As the beginning of a high-end dialogue series, we recently visited Zhang Li, Chairman of Jianfu Convenience Store, and had a deep conversation with him for three hours, also visiting several Jianfu stores. Here is the content of the exchange. Chairman Zhang Li's three elements for doing things The dialogue started with 'people', and Chairman Zhang Li believes that 'people are the root of everything', and the growth of an enterprise is ultimately based on the growth of people. From studying glass technology to producing beer bottles, from producing beer to acting as an agent for beer brands, and then a brilliant turn to establish a convenience store brand, resolutely deciding to dive into business as a principal staff member, Zhang Li, who has completed the entire industry chain, appears decisive and vigorous, with extremely meticulous thinking logic, and actively embraces all new things. However, Zhang Li believes that for 'people, things, and time', whether something should be done, whether there are people to do it, and whether the timing is right - if any of these three elements is lacking, it should be put aside. Sometimes waiting may be the best decision. "Chinese convenience store enterprises face five major mountains, with numerous difficulties" Chinese convenience store enterprises will encounter many problems in their development, which can be summarized as five major mountains: scale, logistics, talent, social cognition, and unknown difficulties. Only by overcoming these difficulties can enterprises grow and strengthen. 1) Scale. Chain convenience stores can only gain competitive advantage through large scale. He vividly compared convenience stores to an army of ants, and the management methods and approaches differ greatly with enterprise scale; managing 100 stores and 1,000 stores involves significant differences in organizational structure and models. Jianfu Convenience Store is growing rapidly in scale, and an important aspect of scale improvement is informatization, adjustment of management structure and communication methods. Jianfu Convenience Store hopes to achieve industry leadership in this regard. 2) Logistics. After a convenience store enterprise expands to 500 stores, it inevitably faces logistics and distribution issues. This scale of 500 is neither large nor small, making it difficult to find suitable logistics partners, so Jianfu Convenience Store chose to build its own logistics distribution center. The self-built logistics distribution center covers 75 mu, with a total construction area of 110,000 square meters. The first phase has invested 170 million yuan, completing 60,000 square meters of construction, creating its own intercity distribution logistics system. Currently, the company's logistics problems are basically solved. 3) Talent. China lacks people who understand retail, especially professional talent in the convenience store format, and almost no university offers a dedicated retail major. Category management, traffic flow analysis, information management, and supply chain management are all urgently needed talents in retail. However, the number of people with these skills is currently very limited. 4) Social cognition. In a true sense, there is no accurate definition for the convenience store industry in China; it is either seen as a supermarket or a grocery store, and social cognition has a certain gap for the chain convenience store industry. 5) Other unknown difficulties Two years ago, Zhang Li encountered the challenge of customer cognition, and membership management was put on the agenda. Traditional retail used methods like registering customer phone numbers to issue cards, but Zhang Li keenly proposed a membership system based on facial recognition cognition. "Entering the store means becoming a member, leaving the store means losing contact" The essence of product management is people's hearts. To solve the millennium pain point of retail: not knowing who the customer is, not knowing what the customer thinks, only guessing user psychology like a blind person feeling an elephant. In May 2017, the Future Smart Retail Forum and Joint Marketing and Market Promotion Agreement Signing Ceremony, hosted by Jianfu Convenience Store and co-organized by Microsoft (China), was held in Beijing. Jianfu Convenience Store officially adopted Microsoft Azure technology, opening a new era of smart retail. Jianfu Convenience Store is currently the first convenience store enterprise in the world to attempt facial recognition, ahead of FamilyMart and 7-Eleven. Jianfu Convenience Store hopes to truly introduce intelligence into the convenience store industry. People's cognition of machines is industrialization, and machines' perception of people is intelligence. In fact, the core point of retail is to recognize customers. Currently, customer information is fragmented and difficult to unify, so Jianfu Convenience Store proposed facial recognition cognition two years ago, digitizing faces, equivalent to forming a QR code for the face, and then recognizing it. The characteristics of the facial recognition system are: entering the store means becoming a member, leaving the store means losing contact. Within the Jianfu Convenience Store scenario, customer information is captured through facial recognition, and upon arrival, customers automatically become members. Member services are provided based on analysis of user consumption behavior data. When customers leave Jianfu Convenience Store, there is no further contact, and customers are never disturbed through SMS or other means. How the facial recognition cognition system is used: 1. Targeted marketing, focusing on customers who visit frequently. For example, providing a free opportunity for every ten visits, based on the '80/20 rule', allocating limited resources to VIP members, making members feel valued and giving customers surprises; 2. Customer reminder service. Taking toothbrush purchase as an example, if a customer hasn't bought a toothbrush for three months (toothbrushes generally need replacement every three months), sometimes it may be forgotten, and in such cases, a gentle reminder can be given at checkout without excessive disturbance; 3. An important part of the facial recognition cognition system is biometric payment. Currently, through cross-comparison of face and gesture, accuracy is much higher than face alone, and security is more assured. In the future, there will be heart wave and breathing recognition, which will be even more accurate. This facial recognition cognition system includes a one-time investment of over ten million yuan for front-end renovation. The cooperation with Microsoft on this facial recognition cognition technology and cloud computing is based on the alignment of values between the two parties. Although Microsoft's facial recognition cognition technology is advanced, its application in specific commercial scenarios is limited, and Microsoft also hopes to make a new attempt through this cooperation. Currently, the facial recognition cognition technology used by Jianfu Convenience Store dynamically captures n images, converts them into data through algorithms, and transmits them to Microsoft's cloud. It has fast transmission, small storage, and low cost, making it commercially valuable. Jianfu Convenience Store currently has over 300,000 people entering stores daily, about 100 million person-times annually, and the reduction in sampling costs is valuable. The plan is to put the entire facial recognition cognition system into use by the end of the year. Internal testing has already ended, and to satisfy the curiosity of consumers, three stores have been specially designated for display and experience. It is expected to take about two years to polish, effectively improving single-store business levels. "Retail intelligence has three layers, from recognizing customers to serving customers, to supply chain intelligence" Smart retail first involves the intelligence of the customer transaction interface, and the facial recognition cognition system falls into this category. Many other convenience store membership systems use intrusive methods like phone numbers and physical cards, which are relatively troublesome, while the facial recognition cognition system is much more convenient and provides a more comfortable experience. The second layer is the intelligence of internal enterprise management, mainly used after recognizing customers to serve them, including employee learning, employee growth, and employee operations, which will be developed later. The essence of smart retail is to replicate individual customer cognition levels through machines into the enterprise's retail intelligence collection. The future goal for internal enterprise improvement is to achieve one-click operation, such as browsing product information and financial information with a single click. Like starting a car, the system behind is complex, but what is presented to the user is simple; this is the intelligence of internal operations. The third layer is the intelligence of the supply chain, from farm to table, from suppliers to retailers, and the collective intelligence of the entire industry chain is the true arrival of the smart retail era. Therefore, smart retail is about understanding customers better than they understand themselves, truly understanding what customers want and need. "Doing business is not for the eternal existence of the parent entity, but to pass on the genes" Chain enterprises have only three paths: 1. Do well themselves and acquire others through chains; 2. Do well themselves and be acquired by others through chains; 3. The most feared is not having the ability to chain others, and not being valued by others for chaining, dying alone. Jianfu Convenience Store does business not for the eternal existence of the parent entity, but to pass on the DNA. Why plan for listing? It is for inheritance. Private enterprises find it difficult to develop on their own. Through listing, the enterprise becomes more standardized, obtains more social resources, and hopes to leave wealth to society. "First become a valuable enterprise, then become a profitable enterprise" Last year, the platform had one billion in revenue, but it is growing rapidly, roughly doubling every two years. The company still has huge development space and is not in a hurry, but development is the absolute principle. Currently, Jianfu Convenience Store's e-commerce business is thriving. There were two previous attempts that failed, but as long as the direction is right, failure is merely the mother of success. The third attempt, the 'Fuge Youxuan' mobile mall, was launched again on June 8 this year, still using the 'order online, pick up in store' model. Through research, the deeper needs of convenience store customer groups were identified: fresh produce - vegetables, fruits, meat, poultry, and seafood. Users order in the morning and pick up at designated stores in the afternoon, greatly facilitating customers and fulfilling Jianfu Convenience Store's promise to provide customers with a convenient lifestyle. This business was mainly launched because office workers are an important customer group for the company; they cannot go home at noon, and after work in the evening, they hope to have a warm dinner with their families. This time, quite satisfactory results have been achieved. "Jianfu Convenience Store hopes to find a development path suitable for itself" Convenience store enterprises, especially private ones, if they cannot find a development path suitable for themselves, will find it difficult to break through the encirclement of foreign-funded and state-owned convenience store enterprises, as they lag in experience, capital, and management. China has its own specific national conditions and cannot completely copy the development experience of foreign-funded convenience store enterprises; it must find its own development path. Jianfu Convenience Store's investment cost for opening a store is relatively low, not exceeding 300,000 yuan, with decoration not exceeding 100,000 yuan, equipment not exceeding 100,000 yuan, and goods not exceeding 100,000 yuan. Overall, it follows a low-cost route, and survival is the first priority. For example, store decoration upgrades mainly start with new stores or when old stores naturally expire and need renovation, without special renovations. However, Jianfu Convenience Store is willing to spend money when necessary, such as on the facial recognition cognition system, spending money where it counts. Through years of attempts and accumulated experience, as long as stores are renovated and upgraded, achieving improvements in product structure, shopping environment, and value-added services, performance growth will definitely be realized. Jianfu Convenience Store dares to innovate. Any enterprise's development will go through four stages: startup, growth, maturity, and decline. Jianfu Convenience Store has passed the introduction stage and entered the growth stage. Jianfu Convenience Store hopes to extend the growth period to prolong its life cycle. But growth also comes at a cost, just like building muscle requires tearing existing muscle to grow new muscle. Therefore, for Jianfu Convenience Store to grow, it must break away from traditional concepts, establish high-tech retail, and must experience the pain of tearing muscle, implanting new high-tech genes, and continuously growing. Once new genes are not implanted, the growth period ends. Therefore, Jianfu Convenience Store places great emphasis on innovation and dares to be the first in many matters, such as introducing the facial recognition cognition system, opening restrooms, opening WiFi, and serving as a train ticket pickup point, and connecting the food procurement system with the Food and Drug Administration for supervision. There may be more such attempts in the future. Each enterprise has its own way of survival, so Jianfu Convenience Store does not plan to directly enter the fresh food field for now, because management may not keep up, and food safety cannot afford mistakes. Currently, it hopes to find suitable fresh food enterprises with international standards for development and production capabilities for cooperation. "Jianfu Convenience Store's development must adhere to three basic principles" In exploring the development path, three basic principles cannot be violated: the law of human nature, the law of economics, and the law of ecological nature. The law of human nature mainly refers to Maslow's hierarchy of needs. For people, safety is the top priority. The 'order online, pick up in store' model, where picking up in store is for customer safety, is a future trend. The ecological law mainly refers to the diversity of nature and business. Cats should not envy the life of dogs, and no matter how good the stomach is, it cannot replace the intestines. A single dominant player would be a disaster. We won't elaborate much on the law of economics here. "Employees are for motivation, not for management" The company's employee management is very humane, such as not deducting wages for lateness, based on trust in people. Winning people's hearts is the most important thing. Bosses should not think about squeezing employees but about managing people's hearts. Processes are meant to improve efficiency, but many now restrict efficiency. Bosses should focus on vitality reform and efficiency reform in the enterprise, continuously igniting employees' hopes. Jianfu Convenience Store's senior executives currently have employee stock ownership, sharing the dividends of Jianfu Convenience Store's growth. Jianfu Convenience Store aims to double in three years, with income doubling, profits doubling, and employee investment dividends also doubling. It is not ruled out that Jianfu Convenience Store may follow Huawei's example and implement comprehensive employee stock ownership. Currently, many grassroots employees have opened Jianfu Convenience Store franchise stores, working at the big Jianfu during the day and returning to their own small Jianfu after work. Franchisees are not managed by control but persuaded by interests and moved by principles. Franchisees basically purchase goods from the Jianfu Convenience Store system platform. Of course, there have been rare cases of individual franchisees secretly sourcing goods from outside for personal gain. The headquarters is not unaware. As the saying goes, even strict customs anti-smuggling cannot completely eliminate smuggling. As long as a supervision mechanism is established and principles are adhered to, once counterfeit goods from private procurement are discovered, the headquarters will revoke the franchisee's license. Therefore, the big Jianfu platform, based on the store network, with the Internet of Things as the core, the Internet as the soul, the telephone network as support, standardization as the premise, customer needs as the guide, and supply-side R&D as innovation, is a manufacturing-oriented smart retail service platform that provides services to supply partners and franchise partners. Future profit models

  1. Supply chain finance
  2. Fresh food
  3. Private brands
  4. Store decoration upgrades
  5. Category management optimization
  6. E-commerce platform support
  7. More humane value-added services
  8. Cross-border cooperation
  9. Integration of imported goods Source: Congcong Talks Retail 2017 (3rd) FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme 'New Forces, New Ecology', inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore a new chapter of cross-border integration! Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 'FMCG + Internet' Summit Forum -END-