Image source@Visual China
Text|Zinc Scale, Author|Xing Wan, Editor|Gao Zhi
By the end of the year, the survival dynamics of major supermarkets have been constantly updated, and the Jiading store of Sam's Club, a celebrity in the membership-based supermarket, has opened, and many new stores are being prepared in the future. However, Biyide, which was the first to enter the hard discount supermarket, failed to spend Christmas Eve safely, and is about to withdraw from the Chinese market before the arrival of 2024.
In addition, there is also Hema that has been making new moves for nearly half a year, and after not moving the "mountain", it seems that it has decided to let go of its obsession with the membership system. Just recently, some netizens said that they could not open or renew their membership. In this regard, the official customer service of Hema Xiansheng responded: "Due to business adjustments, we do not support the opening or renewal of Hema members for the time being. Previously opened membership benefits that have not expired can be used normally, and expired diamond or gold membership cannot be renewed temporarily. ”
This is another big move by Hema after the suspension of the listing plan. It has been just three years since Hema opened its first X membership store in Shanghai in 2020, and the membership model was once the focus of Freshippo's development. Hou Yi, CEO of Freshippo, also publicly said, "Hema Warehouse X Membership Store is the first project in China to benchmark Costco and Sam's Club. "It is enough to see that the membership system has been a long-term and important plan in the planning of Freshippo.
However, after the launch of the discount reform, the membership system was the first to go offline. Perhaps this is a major move by Hema to lower the consumption threshold, and the target has changed from Sam's to a discount store?
Paid memberships, first to be abandoned
When launching the X membership store plan, Hou Yi once confidently talked about the absolute advantage of Hema in personalized products, "Most of the special R&D products of the Hema warehouse membership system X membership store can perfectly compete with COSTCO. ”
The cost of Hema X membership store is 258 yuan/year or 658 yuan/year membership fee, and you can enjoy a discount of 8.8%. Compared with Sam's membership fee of 269 yuan/year and 680 yuan/year, and Costco's membership fee of 299 yuan/year, Freshippo's membership fee is actually not an advantage. However, in three years, Hema still gained nearly 3 million paying users.
Why was such a model, which had internal expectations and achieved good results in a short period of time, be canceled? This is a part of the Hema discount reform that must be abandoned.
This summer, Hema openly fought Sam with the "moving mountain price", trying to snatch Sam's members. But among them, the old members of Hema became the first victims. Some Hema members complained that the offline exclusive price and membership discounts could not be superimposed, and those who recharged the annual fee would choose to pay for additional benefits, but now the offline discount price makes the price of paid members the same as that of ordinary members, and paid members have become a big injustice.
At that time, in order to calm the anger of members, Hema responded: "The reason why there are different prices online and offline is mainly to guide customers to Hema stores to consume, and now it is only in trial operation, if there are too many similar complaints from customers, there may be changes later." ”
But judging from the final outcome, Hema chose to continue to go down with discounts, and the accumulated paid members can only be gradually forgotten.
At the 2022 Hema New Retail Supply Conference, Hou Yi, CEO of Freshippo, said, "Commodity power is the only core competitiveness of today's retail industry." A year later, Hou Yi believed that building price competitiveness was the core goal of Freshippo, so he had a drastic discount reform.
Hema has also carried out reforms from the store side and back end, not only reducing the price of more than 5,000 products by 20%, but also cutting the number of SKUs in standard stores from 8,000 to 5,000. In addition, the Hema commodity procurement department was adjusted into two departments: the finished product department and the fresh product department, and the procurement right was separated from the management right, and changing the traditional procurement model has become an important part of the Hema reform.
All kinds of measures only show one thing, that is, the road of discounting, Hema intends to continue to walk firmly, whether it is a member or a partner, all factors that will affect the acceleration of discounting, will be repositioned.
As for the longer-term goal, in fact, it is still for listing, and some professionals have analyzed that one of the important reasons why Hema binds Sam is to give the capital market a reference target before listing, so as to obtain a higher valuation. After all, due to various factors such as the economic environment and policy adjustments, consumer stock sentiment has weakened, and the valuation of Hema has shrunk sharply from $10 billion to $6 billion.
Hema is still waiting for a good opportunity to go public.
Step into the deep waters of transformation
Although the consumption attitude of the whole society has changed, the public's pursuit of quality life has not diminished, but has only increased rational thinking.
According to the 2023 Global Consumer Insights Survey released by PwC, 51% of Chinese consumers are spending less on discretionary items, and for essential items, people are choosing the lower price path to buy. In other words, products and channels with higher cost performance will be more and more popular with consumers.
After realizing this trend, Hema once responded, "Hema is not a discount store model, not selling cheap goods, but selling good goods and top goods at a low price."
I can't find fault with this idea, but why does Hema always give people a feeling of "four dislikes"? The exploration of various business formats, the adjustment of the supply chain, and the reform of management...... Hema is always on the road to change, but if you look closely, Hema has never had a clear positioning in similar competing products, and no matter from which entry point it is, it seems that Hema cannot be irreplaceable.
Even in the past exploration of the membership model and the construction of its own products, we can only see the posture of an imitator, but we cannot see more eye-catching features. Coupled with the changing strategies and the "backstabbing" of members, word of mouth has gradually declined.
Nowadays, Hema has implemented the discount reform more thoroughly, and it seems that it is using the advantage of "good quality and low price" to compete with "Sam's" for the middle class, but in fact, it has also fallen into a larger competitive queue, such as discount stores that go deep into the community consumption scene, and reduce the unit price of big-name products in the form of small or large packaging, which is also a model to improve cost performance.
In addition to the survival dilemma of being ambushed on all sides, the quality problems that Hema often talks about also need to be further improved, just recently, Chengdu Hema Xiansheng Network Technology Co., Ltd. Wuhou Xincheng Branch was fined 70,000 yuan by the Wuhou District Market Supervision and Administration Bureau for selling "longan" that does not meet the national food safety standards, and confiscated illegal income.
If it is difficult to show outstanding strength in mode, service and quality, then it is difficult to find the threshold of success in this reform of Freshippo. After all, Hema's competitors are constantly accelerating and upgrading, and Sam's and Costco are accelerating their store expansion. Yonghui Supermarket, a traditional supermarket, also said that it will add "authentic discount stores" in stores nationwide, and simultaneously add discount areas in online apps and mini programs to provide surprise discount prices for food and supplies.
Low price and high quality have become the "new ticket" in this business war, and the giants have collectively entered the game, and the challenge of Hema has just begun.