Click to read the original article for details. Source: DT Finance (ID: DTcaijing) Carrefour, which has been around for 60 years, is now "completely cold." On June 23, Carrefour, mired in store closures and negative growth, sold 80% of its China business to Suning.com for 4.8 billion yuan and officially exited China. As the pioneer of the hypermarket format, Carrefour had tried to change its fate. On November 1, 2016, Carrefour converted its Shanghai Xietu Road store into a 24-hour operation to cater to "night owls"; on January 18, 2017, Carrefour followed the "small and beautiful" trend and opened a "slimmed-down" store... None of these efforts reversed Carrefour's decline. In just a few years, the survival mode for hypermarkets quickly shifted from Normal to Very Hard. But when you can only see creative displays by supermarket aunties in funny Weibo posts; when office conversations no longer revolve around supermarket sales but instead about convenience store points promotions like "spend 25 get 10 off"; when domestic variety stores capture your vanity with cost-effective products—you know why the Carrefours of the world can't survive. (Image caption: Nowadays, supermarkets seem to only attract attention through mannequin art. Image source: Internet) The Retreat of Hypermarkets Win or die, Carrefour is not the only player in the survival game; its old rival Walmart is also deeply entrenched. In 2013, Walmart, which held the top spot among retailers in China, began closing stores intensively. At that time, Walmart closed 14 stores nationwide at once. This can be recorded as the first defeat for big supermarkets. What followed was a cliff-like drop in sales growth for national chain hypermarkets. According to statistics, from 2016 to 2018, Walmart closed 13, 24, and 21 stores in China respectively. But closing stores did not change the fact that profit margins were slowing—because while Walmart was closing stores, it was also constantly opening new ones. New revenue couldn't offset the downward trend, so Walmart slowed down its pace of opening new stores. In 2018, Walmart opened 21 new stores, down from 27 the previous year, and at one point the number of closures equaled the number of openings. Walmart hoped this would slow its decline and even return to growth. But Walmart failed again. Unable to open new stores and constantly closing old ones, while once-glorious foreign hypermarkets struggle on the brink of life and death, local Chinese hypermarkets are also having a tough time. According to "Win Business Network" statistics, in 2018, 11 retail companies including Yonghui, China Resources Vanguard, and RT-Mart opened a total of 307 stores across hypermarkets and premium supermarkets, a year-on-year increase of only 4.78%. Compared to the 26.84% growth in 2017, the pace of new store openings by local supermarkets slowed significantly. After experiencing negative growth for the first time in 2014, large supermarkets tried to turn things around but were still helpless against the overall industry decline. In 2017, sales growth for large supermarkets turned negative again. The Walmarts had hoped to stop losses and adjust their decline by closing stores, but they never expected that the heyday of big supermarkets would never return. **Who Killed the Big Supermarkets? Small and Beautiful Ones Are Quietly Breaking Through From the bustling first decade of the new century to the current sparsely populated state, the era of hypermarkets has passed. But people still need to shop; it's just that hypermarkets are no longer the first choice for consumers. In addition to the all-encompassing online shopping that greatly satisfies people, various small formats are also attracting consumers offline to vote with their feet. Take Carrefour as an example: all its main product categories have mature substitutes online or offline. For instance, when consumers are captured by "small and beautiful" new ten-yuan stores like Miniso and NOME, these brands naturally also impact the home goods shelves of hypermarkets. In other words, the dozen or so rows of categorized shelves in a big supermarket—each shelf now has an independent retail store competing with it. More typical examples come from the endless fresh food stores and convenience stores scattered throughout streets and alleys. The former beats the fresh food refrigerated counters of big supermarkets, while the latter condenses the core shelves of large supermarkets, allowing you to get what you need at any time without a reason to travel to a distant hypermarket. Take the convenience stores and fresh food stores that are developing rapidly in cities as an example. Positioned in Shanghai, a major commercial and consumption hub, have their reach already surpassed that of hypermarkets? Yes, without a doubt. Convenience stores have spread into every corner of the city with an unstoppable force. High-traffic business districts and large concentrated residential areas have become battlegrounds for convenience store chains—within one kilometer, you can see several stores of different chains. In such areas, hypermarkets have no place to set foot. We also counted the store distribution of Hema Fresh. Although their numbers are not large, most are tightly clustered in high-traffic business districts within the outer ring road. Looking beyond the outer ring, in the suburbs where big supermarkets traditionally have advantages, the situation is not optimistic either. Fresh food stores have begun to expand their territory here, and convenience stores remain dense. In some remote suburban hypermarkets, there are even cases where dozens of convenience stores are competing for their market share. Simply comparing numbers and locations might seem unfair to big supermarkets, so let's look at the actual service area. We approximate the service range of convenience stores as a circular area with a 500-meter radius, and the service range of fresh food stores like Hema and big supermarkets as a circular area with a 3-kilometer radius. After deduplication, we calculated the service areas of the three. Even without counting the delivery services of convenience stores, we found that the service area of convenience stores across Shanghai already covers more than half of the city and exceeds 10% of the service area of big supermarkets. Although the service area of Hema Fresh is not large, more than 96% of its service area overlaps with that of large supermarkets. After deduplication, we found that the overlapping area between convenience stores and fresh food stores like Hema and large supermarkets is as high as 1,896 square kilometers. This shows that at least 64% of the service area of big supermarkets is being eroded by convenience stores and fresh food stores. As convenience stores and various small formats continue to multiply, in this battle for foot traffic, big supermarkets are clearly on the losing side. Why Are Foreign Hypermarkets So Out of Touch? DT Jun still vaguely remembers that going to the supermarket used to be a great pleasure for a family of three after dinner or even on weekends. Especially in foreign hypermarkets like Carrefour and Walmart, the seemingly endless shopping space, the dazzling array of product shelves, and the ability to push a shopping cart and pick freely—this shopping experience opened the eyes of Chinese people who were not yet materially affluent. The rise of convenience stores today is for the same reason. Although convenience stores are small, their stylish products can hit you directly, without having to search through a pile of shelves. Under the fast pace of life and the wave of consumption upgrading, you naturally won't choose big supermarkets anymore. In this wave of consumption upgrading, "small and beautiful" has become increasingly popular. Looking at the store formats opened by supermarket companies in the past two years, both local and foreign brands are continuously reducing the expansion of hypermarket formats. In particular, local supermarkets are constantly experimenting with various small formats beyond hypermarkets, such as premium supermarkets and fresh food supermarkets. For example, China Resources Vanguard's Olé and Yonghui's Super Species premium supermarkets are blooming everywhere. Compared to the aggressive advancement of local supermarkets, foreign hypermarket brands seem unable to lay out their strategies. The once-glorious foreign supermarkets have not only become increasingly invisible in the eyes of consumers in recent years, but in terms of market share, foreign retailers have also been left behind by local brands. From 2016 to 2018, Gaoxin Retail and China Resources Vanguard consistently held the top two positions in market share for three consecutive years. Walmart fell from the former retail leader to third place, while Carrefour's fourth place was overtaken in 2017 by Yonghui, which had been focusing on high-end premium supermarkets. In the years when e-commerce retail was aggressively advancing, facing business stolen by online shopping, local supermarkets, which had been suppressed by giants, maximized their advantages. Whether it was more actively allying with new Internet retail or actively developing segmented formats, they all embarked on a path of self-rescue tailored to local conditions. However, the foreign giants that had been in the hypermarket business for decades found it difficult to complete reforms in time. The most typical example is Carrefour, which, despite the overall decline of hypermarkets in 2016, stubbornly chose to open 85 new hypermarkets, leading to a further decline in profits. However, for supermarket brands still active in the market, the newly developed business is not all bright. A few days ago, Yonghui's Super Species, a premium supermarket under the banner of fresh food, closed its first store in Shanghai, facing a more severe profitability test. All of this shows that people's tendency to embrace the new and discard the old is accelerating, and their demands for fresh shopping experiences are also increasing. Faced with an endless stream of new check-in spots, do you still miss the days of lingering in hypermarkets?