Lasting more than half a month, expanding from Shanghai to the national market, international retail giants and the new generation of domestic retailers "go head-to-head"
Durian mille-feuille triggered a price war and opened a new model of member supermarkets
■ Jiefang Daily reporter Cha Rui
In early August, Hema quietly launched the "Moving Mountain Price" promotion in Shanghai, without much publicity, but because of a durian mille-feuille cake that caught fire. The reason for the fire is not how delicious the cake is, but the price battle between Hema and Sam's Club.
The price war, which lasted for more than half a month, began to expand from Shanghai to the national market this week, and the international retail giants and the new generation of domestic retailers came to a "head-to-head" showdown. From price to supply chain, behind Sam and Hema fighting for the low price of Internet celebrity cake is a membership battle. Experts believe that this price war may open a new model of Chinese-style member supermarkets.
"Moving mountains" and "tug-of-war"
Membership store competition goes to the Red Sea
A few years ago, Sam's 1kg durian mille-feuille cake has become an Internet celebrity item on Xiaohongshu, priced at 128 yuan a year, until this month, Hema X member store suddenly reduced the price of the same specification cake to 99 yuan, and Sam's durian mille-feuille reduced the price by 0.1 yuan to 98.9 yuan on this basis. Immediately afterwards, Hema dropped another 10 yuan, followed by Sam to 88 yuan..."You are 1 yuan cheaper, I will drop 1 jiao", the price war went back and forth, and finally, the price of 1kg durian mille-feuille cake stopped at 85 yuan in Sam's price, and the price of Hema X membership store was 79 yuan.
Perhaps it is the "first victory" of the durian mille-feuille price war, Hema has expanded the scope of "moving mountain prices" to more baked and cooked food products, Swiss rolls, roast chicken, mochi and other Sam's Internet celebrity goods, you can find the same low-priced model in Hema .
When Sam and Hema were "fighting" and consumers were eating wool, Meituan also joined the battle and launched the "tug-of-war price", a 400-gram durian mille-feuille direct half-price promotion, rubbing the heat of a wave of price wars. Similar to Hema and Sam's, Meituan's "tug-of-war" products belong to its own brand, from its "Elephant Chef" brand, and the category is mainly fresh.
"Freshippo's 'Moving Mountain Price' wants to remove Sam? Meituan's 'tug-of-war' price wants to pull out Hema? Many netizens did not forget to ridicule while eating wool: the real business war turned out to be so "simple".
How effective is this price war promotion? The reporter visited the Hema X member store and Sam's Club store located in Putuo Zhenru, and there was no crazy rush to buy at the scene, but in front of the counter of Internet celebrity goods such as durian mille-feuille and whole roast chicken, there were obviously more consumers who stopped to buy, and the supermarket also put out a sign that each person was limited to 2 copies. Benefiting from the extremely high degree of topicality, the durian mille-feuille counter not only attracted some citizens to check in and take photos, but even attracted some anchors who bought on behalf of others to come to live broadcast. Data obtained by the reporter from Hema shows that in the past month, the sales of durian mille-feuille cake increased by 11 times month-on-month, and also drove the sales of other products. Since the beginning of August, Shanghai residents have bought the largest number of antibiotic eggs, Hema daily fresh milk, fresh meat mooncakes, Kirin cream watermelon and Peruvian large blueberries, and from the perspective of sales growth, Häagen-Dazs chocolate ice cream, Hema mixed nuts, Swiss rolls and other goods have also achieved more than 8 times growth.
Starting this week, taking advantage of the "east wind" of durian mille-feuille, Freshippo, which has earned enough attention and sales, has promoted the "moving mountain price" to 15 cities across the country such as Guangzhou, Hangzhou, Shenzhen and Nanjing, and consumers can also get a free durian mille-feuille cake when they spend 499 yuan in stores. In fact, this is not the first business war between Hema and Sam, as early as before the opening of the Hema X member store in 2019, Hema and Sam also caused a "live frozen dispute" in the seafood category. The "one of the two" disputes among suppliers in 2021 has pushed the dispute between Sam's, Hema and Carrefour's member stores to the center of public opinion. Since then, domestic membership store competition has gradually moved towards the Red Sea.
Low price non-competitive endpoint
Drainage is the real goal
The business war that lasted for four or five years finally pointed to the price, but the low price is not the end of the dispute between Sam and Hema, and attracting customers is the purpose of "moving mountains".
As early as 1996, the first Sam's Club store opened in Shenzhen, and it was not until Costco's first mainland store opened in Shanghai in 2019 that the membership supermarket ushered in the highlight of the full flow of customers. After more than 20 years of development, domestic membership stores have formed three forms: the first type is represented by Sam's and Costco, focusing on offline physical warehouse stores, mainly through membership fees to make profits; The second category is new retailers represented by Freshippo, which integrate digital and multi-format and have the advantages of online and offline dual-channel operations; The third category is membership-based e-commerce represented by JD Plus members, and there are no physical stores.
At present, Sam is still firmly in the top position of domestic membership-based supermarkets (except membership-based e-commerce). Data show that the number of paid members in Sam's Club China announced that it exceeded 11 million in November last year, and as of June this year, Sam's Club has more than 400 offline stores across the country and maintains a fast store opening speed. In contrast, Hema X member stores have only 6 stores nationwide and nearly 40 million paid members.
According to data from the third-party platform Yuehu iApp, in June this year, the user overlap rate between Sam and Hema (including Hema Xiansheng, X member stores and other formats) was as high as 6.43%, and Sam's full network penetration rate was about 1% lower than that of Hema and about 2 million fewer monthly active users than Hema . Comparing the two sets of data, it is not difficult to find that Sam's far exceeds the Hema X member store in terms of the number of stores and members, but the user stickiness is not as good as that of Freshippo, and more importantly, the user groups of the two are highly overlapping, which is equivalent to more than 1300% of Sam's paid members and Hema users. As the head of Freshippo, Hou Yi has long predicted this: Hema X member store faces the same customer group as Sam and Costco - urban middle-class and above consumer groups.
The reporter interviewed a number of consumers and found that the development of domestic membership-based supermarkets is also accompanied by the loss of a certain number of members. Mr. Gu, who lives in Songjiang, once purchased membership cards for both Costco and Sam's, but eventually abandoned Sam due to the limited need to balance both purchases during the one-year validity period. Mr. Feng, who lives in Putuo, switched from Hema X Member Store to Sam's Club.
In addition, the downward trend of the global economy has also cast a shadow on the retail industry, and membership-based supermarkets whose unit prices far exceed those of ordinary supermarkets are the first to feel the chill. Taking Costco as an example, total revenue in the fiscal third quarter was $536.48 billion, up 1.9% from the same period last year, but missed market expectations of $546.6 billion, and net profit attributable to the company fell 3.8% from the same period last year.
Controlled healthy competition
No one has a test supply chain
"This price war is a little different, in the past, the price of distribution channels was hit, the purchase price was very transparent, and the price war often fell into vicious competition between you and me." Lao Shuiling, director of the e-commerce research center of Shanghai University of Finance and Economics, said that this price war focuses on self-operated products, has independent pricing power, can control costs well, and can force merchants to improve production efficiency.
Under the balance of low prices and profits, the importance of supply chain is becoming more and more prominent. Hou Yi has calculated an account: there is a 5-10 times price difference between domestic retail prices and production costs, there are many factors such as sales channels, logistics costs, marketing and so on, if the price difference can be narrowed by optimizing the supply chain, retailers can not only ensure profits but also compress costs to benefit consumers.
Sam has always been a "master" of the supply chain, relying on a perfect membership system, successfully operating its own brand Member's Mark, and then relying on Wal-Mart's perennial suppliers and foundries, and finally retaining millions of paying users with cheap enough self-owned goods.
Continue to optimize the supply chain, appropriately reduce prices and profits, in exchange for the brand loyalty of members, and ultimately expand the member pool, which in turn strengthens the supply chain. According to Lao Lingling's observation, this price war between Hema and Sam is a controllable and benign competition, especially in the "new retail test field", Shanghai took the lead in launching the competition model of two membership manufacturers exceeding the benchmark, which also has strong guiding significance for the promotion and replication of the national market.
In addition to being cheap enough, "no one has me" Internet celebrity items are also an important factor in testing the supply chain. In Hou Yi's view, consumers will not buy all products on one retail platform, there is no one-stop shopping, so there must be explosive products that impress consumers, discount promotion is not simply low price, discount is differentiated commodity competition, vertical supply chain, ultimate operating costs.
For example, at the beginning of Sam's launch of durian mille-feuille cake, this cake was not common in the market, so it attracted many citizens to snap up and became "Sam's must-buy Top10" in the mouths of netizens. From the initial benchmarking of Sam and Costco, Hema X member stores copied their own products, and now they have successively launched innovative products such as custard flowing eight treasure rice and pickled tuk fresh green ballage, which have also been recognized by the market.
The "latecomers" in the supply chain are now catching up, making the "predecessors" feel pressure. A Reuters report quoted Walmart China CEO Zhu Xiaojing as saying that Freshippo has "outstanding advantages in the food supply chain" and has become the only competitor of Sam's Club in China. (Jiefang Daily)