The fresh food industry ushered in rapid development in 2017. As many as a dozen giants are rushing to the beach, such as Ali's Box Horse Fresh, Yonghui's Super Species, Suning's Su Fresh, Jingdong's 7Fresh, and BBK's Fresh Food Evolution. Each of them has made a far-reaching plan for opening new retail stores. And in 2018, Box Horse and Yonghui gradually evolved into two major head brands of new retail, and both plan to open 100 stores in 2018. But the two have experienced different development situations.

The main fresh new retail hot and wild two years later, the market entered a more calm, rational development cycle, but there are still models immature, difficult to profit and other hidden problems. Yonghui, box horse who will become the last king, which became the topic. When the new retail development enters the second half, it is a new test and iteration for Box Office, Yonghui, and even the whole industry.

500 billion and 1 trillion target

Yonghui Supermarket has been moving a lot lately. Following the divestment of the cloud creation plate from the listed system, lifting the founder Zhang Xunsong, the former CEO Zhang Xuanning concerted action person, December 20, Yonghui Supermarket held in Fuzhou, the fourth session of the replacement of the board of directors once again raised concerns.

According to the announcement, the Board of Directors elected Hong Kong Milk Company (holding 19.99% stake in Yonghui Supermarket) Chairman Ben will be Ren Ming Keswick (Benjamin William KESWICK) for the fourth session of the Board of Directors of the company's rotating chairman; Yonghui Supermarket founder and former Chairman Zhang Xuan Song for the company's executive director and legal representative.

Zhang Xuanning, the former executive director of Yonghui, will withdraw from the actual management position as the person in charge of Yonghui Yunchuang, which was previously spun off from Yonghui Supermarket. Earlier, Yonghui Supermarket announced that it would transfer 20% of its stake in Yonghui Yunchuang to Zhang Xuanning, and Yonghui Supermarket's shareholding in Yonghui Yunchuang dropped to 26.6%.

For the rotating chairman of the board, Zhang Xuan Song said the move is to learn from Huawei, hoping to use this as a way to become a company that strengthens the decision-making of the board of directors, and gradually walk from the scale of 100 billion to the scale of 500 billion or even a higher platform.

"The future of corporate governance requires a virtuous and capable team to drive the company, rather than managing through equity and power. World-class large companies are such a development process, and the company also wants to try." Yonghui said that there are many managers who are obsessed with controlling interest and power, and it is difficult to shift over when there are problems with strategy.

In the specific business, Yonghui said that the future will return to the supermarket business, so as to face the competition directly from the Ali system. Cloud super store opening plan this year is 135, next year is a new 150, and then explore small stores to strengthen the ability to go home and to the store. Yonghui is expected to have 20% growth next year.

It is understood that the business structure of Yonghui Supermarket is divided into four major segments, including cloud super, cloud creation, cloud business, cloud gold. The "cloud super" focuses on traditional supermarkets, and the plate involves red label stores and green label stores; the "cloud creation" includes Yonghui Life Store, Super Species, Yonghui Life APP and other businesses, carrying innovation and exploration functions.

Previously, on August 9, the first supplier conference was held in Shanghai. Hou Yi, CEO of the box horse, said at the meeting that China's retail industry is a super blue ocean, and if China's retail industry can achieve a 30% market share, it must be a trillion dollar sales scale. The target that Boxer has set for itself is to occupy 30% of the market share in China's retail industry.

As we all know, the box is Alibaba's new retail test bed. Hou Yi said, (Alibaba) "five new" strategy is the core of the new consumer-oriented retail. The future of the box is willing to spend 12 years to turn the "five new" strategy into an integrated ecosystem.

Hou Yi said that the new retail is based on new technology and new energy, artificial intelligence, the Internet of Things, automation and other new technologies to promote the development of the retail industry. And the retail industry is the leader of the whole industry, which will drive the development of new agriculture, new industry and new finance. Such a pattern can definitely be realized in China in the future.

To this end, the short-term goal set by Box Horse is to be able to complete the full coverage of China's first and second-tier cities in 2021, and serve 300 million consumers. Currently, Boxma has entered 16 first- and second-tier cities across the country, serving about 15 million consumers.

Boxma is committed to establishing a new zero-supply relationship. For the category cooperation, the future strategy of Boxmart is to cooperate with a single brand in a single category. A category of future cooperation with only one brand or supplier, and will not take multiple categories, multiple suppliers "wheel alternative" cooperation. And box horse plans to own brand goods (unique) sales ratio, in the next three years to 50%.

Yonghui to the left, box horse to the right

Early last year, the new wave of retail opened, the retail, Internet giants have layout. According to the current progress of the national layout, in the head of the camp only box horse and Yonghui super species, but the development of the two situations are different.

As a new retail format, Yonghui Yunchuang has its own ambitions. Yunchuang to focus on "high-end supermarkets + fresh food and beverage" super species, and positioning "fresh + convenience" community store Yonghui life and APP two-way force. In July 2016, the management team increased the registered capital of Yunchuang to 600 million yuan, and accepted the capital injection from Today Capital after the share reform. Yonghui Yunchuang has since begun to run faster on the road of expansion.

In 2017, 27 super species opened, and 172 Yonghui Life opened. After the first taste of the sweetness of overfulfillment, by 2018, Yunchuang had a crazier store opening plan, expecting to open 100 super species and 1,000 Yonghui life stores in the whole year.

However, the expansion is not smooth, in the first half of 2018, the company added 96 new Yonghui Life stores. In the third quarter, 137 new Yonghui Life stores were opened and 138 Yonghui Life stores were signed; as of November 30, super species had 61 stores in Fuzhou, Beijing, Guangzhou and Shenzhen and other cities. All are far from the planned target.

The first store of Boxmart was unveiled in Shanghai Jinqiao at the end of 2016.On July 14, 2017, after Jack Ma, Zhang Yong and others tasted freshly baked seafood at Boxmart Fresh Life, Ali's internal low-key preparations for more than a year for a new retail test model was pushed into the spotlight.

In the whole of 2017, Box Horse opened 25 stores in seven cities across the country. Like super species, box horse has set the number of new stores to be opened in 2018 at 100.

Data shows that as of July 31, 2018, Boxma has 64 stores across the country, distributed in 14 cities, serving more than 10 million consumers.On November 30, with the landing of the Wuhan Dimensions store of Boxma Fresh Life, Boxma's store number in the country reached 100 stores. Boxma has completed the 2018 store opening cloth mark in advance.

Gen Xian, general manager of market operation of box horse, revealed on December 20 that box horse has opened 109 stores, plus 13 stores in preparation.The number of box horse opening stores in 2018 will be 121 stores.

In September this year, box horse fresh life for the first time publicized the operational data. The single-store ping efficiency of the box store that has been open for more than 1.5 years is more than 50,000 yuan, the average daily sales of a single store is more than 800,000 yuan, and the proportion of online sales is more than 60%, and the operating efficiency is more than 2-3 times that of the same type of hypermarket.

And financial data show that Yonghui Yunchuang has continued to lose money since its creation, with a cumulative loss of nearly 1 billion yuan in three years. 2016 and 2017, Yonghui Yunchuang lost 116 million yuan and 267 million yuan respectively. In the first three quarters of this year, Yonghui Supermarket's net profit of 1.018 billion yuan, a year-on-year decline of 26.9%, of which the loss of cloud creation business amounted to 617 million yuan.

In fact, the expansion of the unsuccessful Yonghui Yunchuang in the profitability of Yonghui Supermarket is the key to divest this business.

"In the first nine months of this year, Yonghui Yunchuang lost 600 million yuan, and if sales continue to increase in the future, then the loss will be further expanded, which is different from the company's board of directors on the definition of Yunchuang segment, and is not in line with the interests of shareholders of the listed company as a whole." Yonghui Supermarket Secretary Zhang Jingyi explains why it is necessary to divest the cloud creation business in this way.

Who will be the last king?

New retail will account for 22.4 percent of China's total retail sales of consumer goods in 2018, a nearly three-fold increase from 2013, and is expected to increase to 33 percent by 2023, according to market research and consulting firm Inventec.

The Foresight Industry Research Institute predicts that the compound annual growth rate of new retail transactions in the next few years will reach 115.27%, and the market size will exceed 1.8 trillion yuan in 2022.

The new retail market has a broader outlook, and the Box Office and Yonghui Super Species in the head camp will be the focus of the new retail track.

Economist Song Qinghui said that the current market of new retail supermarkets are not obvious advantages and disadvantages of each, but there are obvious and key differences. For example, the super species is oriented towards families with higher incomes, and is generally located near middle and high-end office buildings; Box Ma Fresh Sheng target consumers are the new generation of post-80s and post-90s consumer groups. Their models are essentially the same, no one is better than the other.

And in terms of the development progress in 2018, the problem of profitability will greatly affect the expansion progress of the box horse and Yonghui. The third quarterly report released by Yonghui Supermarket shows that Yonghui Supermarket's revenue in the third quarter increased by 21.67% year-on-year to 52.69 billion yuan, but the net profit was dragged down by Yunchuang by 26.90%.

"The same model but different earnings, a big reason for this is that the two really connotation is not the same product. Boxmart is more like a hypermarket, while Super Species is a fresh food store. In a highly competitive environment, super species has limited appeal to consumers. Restricted by online technology, the online sales of super species account for a lower percentage than that of Boxma." Retail expert Yun Yangzi believes.

In addition, industry insiders pointed out that in the old and new retail competition, the emphasis on branding and supply chain formalization of the box horse in a higher cost basis to give consumers preferential treatment. "Thin margins, as well as the model of food and beverage processing is a major key for Ali to be able to beat the box horse model."

Despite Yonghui Yunchuang's worrying profitability, and even rapidly expanding losses this year, it was unable to fulfill its store expansion goals. But industry sources are still bullish on Yonghui.

Xu Rongcong, chief analyst of China Merchants Securities, said that in the A-share, long-term bullish on Yonghui Supermarket, Yonghui's supply chain volume is much larger than the box horse, the market is very large, the future market share will be more concentrated.

Retail definitely need to talk about supply chain, supply chain is even the most important point. Xu Rongcong said, Yonghui is a direct procurement model, it is doing very well in the traditional track, is the first. "Every business will have a long board and short board, now the Internet to intervene in retail, no supply chain, procurement is too small, it is difficult to form a supply chain, only through the secondary market or supplier procurement."

Cao Lei, director of the E-Commerce Research Center, said that the advantage of the box horse is that there is no historical baggage, and the top-level design is good. The box horse (the model) is the heaviest in store positioning, so the barriers are also the highest. The box horse already has 100 stores, the largest scale, is the industry is more optimistic. "One and a half years of profitability is a very good performance even in the traditional super industry."

Yonghui and box horse who will be the last king? This remains to be tested by the future market. In the view of Wei Hang, executive vice president of the Business School of Shanghai University of Finance and Economics, the first half of the new retail is mainly embodied in the Internet-induced changes in the field, which in turn leads to changes in logistics, information flow and capital flow. The box horse has gained an advantage in this stage.

At present, new retail has entered the second half, Wei Hang said, which is mainly embodied in the globalization, large-scale and customization as the characteristics of the supply changes, to the convenience, quality, personality, experience as the demand changes and mobile Internet, data technology and other representations of the new technological changes. Who can take advantage of the first opportunity, will be able to lead the second half.

This article originated from the Observer Network

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