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Xinyijia Supermarket Co., Ltd., which has been operating chain supermarkets for over 20 years and is well-known to Shenzhen residents, recently spread news on social media about facing operational difficulties. What is the real situation? Sure enough, the Xinyijia store in Buji Xinyi was already like this in July... Several meters of shelves displayed only two types of oil. The place that used to sell fresh produce and yogurt now only has these waters to fill the gap, just to avoid looking too bad. Well, with this little snack, you can't go wrong even with your eyes closed. The fish and bread section has nothing and no one; previously, various promoters would surround you, now it's all empty, and it's a bit uncomfortable. Only a few checkout counters are open, and no one is queuing. It's scary. How did a good supermarket become like this?
Let's look at other places in Shenzhen Longhua Xinyijia: The items on the shelves are pitifully few... Dongmen Xinyijia: Completely empty. They even posted a note reminding people not to pick up expired food. Heartbreaking. Futian Chiwei Xinyijia: Goods scattered sparsely. What happened? Yuanling Xinyijia: A notice at the door says: Internal adjustment, restructuring and reform, temporarily closed. Restructuring and reform? I doubt it. It's scary. I thought only a few Xinyijia stores closed due to poor management, but it turns out a large number in Shenzhen have already shut down! Shekou: Already dead Tianbei: Fallen, even no yogurt to sell Buxin: Fallen for months Bao'an: Fallen to the point where only one brand of oil remains Xinyijia has fallen, even to Changsha! Shocking!
Many friends speculate that Xinyijia owes money to suppliers, so they stop supplying. Others say the boss lost money gambling and ran away. Anyway, opinions vary:
Netizen 1: Everyone has turned to online shopping. My condolences!
Netizen 2: Shopping at Xinyijia feels poorly laid out, like a village supermarket. Why is Walmart packed every day? The closure is due to poor management!
Netizen 3: It's all e-commerce's fault!
Netizen 4: Rents are too high, and with more migrant workers, they can't afford the rent. There are too many competitors. Shenzhen will become an empty city in the future.
Netizen 5: No more aggressive expansion, and don't develop OTO models. Return to tradition and turn existing supermarkets into agricultural wholesale markets. Business will boom, really!
Netizen 6: Online shopping, Shenzhen rents, and fewer people. Each of these is fatal.
In July this year, Xinyijia was exposed to have cash flow difficulties and delayed payments to suppliers. Within just one month, at least 50 suppliers holding "white slips" worth tens of millions of yuan came to Xinyijia to demand payment. Some suppliers said that Xinyijia began delaying payments last year. On Tianya Forum, there were reports: In 2009, for the construction of 18 stores for Xinyijia, they owed over 10 million yuan in decoration and goods payments, which remain unpaid to this day!
Xinyijia once won the title of Guangdong Province Private Enterprise Top 100! Its turnover once exceeded 17 billion yuan! Its sales ranked 17th among national commercial chain enterprises and second in Guangdong Province. It's hard to believe that this chain supermarket, which has been operating for over 20 years, disappeared overnight. It's a memory for the older generation of Shenzhen people! In the impression of Martians, Xinyijia should be like this ▽ Now, under the dim streetlights, it's all dark inside, as if a piece of Shenzhen people's memory has been erased...
Why did it come to this? E-commerce impact + high rents + management mistakes: Uncovering the mystery of department stores' decline!
1. Strong impact from numerous e-commerce platforms, physical stores are too slow to transform and fall into trouble! The main buyers prefer online shopping! In 2015, Taobao's "Double 11" total transaction amount was 91.217 billion yuan. What does that mean? Last year, Shenzhen MixC's sales were 6.2 billion yuan, meaning Taobao's one-day sales are about 15 times MixC's annual sales! Physical stores are too late to transform! Physical stores cannot compete with e-commerce in terms of speed and convenience! Renrenle tried to establish an online mall "Renrenle Gou" as early as 2011, but it only faced PC clients and failed to transform to O2O in time!
2. Expanding nationwide without a solid foundation, long supply chain lines are prone to breakage! Blind expansion leads to hidden dangers! Take Xinyijia as an example: it expanded nationwide within five years of establishment, opening over 70 chain stores in Guangdong, Hubei, Liaoning, Hainan, Hebei, Fujian, Sichuan, Zhejiang, Shandong, Tianjin, and other regions, which seems aggressive! Too scattered locations, supply chain lines too long! Xinyijia once planned to build its own nationwide logistics system, but ultimately failed. It outsourced to third-party logistics, which couldn't meet customers' delivery needs for fresh produce and aquatic products. The logistics bottleneck was never properly resolved! Too rapid expansion, cash flow becomes the biggest risk! Blind expansion laid hidden dangers for Xinyijia's tight cash flow. A local Shenzhen supplier said, "Currently, almost 80% of Xinyijia's stores are unprofitable. The shortage of funds also leads to long payment cycles for suppliers, resulting in arrears."
3. Sticking to old ways leads to lack of innovation, and user experience has become unfriendly! "It's been the same for over a decade" is a shortcoming! When Xinyijia opened, it felt good, but over the past ten years, the decoration hasn't changed much, and it's even getting worse. There's no distinctive feature, and the brands it hosts aren't upscale. Other supermarkets have more advantages! @Tang Huizai's words echoed many people's feelings. Many old Shenzhen department stores don't pay attention to updating their appearance, making passersby feel no freshness. Imagine, would young people prefer the colorful MixC or the old-fashioned XX Department Store?
4. High rents are unbearable, forcing small shops out and affecting malls too! Residential purchase restrictions drive commercial property investment! In recent years, due to residential purchase restrictions, commercial property investment has been hot, with price increases far exceeding rent increases. Therefore, when leases expire, landlords inevitably raise rents. Many department stores are in good locations, but as time goes by, rents rise, and traditional department stores' profits are not satisfactory. Income can't cover rent, so closure is inevitable!
Where is the way out? Can Shenzhen department stores, mending the fold after the sheep are lost, usher in a turnaround?
1. The impact of online shopping is a double-edged sword; physical stores going e-commerce is the necessary path for transformation! In October last year, Rainbow Department Store announced the official launch of its app "Hong Lingjin". It is considered by the industry as a representative model of physical stores going e-commerce.
2. Transforming into shopping centers, learning from each other's strengths, is the secret for department stores to make a comeback! Huaqiangbei Maoye is no longer limited to traditional department store sales; major stores have successively introduced dining, cinemas, and other leisure and entertainment formats, becoming boutique department stores with shopping center features, and sales have significantly improved!
3. Refer to peers to mend the fold, and build a department store that customers love to visit! If you recently walk into AEON's fresh produce area, you'll find staff cutting various fruits for you, and the transparent kitchen making fruit salads on-site attracts many citizens to stop and watch; ParknShop often becomes the filming location for TV station food programs, where selection, cooking, games, and interviews can all be conducted in-store, making it a tourist spot for many Shenzhen housewives... For the real scenes and experiences that online shopping cannot provide, department stores should expand such business content to gain survival and development space!
4. Reduce store area and go into communities to make department stores more down-to-earth! A Xinyijia executive said: "First, we will definitely restructure internally, then find qualified and capable enterprises as shareholders." In the future, Xinyijia will reduce the area of physical stores, go into communities, and provide functional, convenient, and community-oriented services.
5. Gaining bank support adds confidence; old stores still have the strength to fight! Facing the difficulties of the department store industry, the Municipal Financial Office previously held a coordination meeting, requiring creditor banks to support Xinyijia's transformation and development, and help the enterprise overcome difficulties. On the morning of July 13, the Shenzhen Banking Association took the lead in convening a meeting of relevant creditor banks, and Shenzhen's banking industry stated it would help Xinyijia tide over difficulties.
Conclusion: What can old department stores rely on to save themselves? Many years ago, when there were no smartphones, on weekends when not working overtime, many people would choose to go to Xinyijia to hang out, buying instant noodles and snacks. They didn't buy much, but they enjoyed the fun of freely choosing. It can be said that department stores were once a symbol of a city's market economy prosperity! However, in this scorching summer, we feel that the retail department store industry has entered a precarious "winter"! Decline begins with hidden dangers, and decline stems from backwardness. As cities develop rapidly, department stores are still standing still! Blaming Taobao, JD.com, and Amazon for everything is extremely lazy and stupid. To bring a second spring to retail department stores, we should seize the limited transformation opportunities and windows. Future competition will only intensify, and how to break through successfully cannot be saved by outdated decoration, lazy service, or uniform self-rescue slogans!
Content compiled from: Shenzhen Chaolife, Shenzhen Big Events
New Food Era · New Distribution —— 2016 China "FMCG + Internet" Summit Forum —— This is a grand event focused on how the FMCG industry channels will transform under the trend of Internet+ transformation
Conference Agenda 08:00-09:00 Registration 09:00-09:05 Host opening 09:05-09:35 2016 China FMCG Industry Trend Analysis Report - Zhao Bo 09:35-10:05 FMCG Enterprise Transformation Strategy and Path - Liu Chunxiong 10:05-10:35 Opportunities and Challenges Brought by FMCG Channel Reform - Liu Zhao, CEO of Waiqin 365 10:35-11:05 Alibaba Retail Link All-round Empowerment - Guo Kunkun, Alibaba Retail Link 11:05-11:25 Channel Efficiency in the Internet Era - Fu Xiaoyun, Vice President of Benlai Holding 11:25-12:00 Roundtable Forum - Brand Transformation: Improvement vs. Reconstruction? Guests: Liu Zhao, Liu Chunxiong, Fang Gang, Chen Feng, Shi Zhengchuan, Deng Xia 12:00-13:30 Lunch 13:30-13:50 Distributor Transformation: City Distribution Trends - Wang Qi, CEO of Weijie City Distribution 13:50-14:20 Roundtable Forum - Why Distributors Should Do Logistics in Transformation Guests: Zhao Bo, Wang Qi, Liu Zhongmin, Tang Guangliang, Wang Cheng, Sheng Yan 14:20-14:40 How FMCG Enterprises Can Leverage the Internet to Take Off - Wang Hui, E-commerce Operations Director of Xijiu 14:40-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy - Su Xiaoxin, Vice President of Zhongshang Huimin 15:00-15:20 Category Value and B2B E-commerce Development Strategy - Wang Chaocheng, CEO of Yijiupi 15:20-15:40 Supply Chain Finance as a Lubricant for B2B Driving Traditional Business - Chen Xian, CEO of 51 Order 15:40-16:00 Zhanghe Cloud Factory Helps Upgrade FMCG Supply Chain - Yang Lixiang, CEO of Zhanghe Tianxia 16:00-16:30 Integrating Small and Micro Retail, Reconstructing Business Ecology - Miao Dong, Vice President of Quanshi 16:30-16:50 In the Next Decade, B2B is the Main Investment Battlefield - Zhao Mingwei, Vice President of Junlian Capital 17:00-17:30 Roundtable Forum - Who is the King in FMCG B2B Models? Guests: Fu Xiaoyun, Zhuang Jianzhong, Jiang Tao, Zeng Weiqin 17:30-19:30 Dinner For manufacturer friends who want to transform, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register. Registration: Long press the QR code below or click "Read Original" ↓↓↓ Click "Read Original" [Register]