Wal Mart Returned To The Grassroots To Pay For Its Crazy Expansion In March

　　 Wal-Mart Returning to the third and fourth tier cities of "grassroots" gold mining,

　 One after another closed the store to pay the bill

The yellow "worry free price" discount sign is still hanging overhead. At the end of the escalator leading to the entrance of the second floor, a tightly closed roller shutter door blocks the way. This Wal Mart shopping mall, located in Yingao West Road, Baoshan District, Shanghai, was opened less than five years ago and closed in early March this year.

But in less than five years, it just witnessed the dramatic strategic changes of Wal Mart in China. Five years ago, 2009 was the beginning of Wal Mart's rapid expansion in China after changing its low-key style; This year, it seems that it is time to pay for the crazy. In March this year alone, six Wal Mart stores across the country were empty.

Six stores were closed in March

The closing of Yingao West Road did not spare four free shuttle buses painted blue. The reporter noticed at the scene that since March 1, the shuttle bus has changed its driving route and started to transport passengers for Wanda Plaza stores in Baoshan District.

According to insiders, Wal Mart has investigated all stores in Shanghai in the past two years. Yin Gao West Road stores have long been listed in the customs list because their turnover has not improved, while the newly opened Wanda stores are expected due to carefully arranged strategic adjustments. "The radiation areas are similar, and it is expected that the two 'merger of similar items' will happen," said the above informed person.

Across the country, most of the other five stores that exited in March were "dead" in the more brutal inter industry "knockout competition". The reporter of China Economic Weekly noticed that on March 31, Wal Mart's two stores in Ma'anshan were both closed because the supermarkets along Yushan Road were clustered and the competition was fierce. At the end of 2010, in order to "snipe" Century Lianhua to the north of Yushan Road and Auchan to the south of Yushan Road, Wal Mart opened stores in the area just one stop away from Auchan; At the same time, in order to get involved in the "Three Kingdoms Killing" of farmers, industry and commerce at the other end of Yushan Road, Huarun Suguo and Carrefour, they did not hesitate to open another store close to each other, and finally both stores failed.

The Changde store in Hunan, which was closed on March 19, was also due to "too many monks and too few porridge". According to the reporter, the supermarket hypermarket within 1.5 square kilometers of the pedestrian street business circle where Changde store is located includes RT Mart, Xinyijia, Meni, Renrenle, and Carrefour. The location disadvantage of the operation on the first floor of the basement led to Wal Mart's defeat in Changde.

Chen Yaochang's "Sequela"

The reporter found that four of the six stores closed in March were opened in 2009, and the other two were opened in 2010. The years from 2009 to 2011 were exactly the years when Wal Mart made rapid progress in China.

Before 2007, compared with Carrefour, another foreign retail giant, Wal Mart's expansion speed in China was quite conservative. However, in 2007, Wal Mart suddenly opened 29 stores, leaving behind 19 new stores of Carrefour with a "force" attitude, and in 2009, it opened 53 stores in the shock circle at one fell swoop; In 2010 and 2011, Wal Mart, which had become addicted to opening stores, opened 87 more stores, showing a desperate attitude to fight back.

"The decision to expand local stores is mainly the product of Chen Yaochang's era. He has been in charge of Wal Mart China since 2007 and is the first local owner of Wal Mart since it entered China in 1995. His idea is to drive the scale effect by opening stores." retail Circle senior people told reporters.

He Canfei, professor of the School of City and Environment of Peking University, told reporters: "Before 2004, China had geographical restrictions on transnational retail business. Wal Mart initially set up its headquarters in Shenzhen, so before 2000, it only tried to enter Yunnan outside Guangdong. Before 2004, Wal Mart only insisted on spreading to South China with Guangdong as the center, and carried out a pilot layout in Northeast China and Bohai Bay with Liaoning as the entry point, never entering Beijing And Shanghai. "

"By contrast, Carrefour, headquartered in Shanghai, took advantage of Shanghai's superior cargo organization, logistics infrastructure and other conditions to enter 11 provinces and cities, including Beijing, Shanghai, Guangzhou, Tianjin, Chongqing and Jiangsu, before 2000." He Canfei told China Economic Weekly.

The first opportunity has been lost, which makes Chen Yaochang, who has a radical style, quite a headache, so he has opened a store strongly for several consecutive years. However, the management loopholes brought about by the expansion of stores also made the senior management of the US headquarters smell the embarrassment of system deformation. "In 2010, in order to adapt to the rapid expansion of the number of our stores, Chen Yaochang rewrote Wal Mart's centralized procurement model, and delegated all the power of the headquarters, including procurement power, to the directors of various regions, which led to management confusion that made the United States extremely dissatisfied." The above senior personage analyzed the reporter.

The "green pork" scandal in Chongqing that broke out in 2011 finally led to the disintegration of this procurement strategy in order to cooperate with the expansion of stores, and directly led to the downfall of Chen Yaochang. Gao Fulan, a New Zealander who took office in 2012, had to close his shop in order to clean the "chicken feathers" cut from the expansion of Wal Mart stores. Wal Mart, which had almost no stores closed before 2011, closed 19 stores in 2012 and 2013 in an accelerated manner.

　　 March into the third and fourth tier cities

However, Gao Fulan, who intends to clean up the mess, is not just unable to close. In order to correct his predecessor's mistakes, his strategy seems to be returning from the "localization" efforts of Chen Yaochang's era to the "Americanization". According to the reporter's statistics, Wal Mart opened 26 stores in 2013, of which more than 60% were located in third and fourth tier cities, including Xinyu in Jiangxi, Meishan in Sichuan, Xiaoyi in Shanxi, Pu'er and Zhaotong in Yunnan, Loudi in Hunan and Lengshuijiang in Hunan.

"In the United States, Wal Mart is the expansion logic of" the countryside encircles the city ". It believes that the cultivation of low-grade markets will bring more long-term profits, while Carrefour has always been positioned as a middle class supermarket in Europe, and there is a mismatch between the two." The above senior person explained to the reporter of China Economic Weekly.

Qi Xiaozhai, director of Shanghai Commercial Economy Research Center, said to the reporter: "Shanghai's hypermarkets started early, 20 years ago, with a large number of stores and a high distribution density. There are seven or eight foreign investors just settling in. Wal Mart is just exiting the saturated market and devoting its energy to the development of emerging markets."

In fact, after 2004, when Wal Mart entered a new province, it had already paid attention to the second and third tier cities. For example, when it entered Anhui, Zhejiang and Hebei, it chose Wuhu, Jinhua and Langfang as its first stores. He Canfei found that more than 70% of Wal Mart stores are concentrated in cities with a population of less than 3 million, while more than 50% of Carrefour stores are concentrated in cities with a population of more than 4 million.

But even if it is dislocation development, Wal Mart, the global retail leader, is also facing a new test. One of the problems is that after Chen Yaochang left, Wal Mart resumed the centralized procurement mode, and the "remoteness" of store location inevitably increased the pressure on warehousing and distribution. "It is very important that it is difficult to purchase local specialty goods. It is difficult to enrich the variety of goods and may not meet the local demand. The hypermarket market is a buyer's market. If there are no specialty products, it is difficult to attract customers." Qi Xiaozhai told China Economic Weekly.

In addition, according to the analysis of the above senior people, in order to give full play to the advantages of the American model, Wal Mart will still have to choose to maintain a moderate frequency of opening stores in the future. When the operating costs in large cities are increasing, it can only use third and fourth tier cities as lifeboat. "Wal Mart often opens newly opened store The warehouse distribution center was established before to reduce coordination costs and transaction costs. However, due to the poor network environment and policy restrictions in China, Wal Mart's satellite communication system cannot play a role. If we cannot establish enough stores in China, the mode of using dedicated distribution centers to serve stores around the country will in turn increase logistics costs. "