Click 'Read Original' for details. Source: 甲方研究社 (ID: jiafangribao) As Europe's largest retailer, the world's second-largest retail chain group, and the pioneer of the hypermarket format, Carrefour probably never dreamed that one day it would make headlines by 'selling itself.' On the evening of June 23, Suning.com announced that its wholly-owned subsidiary, Suning International, planned to invest 4.8 billion RMB to acquire 80% of Carrefour China. After the transaction, Suning.com would become the controlling shareholder of Carrefour China, with Carrefour Group's stake reduced to 20%. Carrefour, one of the world's two major supermarket giants alongside Walmart, opened its first mainland store in Beijing in 1995, pioneering foreign-invested supermarkets and leading China's market share for many years. After rapid store expansion and sustained sales growth in the first decade of this century, international retail giants like Carrefour and Walmart began to hit bottlenecks and faced unprecedented encirclement, while being caught up and surpassed by their 'students'—domestic supermarkets represented by Yonghui and Wumart. In 2007, foreign supermarkets occupied half of the top ten Chinese chain supermarkets; ten years later, in 2017, only Walmart, Carrefour, and Metro remained on the list. (Chart: 甲方研究社 Data source: China Chain Store & Franchise Association) Suning becoming the major shareholder of Carrefour China reflects the changes in large foreign supermarkets in China, from their initial expansion over 20 years ago to gradual withdrawal, leaving only Walmart and Carrefour, and now handing over control. Over the past 20 years, China's retail industry has progressed from backwardness to learning, and now to leading. China's retail format innovation has even become one of the highlights of global business innovation, driving retail transformation and upgrading, data-driven operations, cross-border integration, and value reshaping. From 'Self-Service Stores' to 'Supermarkets' Today, seeing shopping malls and supermarkets lining the streets evokes no special feeling. But 38 years ago, supermarkets were a rare species. The first time Chinese people experienced the charm of supermarkets was in 1981 with the Guangzhou Friendship Store, though at that time it was called a self-service supermarket. The planned economy, which had persisted for decades, still dominated daily life in the early reform era. Unlike the traditional 'three-foot counter,' the Friendship Store set aside a corner for customers to select goods themselves, mostly imported high-end items. On the day the Friendship Store supermarket opened, Guangzhou residents flocked in, even though they knew they needed foreign exchange certificates to buy items; many could only look but not buy, yet their enthusiasm was undiminished. At that time, the Friendship Store's sales volume was incomparable to today's self-service stores. Goods often sold out as soon as they were stocked, and restocking couldn't keep up. This 'self-service' supermarket became the trend and introduced many Guangzhou residents to luxury goods and high-end department stores for the first time. Customers at that time were not accustomed to supermarket shopping; they often opened packaging arbitrarily, tasted products without paying, and theft was frequent. The supermarket eventually had to close due to poor anti-theft measures and high product loss rates. In 1984, Beijing's first supermarket—Sijiqing Vegetable Self-Service Market—opened in Haidian's Zhongguancun. It was the country's first vegetable supermarket, mainly selling self-service vegetables and non-staple foods, but soon exposed many problems. The self-service market copied foreign marketing models, packaging vegetables and non-staple foods, which lost price advantages. Moreover, people were not yet accustomed to buying vegetables in supermarkets, and relying solely on vegetable sales was unsustainable. Within less than a year, the supermarket's losses reached 230,000 RMB. Early self-service markets inevitably faced localization challenges, but this new shopping method had quietly entered Chinese life. Gone were the traditional 'three-foot counters'; customers could personally select goods from shelves and pay at the exit. Influenced by this, supermarkets across the country sprang up like mushrooms. In 1984, the Shanghai Grain and Oil Food Self-Service Market opened, with a business area of over 400 square meters, making it the largest supermarket in Shanghai at the time and one of the city's earliest supermarkets. When Lianhua Supermarket's Quyang store opened in September 1991 on Quyang Road and Yutian Road, customer traffic was packed for two consecutive weeks. In 1992, Zhang Wenzhong, who was pursuing postdoctoral studies at Stanford University in the United States, firmly believed that 'entrepreneurship is the most important thing a person needs to do in life' and returned to China to found Wumart Group. When the first Wumart supermarket opened in Beijing in 1994, Wang Tian, the business section chief of Xiangtan's star enterprise Nanbeite Food Company, and his wife Zhang Haixia 'jumped into the sea' of business, establishing Xiangtan Bubugao Food Company, which became the predecessor of the later Bubugao supermarket chain. 1995 was a lively year for the chain supermarket industry. 'Iron Lady' Li Binlan left Vanguard's predecessor, Wanjia Chain, and founded Xin Yi Jia in Shenzhen—a new Wanjia. Shandong Jiajiayue Group opened its first Jiajiayue supermarket in Weihai. The same year, brothers Zhang Xuansong and Zhang Xuanning, who had been beer distributors in Fujian, tried opening a 100-square-meter small supermarket called 'Gule Weili' and used price wars to gain a foothold. By 1998, the brothers moved their supermarket to the base of Yonghui Building in Fujian, hence naming it Yonghui Supermarket. In 1996, Yin Yanliang, founder of Ruentex Group, established RT-Mart, opening its first store in Pingzhen City the following year, and expanding into the mainland market months later. However, at this stage, Taiwanese and local enterprises were not the main players; Carrefour, Walmart, Metro, and other established European and American supermarket chains were sweeping through first-tier cities, serving as models for mainland and Taiwanese enterprises, with Carrefour being the shining star. Foreign Giants Disrupt the Market From 1995 to 1997 was the peak period for foreign chain supermarkets entering the Chinese market, with Carrefour, Metro, Walmart, and Lotus rushing in. Foreign supermarkets entered China thanks to the gradual opening of China's retail industry to foreign investment. In 1992, the 'Reply on Issues Concerning the Use of Foreign Investment in the Commercial Retail Sector' was issued, but initially only in areas like clothing and department stores; in 1995, it expanded to food and chain operations. Policy support triggered the first wave of foreign supermarket expansion in China. In 1999, Frenchman Jean-Luc Chereau was transferred from Taiwan to mainland China by Carrefour. During his seven-year tenure, Carrefour opened 81 stores. Especially from 2003 to 2006, Carrefour added stores at a rate of 16 per year. From 2004 to 2010, new stores reached 141, more than triple the number opened in the previous nine years, expanding coverage from 14 provinces before 2004 to 23 provinces. This kept Carrefour as the number one foreign retailer in terms of store count for a long time, making it a true hypermarket giant in the Chinese market. As the pioneer of the hypermarket format, Carrefour not only conquered Chinese consumers but also opened the door to a new world for China's earliest retailers. The industry learned from Carrefour and poached its managers. Carrefour was hailed as the 'Whampoa Military Academy' of retail. Walmart, entering China almost simultaneously with Carrefour, also expanded aggressively. Before 2004, Walmart had only 27 stores in 10 provinces; by 2010, it had 219 stores in 24 provinces. Rapid store expansion not only increased the companies' national influence but also strengthened their scale advantages in logistics, procurement, and other areas, boosting profits and revenue growth, making them the strongest competitors in the domestic supermarket sector within a few years. Foreign supermarkets were superior to local ones in both operations and capital, and their aggressive expansion overwhelmed the rising local supermarkets. Two years after the Zhang brothers founded Yonghui, Fortune 500 companies Metro and Walmart entered Fuzhou one after another. Within less than a year, Fuzhou's hypermarkets exceeded 10, setting a commercial record, and Yonghui faced a life-or-death moment. For domestic supermarket companies, foreign competitors brought immense competitive pressure, but objectively also motivated domestic enterprises to improve their operational levels. The demonstration effect of foreign retail helped domestic retailers improve their existing business structures and operational methods through observation and imitation. Domestic enterprises could hire employees with experience or training in multinational companies, leveraging the flow of human resources to introduce foreign knowledge and management concepts. When foreign enterprises achieved great success with advanced technology and concepts, it prompted local retailers to strive for excellence, imitating while innovating. Local supermarkets were constantly accumulating strength, hoping to find their place in the retail transformation. Reshuffling of Supermarkets Stories of 'surpassing the master' were continuously staged in China's retail market. Foreign supermarket companies that entered China 24 years ago certainly did not expect that the complexity and intensity of competition in the Chinese market would far exceed their imagination. Wherever the giants expanded, they encountered sniping from national or regional local supermarkets: nationwide it was Vanguard and RT-Mart; in Jiangsu, Suguo; in Sichuan, Hongqi; in Zhejiang and Shanghai, Hualian; and in Guangdong, Xin Yi Jia and Renrenle. Facing the strong offensive of foreign supermarkets, Yonghui creatively abandoned the general supermarket model of mainly selling clothing, daily necessities, and appliances, establishing supermarkets and chain stores featuring fresh produce, and locating them in residential areas, secondary roads, and urban-rural fringes, targeting housewives and office workers as main customers. This avoided direct conflict with the giants. This choice laid the foundation for Yonghui's later achievements in the industry. On December 15, 2010, Yonghui officially listed on the Shanghai Stock Exchange. That year, Yonghui achieved operating revenue of 12.317 billion RMB. With its unique 'fresh produce model' and control over upstream suppliers and bargaining power, Yonghui had the ability to expand rapidly and continuously. Unlike foreign supermarkets focusing on first-tier cities, RT-Mart quietly expanded in second- and third-tier markets, surpassing Carrefour by surrounding cities from rural areas. In 2009, RT-Mart's revenue was 33.546 billion RMB, a year-on-year increase of 31.04%, with profits of 1.042 billion RMB, up 38.9%. In 2010, China RT-Mart's revenue was 40.43169 billion RMB, up 20.5%, replacing Carrefour as the champion of mainland retail department stores. In May 2010, RT-Mart entered Beijing. That same year, Carrefour China reached a crossroads. In July, Carrefour closed its Xi'an Xiaozhai store, its first store closure in China, but it was only the beginning. The rise of local forces cutting market share was secondary; the impact from e-commerce and the internet threw traditional supermarkets into disarray. Since 2011, with the strong rise of e-commerce giants like Alibaba and JD.com, changing consumer habits left traditional supermarkets at a loss. From 2010, Carrefour China's revenue and store numbers began to decline. It started closing stores in China in 2010, with 30 closures from 2013 to 2015. In 2018, Carrefour China closed another 19 stores. As for Walmart, recently, Walmart's Zibo Liuquan Road store posted a closure notice stating it would cease operations from June 25, 2019. After the closure, Walmart would have only one store in Shandong, in Jining. It is reported that this is the 15th store Walmart has closed nationwide this year. Media statistics show that over the past three-plus years, Walmart has closed more than 70 stores in China. From 2011 to 2015, offline supermarkets were the 'victims' of internet e-commerce, in a confrontational relationship with online. Embracing e-commerce became a desperate survival path for traditional supermarkets. Before joining Alibaba, Gaoxin Retail operated its own e-commerce business around Feiniu.com for over three years, burning over 1 billion RMB, but ultimately ended in failure. Walmart attempted independent e-commerce operations but couldn't escape the loss-making situation for years, eventually selling its wholly-owned 1号店 (Yihaodian) to JD.com. Carrefour, which started building its e-commerce platform late, persisted but progressed very slowly. Facing the decline, collective leadership changes became the theme for foreign retail giants like Carrefour, Walmart, Tesco, and Metro in 2012. Foreign retailers began to retreat from China. In 2014, UK's Tesco withdrew from the Chinese market, injecting all its stores into a joint venture with Vanguard, retaining only a 20% stake. Lotus, under Thailand's richest man, suffered losses for five consecutive years, barely turning profitable in 2017 through layoffs, but in 2018 it lost nearly 300 million RMB due to goodwill impairment. Carrefour's performance declined, Walmart and Metro struggled to maintain, and all were rumored to be selling out or seeking refuge with Chinese giants. Now those rumors are being verified one by one. On September 3, 2016, Carrefour opened a large supermarket in Pingzhen City, Taoyuan County, Taiwan. Yin Yanliang was very angry when he learned of this, and RT-Mart's Pingzhen store directly cut prices on popular items to 50% off, confronting Carrefour head-on. The same day, RT-Mart announced a 2.5 billion New Taiwan Dollar investment to upgrade all stores in Taiwan, a clear show of force. A fallen tiger is bullied by dogs; this situation indicated that foreign supermarkets had fallen from their high pedestal. In recent years, news of foreign hypermarket closures has frequently appeared in the press, and foreign supermarkets are seeking opportunities to save themselves. In the past three and a half years, Walmart has closed over 70 stores in China, but its opening speed is also noteworthy. According to data previously provided by Walmart, in 2018, Walmart opened 21 new hypermarkets, 4 Sam's Club stores, and 8 'Huixuan' supermarket stores. The number of hypermarket openings alone equaled the number of closures that year. In the context of the decline of the hypermarket format, traditional supermarkets must transform in time to offer formats more suitable for current consumption habits for long-term development. Of course, in this round of reshuffling, local supermarkets did not emerge as complete victors. Nonggongshang Supermarket, born in Shanghai, once surpassed RT-Mart and Walmart to rank among the top five Chinese chain supermarkets, with over 3,000 stores for a long time, second only to Lianhua. However, in recent years, the only news about Nonggongshang Supermarket on news websites is store closures. In 2016, Nonggongshang Supermarket ranked ninth among Chinese chain supermarkets, with stores shrinking to 2,300. In 2017, Nonggongshang not only dropped out of the top ten but also disappeared from the chain top 100 list. From 2014 to 2015, Xin Yi Jia closed 14 stores, and annual sales revenue shrank by 3 billion RMB in two years, eventually disappearing from the China Chain Top 100 list in 2016. In 2017, Xin Yi Jia initiated bankruptcy liquidation. Giants with large resources could afford to try and error to find a way out, but many weaker supermarkets and stores could only become history in the turbulent retail transformation. New Retail Laboratory Carrefour China President Thierry Garnier once said, 'China is a retail laboratory.' This is not an exaggeration. Hypermarkets, as the retail format with the highest consumption frequency, began to see online internet companies accelerate 'integration' with offline in 2016 due to the peak of traffic dividends. Supermarkets are the most valuable experimental base for retail transformation. In October 2016, Jack Ma first proposed 'New Retail' at the Alibaba Cloud Computing Conference: 'In the next ten or twenty years, there will be no e-commerce, only New Retail.' New Retail uses the internet as a foundation, leveraging big data, artificial intelligence, and other technologies to transform the production, circulation, and sales processes of goods, promoting deep integration of online, offline, and modern logistics. This e-commerce giant's prophecy brought Chinese retail into a new development stage. Giants rushed in, and the relationship between internet and traditional retail has never been so close. On November 20, 2017, Alibaba acquired 31.6% of Gaoxin Retail for HK$22.4 billion, becoming its largest single shareholder. But this was not the end. A month later, on December 16, Tencent invested 4.2 billion RMB in Yonghui, acquiring 5% of its shares. 39 days later, on January 24, 2018, Tencent and Yonghui jointly invested in Carrefour, causing a stir in China's retail industry. These multiple retail industry mergers and acquisitions in 2017, initiated by internet companies and leading retail enterprises, presented a different picture of China's retail industry: foreign forces weakened, Taiwanese capital sold out, domestic forces rose, and internet companies led by Alibaba and Tencent deeply intervened in traditional retail, accelerating industry reshaping through different paths. (Source: Jiemian News) After internet transformation, traditional supermarkets began to show new vitality. In March 2018, RT-Mart's New Retail transformation officially began. According to the announcement, 'the connection of store data systems' became the first step, including three parts: membership connection, payment connection, and inventory connection. With Alibaba's support, RT-Mart also began to seek online traffic entry points. In February 2018, two RT-Mart stores in Shanghai and Suzhou first piloted access to Taoxianda. In June 2018, RT-Mart announced that 100 stores that had completed upgrades would fully participate in Tmall 618. And before Double 11 in 2018, all RT-Mart stores had connected to Taoxianda, completing online-offline cooperation. It is reported that three months after RT-Mart connected to Taoxianda, daily online orders exceeded 1,200, monthly sales per store increased by over 10% month-on-month, and each store accumulated more than 20,000 new young customers. Since Tencent's strategic investment in Yonghui in December 2017, Yonghui has transformed into a technology retail enterprise. With Tencent's help, Yonghui achieved digital upgrades of people, goods, and scenes in physical retail stores. Currently, Yonghui operates over 1,000 stores under formats including Yonghui Supermarket, Yonghui Mini Supermarket, Bravo Green Label Stores, Super Species, and Yonghui Life. Tencent's Smart Retail toolbox has been fully implemented across Yonghui's various formats. For online-offline integration, Yonghui also developed the YHSHOP system, combining Yonghui's membership system, organically integrating the Yonghui Life APP, product codes, membership cards, stored-value card balance management, and third-party payment systems, while connecting Yonghui's membership, product, and payment systems, giving Yonghui a relatively complete operational mechanism for driving traffic from stores to online. Wumart, outside Alibaba and Tencent, is also a system-level player in New Retail. By incubating Duodian Mall, in October 2018, Wumart partnered with Duodian Dmall and Lianshang Yougong to embrace the internet for digital upgrades, connecting online and offline, achieving integrated development of users, products, supply chains, marketing, operations, and payments. Wumart stated that as of early March 2019, Duodian Mall had cooperated with 50 of China's top 100 chain enterprises, covering nearly 10,000 stores. The old and new intertwine, making retail in China unprecedentedly complex and diverse, but also full of unprecedented imagination. If the future of China's chain supermarkets requires reshuffling, then New Retail should be one of the biggest driving forces. In just two years, the innovation of New Retail in the supermarket sector has been preliminarily completed. Offline transactions, which account for 70-80% of the retail industry, continue to stimulate the sensitive nerves of innovators, and the competitive game of New Retail has just begun. For traditional supermarkets, the short-term pain of transformation is inevitable, but they can only move forward, exploring a path that suits them. However, this path may require the determination and courage to cut off a limb to save the whole.