Click to read the original article for details. In April 1997, a sign reading 'Shanghai RT-Mart Co., Ltd.' was hung by the Huangpu River. Those who erected the sign at the time would not have imagined that this act of desperation would, over the next 20 years, completely change the lives of Chinese people. RT-Mart, a large chain hypermarket from Taiwan, China, was originally founded by Yin Yanliang, president of the Ruentex Group. At the time, Yin was already overwhelmed—because by the 1990s, Taiwan's textile industry faced soaring labor costs and threats from low-cost overseas competition, making it a recognized sunset industry. Ruentex Textile, the main enterprise of the Ruentex Group, naturally could not escape the decline. Against this backdrop, the Ruentex Group, seeking transformation, placed its bets on the distribution business with a sense of last-ditch desperation. RT-Mart came into being and thus began its legendary story in Chinese commercial history. RT-Mart's debut coincided with an era when Chinese consumers craved product variety. However, in July 1998, when RT-Mart opened its first store on the mainland in Shanghai's Zhabei District, an industrial area, it did not have the appearance of today's supermarkets but rather a strong flavor of a wholesale market. Correspondingly, ordinary consumers would not make special trips to shop there. The change came after Huang Mingduan, then CEO of RT-Mart's mainland China operations, visited European countries. He discovered that Makro, a wholesale market model, had few visitors, while the neighboring Carrefour was bustling. Thus, under Huang's direct authorization, RT-Mart's warehouse format for B2B disappeared, replaced by hypermarkets for B2C, welcoming ordinary consumers. Image source: Pixabay As a hypermarket, RT-Mart offered Chinese consumers, who were not yet accustomed to shopping in large supermarkets, two major product 'dividends'—abundance and low prices. Abundance goes without saying; Chinese manufacturing was continuously proving its strength to these stores. Low prices, however, were a lesson RT-Mart taught its peers. In fact, 'low prices' are the true core value of a hypermarket, because word-of-mouth among consumers can quickly determine whether a store remains popular. And low prices must mean real-time, first-time low prices. To achieve this, each RT-Mart store had a market research team of about 10 people, ensuring that prices remained competitive. Meanwhile, compared to competitors like Walmart and Carrefour, which used rigid pricing models either set by headquarters or by stores, RT-Mart adopted a flexible pricing system: base prices were set by headquarters, but stores had significant autonomy, allowing RT-Mart's price system to always be one step ahead. Consumers only needed to 'vote with their feet' and come to 'buy, buy, buy.' Data proved the correctness of RT-Mart's strategy. As of the end of June 2015, RT-Mart had successfully opened 318 comprehensive hypermarkets in mainland China, covering five major regions: East China, North China, Northeast, Central China, and South China. It employed over 100,000 staff and 100,000 demonstrators, serving more than three million customers daily. Earlier, in 2011, RT-Mart and Auchan jointly formed Sun Art Retail Group (6808.HK), which went public on the Hong Kong Stock Exchange in July 2011. Those were RT-Mart's good times. If RT-Mart were a person with emotions, those memories might still glisten with gold. Because in the days that followed, the two words accompanying RT-Mart were—transformation. The reason is that RT-Mart, as a traditional retail enterprise, suffered severe customer attrition due to the popularity and prevalence of online shopping, and because RT-Mart lacked an internet gene, it found itself in an awkward position of difficult transformation. Thus, in 2018, Alibaba and RT-Mart partnered. Amid everyone's expectations, the combination of online and offline was supposed to add considerable industry competitiveness to RT-Mart. It must be acknowledged that Alibaba did bring some changes to RT-Mart. Image source: Pixabay CICC recently released a research report stating that the core indicators of Sun Art Retail's Taoxianda business are gradually improving, indicating that the company's new retail transformation is transitioning to a harvest period. With the support of Alibaba's new retail resources, traffic, and technology, market share is expected to further increase, so CICC maintains its 'Outperform' rating on the company. Taoxianda, under Alibaba's Tmall Supermarket business group, provides traditional hypermarkets with an integrated online-offline new retail solution, using digital operations to improve efficiency. After offline supermarket stores connect to Taoxianda, consumers within a 3-kilometer radius can search for 'Taoxianda' on the mobile Taobao app to order fresh food and daily necessities, with delivery to their homes within one hour. Since RT-Mart began its new retail transformation and connected to the Taoxianda online entrance in 2018, the company's online order volume and average order value have been the focus of investor attention. In March 2019, Sun Art Retail mentioned in its 2018 annual report that from March 2018, Taoxianda was piloted in two stores, and by the end of 2018, Taoxianda had been launched in all Sun Art stores. Through the Taoxianda project, physical retail is digitally transformed to achieve integration of online and offline membership, payment, inventory, marketing, logistics, and supply chain. However, RT-Mart, which has been 'transformed' to look glamorous, secretly harbors unwillingness—various signs indicate that in its cooperation with Alibaba, future profits can only be on Alibaba's platform, leading to the result that RT-Mart is merely working for Alibaba. This is also why, on the day Sun Art Retail's 2019 annual report was released, the company's stock price plummeted and began a continuous path to new lows. Image source: Internet Numbers that seem to have stopped losses cannot let investors see signs of recovery for the former supermarket king. People cannot see the future of its business model. It has become a camel hiding behind an elephant, enjoying the shade the elephant provides. Of course, it still has its pride. RT-Mart redefined itself: its old logo was 'fresh, cheap, comfortable, convenient', now changed to 'professional, quality, high cost-performance, new retail'. In today's era when Alibaba talks about new retail, RT-Mart, as its strategic partner, places 'new retail' last. Now RT-Mart emphasizes 'professionalism'. What does 'professional' mean for a store? In RT-Mart's theoretical system, it is gradually spinning off various business segments from RT-Mart and handing them over to professional teams to operate. For example, it leases home appliances to Suning and department stores to Tmall. Unconsciously, RT-Mart may transform from a supermarket operator into a pure 'landlord'. Perhaps after rounds of e-commerce impact, RT-Mart has finally realized that the most profitable approach is to lie down and collect rent. As for its mention of 'quality', who knows what that vague concept means. A telling fact is that Carrefour, which Huang Mingduan once used as a model, has now become a trophy of Suning. Earlier this year, Suning completed the acquisition of 37 Wanda department stores. Recently, Suning acquired 80% of Carrefour China for 4.8 billion yuan, showing its emphasis on scenario layout. Zhang Jindong stated at Suning's internal semi-annual work meeting on July 1 and 2 that acquiring Carrefour China is a key step in Suning's smart retail layout. This move allows Suning's full-category marketing strategy to achieve a major breakthrough in the FMCG category, successfully filling the gap in Suning's large FMCG sector, and truly realizing full-product, full-scenario operations and new scenario layout. In Zhang's view, Carrefour's professional FMCG operation experience and supply chain capabilities can be organically combined with Suning. By exporting smart retail scenario-building capabilities, Suning can comprehensively digitally transform Carrefour stores, build an integrated online-offline supermarket consumption scenario, and better meet escalating consumer demands. Image source: Pexels Of course, with such a large revenue scale, RT-Mart can indeed 'collect rent' on its past achievements. But when Suning has already begun acquiring Carrefour China, RT-Mart urgently needs to convert its unwillingness into forward momentum. After all, Suning has expanded from online and offline to offline business groups including 'two large (Suning Plaza, Suning.com Life Plaza), two small (Suning Xiaodian, Suning Retail Cloud), and multiple specialized (Suning Cloud Store Appliance Store, Su Fresh, Suning Jiwu, Suning Cinema, Suning Sports Store, etc.)'. From acquiring Wanda department stores to Carrefour, the smart retail landscape that Suning has been striving to build, covering all scenarios, channels, and customer groups, is basically complete. In contrast, RT-Mart, apart from betting on Alibaba's Taoxianda, has not had a single move remembered by the market and consumers. RT-Mart places new retail at the end, while other industry giants are making great strides in this new frontier. In this rapidly developing era, who is right? Source: No.1 Company (ID: yhgs_2018)