Author/ Author of "Finance and Economics" Weekly Zhang Jikang
Editor / Chen Fang
The Asian flagship store is closed
"Big sister, don't go! On the last day, give money to sell! "The original price is 39, the current price is 19, don't miss it when you walk by!" On March 31, Carrefour's 18-year-old Asian flagship store in Beijing Zhongguancun finally came to a close, officially closing on the same day.
One day before closing, when the Weekly magazine "Finance and Economics" came to carrefour Zhongguancun store, it was plastered with red posters of the countdown to the closure of the store along the way, and a huge banner of "Zhongguancun Square is about to be transformed, thank you for 18 years of companionship" hung at the entrance of the store, and some customers with feelings took a group photo in front of the banner.
The 11,600-square-meter hypermarket opened in 2004 and was known as the largest supermarket in Asia. It is Carrefour's first flagship store in China built according to its own design concept, where the supermarket only accounts for a small part, tens of thousands of square meters of area to all kinds of brand clothing stores, restaurants, pet stores, etc., trying to let consumers enjoy a "shopping addiction" when shopping in Carrefour supermarket.
Carrefour's Asian flagship store in Zhongguancun, Beijing, was very successful when it first opened, attracting countless consumers to come shopping and leisure, and the combination of supermarkets and various brand stores has since become the standard of supermarkets. After 18 years of change, but now it has come to the end of the store closure, which is lamentable.
The Carrefour supermarket, located in the center of the store, was empty before closing, leaving only a few containers marked with 10 yuan, 15 yuan and 30 yuan, and in the clearance of sparkling water, laundry detergent, dog food, snacks and biscuits. Some consumers who wanted to pick up the leaks walked around and ended up empty-handed. "There's no more merchandise, nothing I want."
A clerk in charge of cashier at Carrefour Supermarket told Caijing Tianxia Weekly that as early as the end of February, the supermarket began to clear the warehouse and sell, and it has now entered the end.
"Most of the people who have come recently are old customers in the neighborhood, mainly rushing to pick up leaks, in order to spend less than 5 yuan can insist on coming for several days." A seller said, "It seems that there are many customers, but in fact, the transaction rate is not high, and many of them are spectators." ”
(Source: Finance & Economics Weekly)
Most of the merchants sold in the Carrefour store area were introduced by merchants a month ago, which is a typical mobile shop, "after the promotion is done, go". "Finance and Economics" Weekly noted that the signage of many stores is completely different from the actual goods sold, such as a shop with kodak film LOGO printed selling middle-aged and elderly clothing.
A Seller of a Chinese women's clothing store that has been open for nearly 8 years said that many brand merchants have withdrawn early because Carrefour's traffic is getting smaller and smaller, and it cannot attract new customers. "In recent years we've been doing the business of regular customers."
Industry insiders believe that the decline of Carrefour Zhongguancun store is inevitable, on the one hand, this store is a hypermarket model, failed to keep up with the pace of transformation of commercial supermarkets; on the other hand, the underground commercial traffic structure is not smooth enough, in and out is very inconvenient; in addition, the surrounding new shopping malls and increasingly developed online shopping are eating away at its customer flow.
For the closure of Carrefour's Zhongguancun store, the Weekly "Finance and Economics World" asked Carrefour for verification, and the other party responded that the closure was to cooperate with the owner's Zhongguancun Square business transformation.
It is understood that after the closure of the store, Carrefour will be taken over by the real estate company Everbright Anshi to create a new business district called Zhongguancun ArtPark, and thus build a core shopping mall in Haidian District. In the future, whether Carrefour can continue to open stores here, there is uncertainty, on the one hand, whether the transformed business district needs Carrefour is a question mark, on the other hand, whether Carrefour can afford the rent after the transformation is also a question mark.
More than 80 stores were closed in more than 4 years
In Carrefour's business map, the Zhongguancun store is not the first store to "fall", and it should not be the last, and the former "godfather of hypermarkets" is not in a good position today.
Carrefour, which started in France, entered China in 1995, and in the first decade of entering China, thanks to the uniqueness of the "hypermarket" format, Carrefour was completely in a state of "lying win" in China. In just a decade, Carrefour has opened more than 60 stores in China, and the number of stores has always been faster than other similar stores such as Runfa and Walmart.
In 2010, carrefour ranked second with a sales scale of 33.8 billion yuan in the list of china's top ten supermarket chains released by the China Chain Store Association. But a decade later, Carrefour's ranking has dropped to No. 8, with sales of just 27.3 billion yuan, down 23.8 percent from a decade ago.
Carrefour's first store closure also occurred in 2010, when Carrefour had been in the Chinese market for 15 years. The store that was closed is located in Xi'an and only survived for three years from opening to closing. The reason why Carrefour ruthlessly closed the store was that the store had been losing money and the income had not met expectations, and finally decided to close the store to stop the loss.
This year, Carrefour closed 4 stores in China, of which dalian Xinhua Oasis store lost money for seven consecutive years. At that time, Carrefour, the closure of stores more for commercial considerations, while closing stores is also constantly opening new stores, and new stores than closed more, the total number of stores is growing, in 2017 Carrefour in China The number of stores reached its peak, with 259 stores.
Since then, the number of Carrefour stores has entered the downward channel, and the number of stores has not been as much as relevant. According to public information, from 2018 to 2021, the number of Carrefour stores closed was more than double digits, with 20, 17, 20 and more than 20 stores closed respectively.
Suning Tesco, which spent 4.8 billion yuan to acquire 80% of Carrefour China's shares in September 2019, also confirmed its financial report. According to the data, as of June 30, 2021, the number of Carrefour China stores was 223, with 8 stores closed and 3 new stores opened. In the third quarter of 2021, Carrefour closed 5 more stores and did not open a new store. Public data shows that in the second half of 2021, Carrefour closed 7 hypermarkets, 8 convenience stores and 3 select stores in a row. Counting down, the total number of Carrefour stores has decreased to about 205.
In 2022, Carrefour's store closures continue. From January to March this year, Carrefour closed four stores in Guangzhou Wanguo, Nanchang Qingyunpu store, Chongqing Shapingba store and Beijing Zhongguancun store, which is worth noting that these four stores are all old stores with operating hours of more than ten years.
When the Weekly "Finance and Economics" asked for verification, Carrefour officials also confirmed that the number of Carrefour stores in various formats in China is currently about 200. This means that in just over four years, Carrefour China has closed more than 80 stores, and with the addition of newly opened stores, the total number of Carrefour stores has decreased by nearly 60.
Behind the shrinking number of stores is the sluggish revenue of Carrefour. In fact, Carrefour's revenue in China in the past decade has been declining in most years. According to china's top 100 chain data, Carrefour China's revenue fell for four consecutive years from 2017 to 2020, and the highest decline in 2020 shrank by 12.6%.
In fact, in the first two years of being acquired by Suning Tesco, Carrefour was already at the end of the crossbow. In 2017 and 2018, Carrefour China lost 1.099 billion yuan and 578 million yuan respectively. As of the end of 2018, Carrefour China's total assets were worth 11.5 billion yuan, but its liabilities were as high as 13.8 billion yuan.
In 2019, after being acquired by Suning Tesco, Carrefour China's survival situation has not improved. Suning Tesco's financial report shows that after the acquisition, carrefour China lost a total of 304 million yuan to the end of the year. In 2020, Carrefour China lost 795 million yuan.
Carrefour China's loss-making dilemma is not unrelated to the decline in the effectiveness of its stores, that is to say, the profitability of each store is weakening. According to the financial report data, in the first half of 2021, the ping efficiency of Carrefour's stores in China fell by 18.88% year-on-year, and the revenue per square meter was 13761 yuan. Among them, the tertiary market with the largest decline in revenue per square meter is less than 10,000 yuan, which is 9406 yuan.
Carrefour, once the "godfather of hypermarkets", is no longer the Carrefour that is in the retail market.
The market reaction was too slow
Founded in France, Carrefour carries the genes of the French people who are laid-back and comfortable. But on the Chinese retail battlefield, the rapidly iterative market environment has left the slow-paced French company with serious dissatisfaction.
Ding Liguo, a retail expert who used to work for Carrefour, told Caijing Tianxia that the most critical reason for Carrefour China's decline was that the highest decision-making level was not familiar with China's business, thus losing a lot of market opportunities. In recent years, Carrefour has made few achievements in e-commerce, logistics, digitalization and other aspects.
Carrefour's slow pace is mainly manifested in two aspects, one is slow on e-commerce channels, and the other is slow in self-built supply chains. These two factors are undoubtedly fatal crises for Carrefour, which started with a hypermarket business model.
After 2010, China's e-commerce platform ushered in a high-growth stage, squeezing the market share of traditional hypermarkets represented by Carrefour and Walmart. In 2015, under the impact of e-commerce, China's hypermarket formats showed "negative growth" for the first time.
In the face of the current situation, Carrefour France's top management has made a wrong decision: to suspend the opening of online channels. This decision directly reduced Carrefour's market share and led to a decline in the store's single store revenue. According to statistics, in 2013, Carrefour's single-store revenue can reach 200 million yuan, but then gradually declined, and in 2018, the single-store revenue was only maintained at 140 million yuan, and the market share dropped from the original 5% to 3%.
Carrefour executives in France did not realize the importance of Online Channels in China. Some insiders once lamented that "the online channel opened too late, and the harm to Carrefour was too great." ”
Carrefour, which missed the best time, did not enter the market until 2015 and launched an online store. However, its door-to-door delivery service mainly relies on offline stores, coupled with the limitation of the number of Carrefour stores, it is destined that its radiation range can only be limited to a part of the region.
On the other hand, the independent supply chain that has not been established has also become a weak link in the competition between Carrefour and Yonghui and RT-Mart.
Before the establishment of an independent distribution center, Carrefour's supply method has always been that suppliers directly transport goods to the store, while Yonghui and RT-Mart have chosen to accumulate online supply chains through buyouts and direct procurement, thus "beating down" the price of goods.
Carrefour also chose to set up a distribution center in 2015, and also chose to separate procurement and operations, from 24 urban procurement centers to 6 regional procurement centers, but it was too late.
The same Kind of Yonghui Supermarket established its first distribution center in Fujian in 2004, and Wal-Mart established more than 20 distribution centers in 2014. In terms of time, Carrefour only began to build its own supply chain in 2015, 11 years later than Yonghui Supermarket.
Carrefour, which has accumulated a lot of difficulties, has not been able to seize the wind in the transformation of China's retail market, and has repeatedly fallen into the rumor of "selling itself". Ding Liguo said, "The people in power at the French headquarters are not thinking about how to do a good job in the Chinese market, they have always thought about how to sell themselves and cash out." ”
Carrefour's "selling" rumors first appeared in 2013, when the Wall Street Journal reported that Carrefour's French headquarters was considering selling Carrefour China, but it ended because there was no suitable home.
Then, from 2017 to 2018, there was more and more news about the business of the reseller Lefour China, involving capitals such as Alibaba and Tencent. At the end of 2017, Caijing magazine reported that Alibaba and Carrefour negotiated a plan to acquire all of Carrefour China's shares, but the two sides did not reach an agreement. Alibaba denied this.
Subsequently, at the beginning of 2018, Carrefour announced that it had signed an equity investment letter of intent with Tencent and Yonghui, but when the outside world generally believed that Carrefour was determined to sell Tencent, Carrefour once again denied the relevant rumors.
Carrefour, which has been seeking to sell itself, finally waited for Suning Tesco in 2019. But unexpectedly, this sale made Carrefour's situation more difficult.
(Source: Visual China)
And Suning "pity for the same disease"
After being acquired by Suning Tesco, Carrefour has had a short profit. After Suning Tesco released its 2020 semi-annual report, it said that the first phase of Carrefour's integration was relatively smooth, and the profit achieved by Carrefour in the first half of 2020 reached more than 100 million yuan.
Unexpectedly, this profit did not last, and Carrefour lost 795 million yuan in 2020. Entering 2021, Carrefour's total revenue is still declining. According to the announcement of Suning Tesco, Carrefour China's operating income fell by more than 10% year-on-year, due to the impact of the impact of low-price expansion of community group buying and the recurrence of the epidemic.
Hong Tao, director of the Beijing Institute of Industry and Commerce and Business Economics, told Caijing Tianxia Weekly that after Suning Tesco acquired Carrefour, the advantages of the two in joining forces and complementing resources have not been fully utilized.
Ding Liguo said: "The current Suning Carrefour actually only has the name of Carrefour, not only does it lose the reality of Carrefour, but also loses the soul of Carrefour." ”
He explained that Suning Tesco's acquisition of Carrefour is mainly to open up online and offline channels, and to open up the traffic between Suning Tesco and Carrefour offline stores, which is a bit modeled on the practice of Tmall supermarket and Hema. However, the final effect is not ideal, on the one hand, offline stores are heavy assets, cash flow pressure is actually very large; on the other hand, since 2019, online e-commerce dividends have begun to decline, e-commerce in terms of customer acquisition has no previous advantages.
The road of 1+1>2 has not yet gone to the liso, but the "golden father" Suning Tesco has a big problem.
Since 2012, Suning has been adopting an aggressive M&A strategy, in order to expand its commercial territory, Suning Tesco has successively acquired Red Child, Juli Video, Daily Express, Dia Tiantian, Wanda Department Store, etc. However, these mergers and acquisitions not only did not play a helping role, but also hollowed out the home base of Suning Tesco, plus the funds invested in Evergrande were adrift, and in the second half of 2020, the debt-laden Suning Tesco completely moved towards the situation of a broken capital chain.
In desperation, Suning Chairman Zhang Jindong had to choose to transfer his shares. At the beginning of last year, Zhang Jindong, who was running in many directions, finally found funds for Suning Tesco, introduced Jiangsu state-owned assets into the market, and exchanged 16.96% of the shares for 8.83 billion yuan in cash. Since then, Zhang Jindong stepped down from the position of CEO of Suning Tesco, and Suning Tesco has become a company without an actual controller.
The dilemma of Suning Tesco has not been solved so far. According to the performance forecast released by Suning Tesco, Suning Tesco made a huge loss of 42.3 billion to 43.3 billion yuan in 2021, compared with a loss of 4.275 billion yuan in the same period last year, and the loss margin expanded by nearly ten times.
In this context, the rumors of Carrefour selling itself again have once again been exposed. According to Bloomberg, Suning Tesco is considering selling a controlling stake in Carrefour China, saying that Suning Tesco wants to get $7.8 billion through the transaction, slightly lower than the price at which it bought a stake in Carrefour that year.
Ding Liguo believes that the probability of Suning Tesco selling Carrefour is very high, and it may lose money to sell. Because there are fewer companies that can take over Carrefour, and hypermarkets are already sunset industries, the international and domestic environment is very unfriendly to offline business.
Hong Tao is more optimistic, he believes that although Suning Tesco and Carrefour are now facing development bottlenecks, but the advantages of the two are still obvious, but also irreplaceable, if in the future can accelerate digital transformation, fight the overall war, or can give full play to the advantages of new formats.
Carrefour stressed that in the track of consumption upgrading and positive transformation and upgrading of the retail industry, Carrefour will focus on expanding the four major formats of membership stores, home business, retail cloud and easy cloud in the future. In 2022, Carrefour focuses on users, returns all operations to the core main line of "user-centric", adheres to precise member marketing, refined store operations, and firmly transforms into quality supply chain, quality store experience, and quality fulfillment services.
In February 2021, the survey report released by Winshang Network showed that only 2 of the 13 supermarket listed companies in China achieved net profit and revenue growth, and 11 net profits fell, and this decline in the second half of the year could not be reversed, and the annual performance was not optimistic. The number of these 13 supermarket companies closed more than 100 stores throughout the year.
Carrefour's peers are facing the same business situation and have been exploring new development paths for many years, but so far they have not found a good solution.
It's hard to say where Carrefour will go next, but the future must be facing a painful situation, after all, the era of hypermarkets has passed.
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