Retail is a very special industry, where companies face vastly different markets and consumers. While the business processes and operational management of chain enterprises can be standardized, the core business of retail enterprises is difficult to standardize. It is necessary to make practical and effective adjustments based on the highly differentiated markets and consumers. The greatest competitive advantage of an enterprise lies in flexibility and speed, which is also the biggest advantage that regional chain enterprises have over large chain enterprises. As the saying goes, 'flexibility and speed are the passport for small businesses; scale and standardization are the epitaph for large ones.'
Analyzing regional chain enterprises, they have the following advantages:
- Accurate grasp of regional markets From a certain perspective, the market for retail enterprises is very small—just one kilometer, three hundred meters, one hundred meters. Whoever can grasp the consumption characteristics of this range will win the market. Regional chain enterprises are generally 'locally born and bred,' everyone is a 'fellow townsman,' 'born here, growing up here,' with extensive and deep understanding of the local market. They have an innate familiarity with consumer habits and characteristics. This familiarity and understanding form the basis for accurate market control, good interaction with consumers, and consumer favor. Whether it's the winter cabbage storage of Supermarket Fa or the specialty tobacco, alcohol, and gift counters of Pangdonglai, these are all unique business features formed on the basis of accurate grasp of the local market.
- First-mover market advantage In the current environment where retail market differentiation is weakening, being first-mover becomes an important advantage. The current retail market, from products to retail formats to operational methods, tends to be similar. In such a competitive environment, whoever gains consumer recognition first takes the lead. Most regional chain enterprises have developed through years of painstaking effort, accumulating step by step, from slow store openings to concentrated expansion. Their brands have high visibility and reputation locally, forming high consumer trust and dependence. They have also integrated various local market resources. On this basis, the first-mover advantage is obvious. In this case, when new competition arises in the market, they are already one step ahead and have the advantage to cope with competition. From visits to multiple markets, under the current retail environment, this is basically the case, as the old saying goes, 'A fierce tiger cannot fight a local snake.'
- Regional scale advantage becomes core market advantage 'Economies of scale' and 'only with scale advantage can there be price advantage' have misled the retail industry for years. In fact, the real scale advantage is 'regional scale advantage,' that is, the scale advantage you demonstrate in a regional market. Walmart and Carrefour have huge global scale, but after entering China, they did not show obvious price advantages from global scale, including in global brands like P&G and Unilever. Analysis of the current FMCG distribution system shows that the main determinant of market prices is not the manufacturer but the distributor. That is, the real pricing power lies with the distributors. Regional distributors, who have cooperated with regional chain enterprises for many years, have formed intricate connections and have become more of a community of interests in business, fully supporting the competitive needs of regional chain enterprises. This is because it concerns their own survival. Even within manufacturers, under the current business team assessment and management mechanism, the manufacturer's sales personnel also attach great importance to cooperation with regional chain enterprises in their own business development, sometimes even resisting external competitors. Therefore, the regional scale advantage already formed by regional chain enterprises becomes a very important competitive advantage.
- Flexible operating mechanism Most regional chain enterprises have gradually developed from small businesses, without the constraints of so-called 'processes, standards, and systems,' nor many 'rules and regulations,' making their operating mechanisms very flexible. The boss is both owner, operator, and controller, mastering the market, familiar with relationships, controlling everything, and personally directing operations. Store adjustments, product adjustments, supplier adjustments, promotion organization, and all other issues are decided quickly and efficiently. This exactly meets the needs of market competition and contrasts sharply with the 'process-driven, multi-level approval, bureaucratic' approach of large chain enterprises. Generally, a large chain enterprise's promotion organization takes 1-2 months, passing through marketing planning, purchasing, product departments, operations departments, and stores, with multiple iterations, resulting in very low efficiency. This seriously deviates from the needs of market changes.
- Efficient enterprise management Currently, many regional chain enterprises have effectively solved the most critical factor affecting retail enterprise management—people. This makes enterprise management efficient, high-quality, and low-cost. Enterprise management is the guarantee for retail enterprises. The highest state of enterprise management is effectiveness. This is in stark contrast to some large chain enterprises and foreign enterprises that one-sidedly pursue 'institutionalization, process orientation, and standardization,' seriously losing people's hearts, leading to corruption, coasting, and inefficiency. Currently, many regional chain retail enterprises adopt effective methods such as shareholding systems, partnership systems, and store shareholding systems, effectively solving the problem of benefit distribution in enterprise management and greatly motivating employees. Many enterprises, under a management mechanism of full trust and delegation, allow employees in key positions such as purchasing and store managers to fully exercise their operational autonomy and proactively and flexibly manage operations. In contrast, some foreign enterprises like Walmart and Jusco, despite seemingly complete management systems and strict assessment systems, have store managers and other core management positions working under strict 'rules and regulations,' ultimately leading to inefficient enterprise management.
Regional chain enterprises also have some problems:*
- Capital risk and social risk As analyzed above, many regional chain enterprises have grown from small to large, accumulating step by step. From a certain perspective, their capital resilience is relatively low; some enterprises have too close a relationship with the government, which also poses risks.
- Governance structure risk Everything has two sides. Most regional chain enterprises are built by the boss's hard work, with obvious 'strongman management and capable person effect.' The boss needs to maintain a clear mind, high morale, and the ability to continuously absorb new knowledge.
- Sustainable development capability To maintain healthy and sustainable development, continuous innovation capability, continuous enterprise reform capability, and a continuous talent team are crucial. These aspects are major challenges for regional chain enterprises.
- Inappropriate high imitation Currently, some regional enterprises have fallen into a misunderstanding in development—highly imitating other enterprises. It is necessary to actively learn from the good aspects of foreign enterprises and other enterprises. But imitating blindly is very dangerous. Enterprises must not forget their original entrepreneurial intentions, must not lose their own characteristics, and should boldly innovate while learning and referencing. It is gratifying to see retail innovations like Hema Fresh and Fresh Legend constantly emerging before industry professionals.
Author: Bao Yuezhong, WeChat: bc111246** -END- ★ Click the blue text below to view this month's popular articles ★ Click the blue text below to view this month's original articles FMCG industry's most professional and practical knowledge base 【 Reply with yellow numbers in the backend to view the following keywords 】 | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales volume improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation |