Click the image for details. Store closures may signify a sorrowful exit or a strategic retreat to save oneself. Whether a painful lesson or a strategic move, they indicate that times have changed and a major reshuffle is underway. As Vice Minister of Commerce Wang Bingnan stated, e-commerce is not the main reason for physical store closures, so don't blame Jack Ma—blame yourself, and you must save yourself. Half of 2017 has passed, and here is a review of the store closures among major supermarkets and department stores so far. 1 Walmart A Fortune 500 giant, but China's king of store closures On June 8, 2017, the 2017 Fortune 500 list was released, with Walmart ranking first with annual revenue of $485.873 billion (approximately 3.32 trillion RMB), marking its fifth consecutive year at the top. Not only on the Fortune 500, but Walmart has also held the top spot on the Fortune Global 500 for three consecutive years. In the United States, there was once a famous theory about Walmart: the "5-kilometer death circle," meaning that within a 5-kilometer radius of a Walmart store, other retail outlets had no room to survive. But this "myth" is being shattered. On June 28, Walmart's Shenyang Pengli store posted a notice stating it would cease operations on July 5, 2017. It is reported that the store had been operating for nearly 17 years since its official opening on September 20, 2001. According to incomplete statistics, Walmart closed or confirmed the closure of a total of 17 stores in the first half of 2017, the highest in six years. Half a year has passed, and time is running out for Walmart, and also for traditional Chinese hypermarkets. 2 RT-Mart The golden body has been broken; the future is hard to predict In recent years, to counter the impact of e-commerce, RT-Mart has made a series of transformation attempts: in 2013, it established the B2C e-commerce website Feiniu.com, trying to combine online and offline. At the same time, RT-Mart will also open a fresh food O2O concept store this year—Feiniu Youxian—focusing on fresh products, supplemented by daily necessities and catering services, with delivery speed (1-2 hours) as a highlight. However, despite this, RT-Mart's Shanghai Hong Kong and Macau store still closed. The store, located at 1390 Shuiqing Road, Minhang District, Shanghai, opened in 2006 and was RT-Mart's eighth store in Shanghai. This closure is the second store closure in the mainland market, following the closure of the Weifang, Shandong RT-Mart store last October. However, RT-Mart's development department general manager Hong Wankang spoke about store closures shortly after the Weifang closure. He believes that store closures in the retail industry will become normal, and RT-Mart has always been cautious in site selection. The maximum lease term is 20 years; when the lease expires, rent may increase, and if RT-Mart cannot accept it, it will choose to leave. So, closing stores is a very normal thing. 3 Xinyijia A reluctant negative example Xinyijia was once one of the three giants of Guangdong supermarkets, along with Renrenle and China Resources, with annual sales of 18 billion RMB and over 100 stores, ranking 14th in China's chain stores. Now, a bankruptcy liquidation announcement has officially ended its 22-year history. According to the China Chain Store & Franchise Association's annual top 100 chain statistics, from 2005 to 2012, Xinyijia's sales scale gradually rose from 11 billion RMB to 18 billion RMB, and its stores expanded from 79 to 116, with its highest ranking at 14th. However, in fact, as early as around 2008, Xinyijia began to see a wave of store closures, and some suppliers reported that 80% of Xinyijia's stores were not profitable. By 2017, Xinyijia's national store count had sharply decreased from 42 last year to 18, and it was renamed "Yuegouhui." A bankruptcy liquidation announcement from the Changsha Intermediate People's Court marked the end of this giant's downfall. The fall of a giant cannot be denied as partly due to the impact of e-commerce, but in the case of Xinyijia's death, internal factors far outweighed external ones. Xinyijia's rapid expansion masked hidden dangers in its corporate management. After the economic slowdown in 2015, Xinyijia's performance suddenly declined, and problems such as broken capital chains, strategic mistakes, and chaotic management burst the beautiful bubble. 4 Lotte Mart Forced self-destruction; it really can't blame others Yonhap News Agency reported on April 20, citing Lotte Mart in South Korea, that among the 99 Lotte Mart stores in China, a total of 74 were ordered to close, another 13 closed voluntarily, and the remaining 12 stores, although operating normally, had almost no customers. As a result, Lotte Mart's operating losses in China have reached 200 billion Korean won (approximately 1.2 billion RMB). An industry insider in East China once revealed to the media that due to poor management and insufficient localization, the annual revenue of Lotte Mart's more than 70 stores in East China was only about 2 billion RMB, with an average sales per store of only 30 million RMB, a significant gap compared to Yonghui, Walmart, and RT-Mart, which have sales of hundreds of millions per store. 5 Lotus Disappointed at its failure to thrive When it comes to the entry of large supermarkets into China, Lotus can be traced back to 1997. On June 23, 1997, the first Lotus hypermarket, originally called "Easy Carrefour" (renamed Lotus in 2007), opened on Yanggao South Road in Pudong, Shanghai. But compared with foreign retail companies like Walmart and Carrefour, Lotus's path into China has been somewhat bumpy, with expansion significantly slower than many peers. According to public data, as of December 31, 2016, Lotus had 61 hypermarkets and 1 shopping center in China, distributed across 8 provinces and cities including Guangdong, Shanghai, Jiangsu, Beijing, Henan, Shaanxi, Hunan, and Shandong, with a total operating area of nearly 520,000 square meters. Not only has store expansion been slow, but Lotus's "five consecutive years of losses" also stands out among foreign retail companies. According to Lotus's 2016 annual report, in 2016, Lotus achieved revenue of 10.086 billion RMB. While sales declined, losses expanded to more than 28 times the previous year. From 2012 to 2016, Lotus's cumulative losses exceeded 1.1 billion RMB. Compared with peers, whether it's Walmart and Carrefour, which entered China at the same time as Lotus, or RT-Mart, which came later and also focuses on hypermarkets, Lotus is significantly inferior. Walmart and RT-Mart have both entered the era of annual sales of 100 billion RMB, with 300 to 400 stores each, while Lotus's revenue has always hovered around 10 billion RMB, and it abandoned its plan to open 100 stores proposed in 2004. 6 Dia A precarious journey in China According to Spanish media reports, under the heavy pressure of e-commerce penetration, Spain's Dia Group finally ended its "adventure" in China. The supermarket chain was forced to close 160 stores in Beijing in 2013 and dissolve its branch company, and is now preparing to withdraw from Shanghai, the only city where it still operates stores. The company currently has 379 supermarket stores in Shanghai, most of which are franchised. In 2003, Dia, then still part of the Carrefour Group (Dia became independent from Carrefour in 2011), formed joint ventures with Lianhua Supermarket and Shoulian Group, entering Shanghai and Beijing under the brand "Dia," and opened multiple stores in both cities that year, proposing a plan to open 1,000 stores within five years. However, due to poor performance, partners withdrew capital one after another. At its peak in 2011, Dia had only 447 stores in China, and by the end of 2013, only 361 remained. In early 2014, the group fully withdrew from Beijing and turned to the Shanghai market. Dia is the world's third-largest discount retailer, but the Chinese market's positioning for discount supermarkets is unclear, and the private labels that discount stores rely on for survival cannot achieve scale production and consumption domestically. It must be said that store opening plans like 100 stores or 1,000 stores are really toxic. In addition to the above-mentioned "typical cases," the following supermarkets also have various problems. 1. Carrefour: Declining global influence In 2015, Carrefour closed more than 15 stores in China, and in 2016, it closed 3 stores. Its overall influence is far less than before. In China, it is being overtaken by RT-Mart, China Resources, Yonghui, etc. 2. E-Mart: Closed 6 stores, fully withdrawing from China According to media reports, E-Mart, a large discount supermarket under South Korea's largest retail group Shinsegae, plans to close its existing 6 stores in China in the coming months, ending its 20-year "journey into China." 3. China Resources Vanguard: Closed 800 self-operated stores in 18 months In 2016, China Resources Vanguard's national self-operated stores achieved sales of 103.5 billion RMB, with a total of 3,224 self-operated stores. In a year and a half, China Resources Vanguard's self-operated stores decreased by more than 800. 4. Yonghui: Opened 33 stores, closed 2 stores It is reported that in the first quarter, Yonghui opened 33 new stores in Heilongjiang, Shanghai, Jiangsu, Zhejiang, Anhui, Jiangxi, Fujian, Shaanxi, Shanxi, Sichuan, Guizhou, and Beijing (including 1 premium store, 1 Super Species store, and 9 membership stores); and closed 1 store each in Guangdong and Fujian. 5. Zhongbai: Closed 30 stores, net profit surged 2674.05% In the first three months of 2017, Zhongbai Group's new stores were concentrated in community supermarkets, convenience stores, and fresh food supermarkets, adding 3 small Zhongbai supermarkets, 36 Zhongbai Lawson convenience stores, and 6 fresh green-label stores; at the same time, it closed 30 Zhongbai supermarkets and 4 Zhongbai warehouse stores outside Wuhan. The full-year 2017 plan is to open 10 warehouse supermarkets, 40 standard supermarkets, and 150 convenience stores. 6. Lianhua: Opened 39 stores, closed 51 stores, overall "negative growth" In the first quarter, Lianhua opened 39 new stores and closed 51 stores. Among them, in East China, 22 stores opened and 39 closed; in North China, 2 opened and 2 closed; in Northeast China, 2 opened and 3 closed; in South China, 13 opened and 7 closed; no changes in Central China and Southwest China. 7. Jiajiayue: Opened 7 stores, closed 5, total 633 stores In the first quarter, the company opened 7 new stores, including 6 in the Jiaodong region and 1 in other parts of Shandong; by format: 4 comprehensive supermarkets and 3 Baobaoyue stores. During the reporting period, 5 stores were closed, with a closed area of 5,436 square meters. At the end of the reporting period, the company had a total of 633 stores. So, since the rapid development of e-commerce is not the main reason for these store closures, what is? 1. The gradual disappearance of the demographic dividend China's demographic dividend can be said to have contributed to the success of many companies and brands. From material scarcity to population growth, it brought unprecedented development to retail hypermarkets. From international retail giants like Walmart and Carrefour entering China to Chinese retail giants like China Resources Vanguard and Hualian opening their doors, China's retail hypermarket industry has achieved significant development over the past 20 years. But as the demographic dividend gradually weakens, hypermarkets are experiencing an unprecedented decline. 2. Homogeneous competition and a saturated market The disappearance of the demographic dividend is a process, and its impact on hypermarkets is not fatal. However, homogeneous competition may be the core reason for the continuous store closures. Years ago, to grab market share, hypermarkets arrogantly told competitors, "Try opening there, and I'll open right across from you." This situation has become common in the layout of stores in many cities. But this also laid a deep hidden danger of "homogeneous competition." Homogeneous products, price wars, homogeneous services, homogeneous store environments, etc., have all become the fundamental reasons for their weakened competitiveness. 3. Small formats and specialty stores continuously "erode" and "divide up" With the improvement of living standards, the acceleration of life pace, and the demand for rich product choices, hypermarkets have been "divided up" into multiple small formats and specialty stores. It can be said that in retail, "the world of retail has been long divided, must unite; long united, must divide." Hypermarkets initially adopted an "all-inclusive" attitude, seizing many scattered retail businesses including clothing and grocery stores. However, with economic development, more and more specialized small-format retail has emerged, of course also including large formats that "divide up" categories like "appliances," "building materials," and "furniture," giving rise to super single-category large retail formats such as Suning, Gome, and Red Star Macalline. However, various convenience stores, fruit shops, snack food stores, specialty stores, and other small formats have become the new stars of today's retail formats, continuously dividing up the share of hypermarkets, making it even more difficult for hypermarkets already in trouble. -END-