business plan in 2003, Shanghai will restrict the opening of large supermarkets within the inner ring. In the competition of Shanghai retail market, Wal-Mart is at a disadvantage, which is a hidden pain in Wal-Mart's heart.
Purchasing profit.
In fact, in addition to the obvious store sales model, Wal-Mart's other biggest profit source in China is the procurement center. Wal-Mart has benefited greatly from its procurement in China due to its low cost and increasingly developed logistics system.
Li Chengjie, vice president of Wal-Mart China Co., Ltd., told the outside world that China is becoming an important base for Wal-Mart's global procurement. "Wal-Mart uses its relationship with manufacturers in China to develop or customize products for consumers in China. Last year, we bought goods worth $654.38+0.2 billion in China, and this year the figure will reach $654.38+0.5 billion. We plan to expand the purchase amount in China to 25 billion to 30 billion US dollars per year in the next five years. " According to statistics, the purchase amount of Wal-Mart in China is increasing by 20% every year, and China has become one of the largest suppliers of Wal-Mart in the world. At present, Shenzhen and Shanghai, as Wal-Mart's global procurement centers and sub-centers, are responsible for the procurement work in the world, East China and other regions, among which the global procurement center in Shenzhen is the most valued by Wal-Mart headquarters.
According to Wal-Mart's statistics, in 2002, the company purchased more than $654.38+02 billion from China, of which more than 95% came from Shenzhen, accounting for about two-thirds of the total purchases from 55 countries around the world. Wal-Mart's global sales are growing at a rate of $20 billion a year. The establishment of a global procurement center in Shenzhen is a long-standing strategic plan of Wal-Mart Group, and its headquarters executives have visited Shenzhen many times to discuss and discuss this matter. In the next two years, Wal-Mart China will stop outsourcing and hand over all products with annual sales of $654.38 billion+$09 billion to the global procurement center and its procurement network established in Shenzhen. Wal-Mart headquarters said that the establishment of a global procurement center in Shenzhen means that Wal-Mart can not only purchase high-quality goods with competitive quality, packaging and price here, but also Shenzhen's smooth and convenient logistics system and developed three-dimensional transportation network by land, sea and air, especially South China's position as a hub port connecting the world market, will win more time and bring more convenience for Wal-Mart Group's global expansion.
China's manufacturing level has greatly improved, prompting foreign retailers to look to China. In addition, China's price advantages in clothing, daily necessities, household appliances and other products also make these retailers happy to purchase goods from China. According to statistics, in 2002, foreign retailers bought nearly $40 billion of goods from China, accounting for 1 1.3% of China's total exports. From July 29th to 3rd, 2003, the 2003 International Procurement Fair will be held in Shanghai. At present, 63 large multinational companies, such as Wal-Mart, Auchan and Carrefour, have signed up to participate, which shows the collective recognition of the retail giants for the status of China's procurement center. Wal-Mart's competitor Carrefour has opened nine procurement bases in China. Tesco, a British supermarket chain, will also set up a procurement center in Shenzhen, Guangdong this year; Home Depot, the world's largest home improvement retailer and the second-ranked retailer in the United States, is about to choose a city between Shanghai and Shenzhen to open a procurement center; Japanese retail giant AEON is also preparing to open a distribution and procurement base in Guangdong Province in 2004.
The competition of multinational companies for suppliers in China is also the impact of Wal-Mart on chain retailing in China. Multinational retail enterprises such as Wal-Mart usually have a global unified production and marketing chain. In many countries, private brand products account for 30% to 60% of their total sales. In some developing countries, they even seized the main local circulation channels and even controlled the local manufacturing industry. Because of Wal-Mart's strong position, its fair treatment to suppliers is unmatched by other retail enterprises. Entering Wal-Mart not only means the promotion of brand reputation and the expansion of "quantity", but more importantly, it can share the "partnership" with suppliers advocated by Wal-Mart-no deduction and no entrance fee. On the contrary, in order to reduce the procurement cost, Wal-Mart will help suppliers improve their processes, improve quality, reduce labor costs and control inventory ... This is also the reason why suppliers are competing to "pursue" Wal-Mart.
However, this situation makes the retail industry in China feel more and more chilling. Zhang Hongwei, chairman of Oriental Group, a retail enterprise in China, said in the Report on Over-opening that if the circulation industry is in the hands of foreign capital, it will endanger the downward control of manufacturing industry and the upward control of financial industry, and even lead to the hollowing out of China's economy. Many people in the industry pointed out that once international retail enterprises master the main circulation channels, China's industrial enterprises will become the processing workshops for foreign circulation enterprises to produce brand products, and China's own industrial brands will disappear, which will eventually threaten the country's economic security. The three-year protection period after China's entry into WTO is coming to an end. If China can't expect suppliers to automatically bypass Wal-Mart, then how to deal with the purchasing strategy of transnational retail will indeed be the most difficult problem for China's retail industry.
Bound giants
Information logistics is Wal-Mart's most powerful skill, but the scattered chain store layout and the size of no more than 30 stores in China market make Wal-Mart feel overwhelmed and unable to find room for display. It has fallen into a self-made problem: the policy has limited the scale of its store opening, and without advanced information system, it can't bring into play the scale benefit, so Wal-Mart has little profit in China. However, this situation will eventually change. Every time Wal-Mart opens a chain store, it takes a step towards the goal of profit.
Wherever Wal-Mart goes, it will cause a blockbuster sensation in the local area.
In China's huge retail market, no one can stop Wal-Mart from shining brilliantly. However, in June this year, a survey report released by Merrill Lynch seemed to cast a shadow under this strong light. Merrill Lynch's report evaluates the operation of multinational companies in seven industries in China market. According to the survey report, except Carrefour, almost all foreign-funded retail enterprises in China are in a state of loss, and Wal-Mart is also unfavorable. In fact, in China, it is no secret that Wal-Mart's store operation has not achieved profitability. Since 1996 Wal-Mart officially moved in, its store operation has been at a loss. This seems to be incompatible with the strong development momentum of Wal-Mart in its home country.