"Explosion reform" type of help, Fat Donglai to rectify the supermarket like this?

Chief Business Review

2024-06-30 14:09Chief Business Review official account

Source: Lianshang.com

Fat Donglai's supermarket is queuing up again, this time not because there are Internet celebrity mooncakes, but because of queuing for refunds.

On June 27, Fat Donglai's official account released a message in response to customer complaints about the hygiene problems in the noodles of Fat Donglai Xinxiang restaurants. Fat Donglai officially announced that for the customer who helped him discover a major food safety hazard, he would give the customer a cash reward of 100,000 yuan, and give a refund of 1,000 yuan per dough for the 8,833 pieces of dough sold in the past ten days, with a total compensation of 8.833 million yuan.

Source: Official Account @ Supermarket Design Planning

"The ceiling of the service industry" and "Haidilao in the retail industry", Fat Donglai, a regional supermarket in Henan, has quickly gone out of the retail field in the past year with its people-oriented service concept. In the "2023 China Chain TOP100", Fat Donglai was on the list for the first time, ranking 46th with sales of 10.7 billion yuan. 13 stores (11 in Xuchang and 2 in Xinxiang).

The Fat Donglai model has also begun to become the object of learning for many traditional supermarkets that are in business difficulties. Since April this year, Fat Donglai has successively exported its business model to BBK Supermarket in Changsha and Yonghui Supermarket in Zhengzhou in the name of help.

At the same time as Fat Donglai exploded on the Internet, some media pointed out that in 2023, Fat Donglai's annual revenue will exceed 10 billion, but the profit will be less than 500 million, far lower than the 10% profit margin of the ordinary retail industry. In addition, the stores have always been wandering in third-tier cities, which has also questioned the ability of Fat Donglai's chain expansion.

has "exploded" two supermarkets in a row, can Fat Donglai's model really be replicated? The profit is too low to enter the first-tier cities, is Fat Donglai really just a supermarket model exclusive to "small town youth"?

Yonghui, which was transformed by the younger brother, has increased its sales by 13 times

On June 19, after 19 days of renovation by the Fat Donglai team, the Yonghui Supermarket Zhengzhou Xinwan Plaza store was officially opened to the public. Fat Donglai, who came from a third-tier county, took the transformation of a large supermarket chain with nearly 1,000 stores, which is itself topical.

What is the effect of the lonely industry giants finding the industry brother to transform? According to media reports, Xinwan Plaza began to restrict traffic 20 minutes after it opened. The sales volume on the day reached 1.88 million, which was 13.9 times that before the adjustment.

Source: Yonghui Supermarket official website

Fat Donglai's transformation directly made Yonghui's stock price rise and fall on the same day, what did Yonghui change by Fat Donglai? To put it simply, it is to change Yonghui to the appearance of Fat Donglai.

First of all, the product structure was optimized, the original products were removed from the shelves, and many Fat Donglai's self-operated Internet celebrity products were put on the shelves. It is said that the number of new products accounted for 80%.

The second is the adjustment of the layout of the supermarket, expanding the baking area and cooked food area where Fat Donglai has advantages, and also adding a special tobacco and alcohol gift area and a customer rest area.

There is also the happiness of employees praised by netizens, it is said that the store employees who have been transformed by Fat Donglai have achieved a salary increase for all employees, and the salary of grassroots employees has increased from 2500 yuan to 4500 yuan per month, and the business hours have been shortened by three hours, and the annual leave time has been increased. Such a welfare policy is also in line with the concept that Fat Donglai has always advocated that employee happiness can better serve customers.

Source: BBK Group's official website

As of the end of June, there are only 3 BBK and Yonghui supermarkets that have been transformed by Fat Donglai. However, it is not the first time for Fat Donglai to export the model, the founder of Fat Donglai Yu Donglai has initiated the establishment of the "Lianshang Donglai Business Research Institute", and has now joined 12 regional retail enterprises such as Jiabaile in Shangrao, Jiangxi Province and a pro-supermarket in Qinghai, and they have successively accepted the guidance and assistance of Fat Donglai.

If you lose money to help, you can go out without expansion

Fat Donglai's mode output is not large, but the movement is not small. There are also doubts from the outside world. First of all, some people questioned that Fat Donglai's so-called help was actually expanding the supply chain of its own brand, and the price of many self-operated goods was even higher than that of Fat Donglai's stores in Henan. Some industry insiders also said that for Fat Laidong, the adjustment and reform is actually to promote the multi-channel expansion of its own brand.

Source: Xuchang moment

In this regard, the founder Yu Donglai immediately denied these statements. Yu Dong said that he has no idea of expanding the scale, in this adjustment and reform activity, the fat Donglai products that entered other supermarkets were all able to enter the cooperative supermarkets after bidding with other suppliers, and the supply price was basically the same as the original. The extra part is just logistics costs, and many products are still being supplied at a loss. In addition, Yu Donglai also said that at present, Fat Dong's branded goods are in serious short supply, but they still take out part of their production capacity to support the transformation of stores.

Fat Donglai has repeatedly emphasized that the cooperation between them and BBK and Yonghui should be called "help", not expansion. Yu Donglai said that the adjustment of Yonghui did not charge any fees, nor did it involve any returns. The salary, transportation, accommodation, etc. of the help team also need to be borne by Fat Donglai.

Losing money to help, in fact, is quite in line with Fat Donglai's consistent setting. But there are some different interpretations in the industry. Some media believe that Fat Donglai's unilateral "help" to his peers is more like a commercial act. As a regional supermarket rooted in Xuchang, the expansion of Fat Donglai may be different from the model of other supermarket chains, through the "help" to export its own brand goods, with the Fat Donglai model and Fat Donglai products have become a "fixed match", which may be a good way to go out.

During the Qingming holiday in April this year, many Fat Donglai in Xuchang were crowded with Internet celebrity anchors, purchasing agents and tourists, resulting in a decline in the experience of the supermarket. At that time, some retailers analyzed why Fat Donglai did not open stores in first- and second-tier cities, and the main problem was the limited volume control ability.

Source: China Consumer Daily Wang Xiaoyue/photo

Today's Fat Donglai has made its own products into an independent brand through the "help" model, and has completed the task of expanding in other places to a certain extent. For supermarket chains, private label goods not only mean exclusive suppliers and supply chains, but also cost and price advantages, and generally speaking, the profit margin of this product is usually higher. In terms of the idea of Fat Donglai to expand its own products, it is not only to be a retailer and make money on the supply side and brand premium, but also to hope that more supermarkets will come to Fat Donglai to purchase goods and be a brand owner.

Fat Donglai mode is just "copyed"?

The success of the "explosive reform" Yonghui has made many traditional supermarkets seem to see the object of "copying homework". However, some experts pointed out that the high salaries of Fat Donglai's employees and the commodity supply chain are not applicable to supermarkets across the country. For example, Fat Donglai's unique profit sharing and employee incentive model is not suitable for every enterprise. In 1999, Fat Donglai once gave 10 million of the 17 million profits to employees as rewards. If this model is replicated, once the number of stores and employees expands rapidly, it will require a lot of capital, which is obviously difficult for most companies to implement.

Yu Donglai inspected the store Source: Red Net

Many people in the industry pointed out that the development of Fat Donglai has its special situation, first of all, the number of its stores is only more than ten, the scale is not large, most of the stores are also concentrated in Xuchang, the regional advantages of retail are obvious, and it is not something that other regions can copy. In addition, the model of managing 10 stores is not suitable for retail chains with 100 or 1,000 stores.

In addition, Fat Donglai's self-operated products are still an exclusive supply chain system, Fat Donglai rises in China's major grain-producing province Henan, and has many special advantages in the food industry. Honey Snow Bingcheng, pot ring are from Henan out of the enterprise, and these large food behind the exclusive supply chain system, for Fat Donglai, regional production may also be able to meet the daily needs of the store, once the cross-regional goods need to rely on a series of resources such as cold chain and warehousing, these may not be Fat Donglai such a size of enterprises can solve and coordinate.

There is also the problem of store positioning. Judging from Fat Donglai's adjustment and modification of BBK and Yonghui, it is basically a boutique supermarket route. However, the distribution of large supermarket chain stores is wider, and the consumption power of stores in different regions is still different, and Fat Donglai's exquisite and people-friendly model cannot be "universal".

In fact, Yu Donglai also had the idea of expansion. In 2012, the Fat Donglai supermarket chain once increased to more than 30. At that time, the retail sales of Fat Donglai once accounted for more than 60% of the total retail sales of Xuchang. However, just a year later, Fat Donglai successively closed 14 supermarkets, involving thousands of employees. It can be seen that the model of Fat Donglai is not static.

Source: Official Account @ Supermarket Design Planning

In any case, in today's increasingly difficult chain supermarkets to do, Fat Donglai still has a lot worth learning, at least its business philosophy of people-oriented, continuous innovation is worth learning from many chain supermarkets at present.

In the face of the popularity of the Fat Donglai model, many traditional supermarkets have also started self-help reforms. Leading supermarkets such as Walmart have promoted the repositioning and brand upgrading of their stores. Compared with the "large and complete" positioning of traditional supermarkets, many brands have begun to choose certain consumer groups to intensively cultivate, such as Walmart's "Huiyi" sub-brand for urban middle-class families. Some supermarkets represented by Wumart have learned from Sam's and Costco to engage in a membership system. In addition, Fat Donglai's employee benefits have also driven the healthy competition in the same industry, Yongchao Supermarket officially launched employee internal shopping benefits on June 6, and each employee can enjoy a monthly consumption discount of 1,000 yuan.

According to the plan, starting in July, Fat Donglai's "explosive reform" plan will continue to be carried out in Yonghui Supermarket in Xinxiang, Henan. It remains to be seen how the Fat Donglai model will be replicated.

Times are changing, and so are consumer demands for supermarkets. Traditional supermarkets can only leave a place in the market by constantly seeking change.

Resources:

1. Seven questions about Fat Donglai's "explosion reform" Yonghui, can it really save traditional supermarkets? Upstream News

2, Hunan Companion丨Fat Donglai's "explosive reform" backgammon, what enlightenment does it bring? Wah Seng Online

3. "Resolutely resist Fat Donglai, unless it is opened at my doorstep!" "Naughty e-commerce

- END -

View original image 82K

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Personal opinion, for reference only