Yesterday, the largest chain member supermarket Costco opened in Shanghai and opened the first store in Chinese mainland. Surprisingly, just half a day after opening, Costco's official website was forced to issue a notice that it would suspend business in order to provide a better shopping experience due to the crowd congestion in the store. At a time when traditional supermarkets are suffering and Carrefour and Metro's business in China are struggling, Costco, a newly unveiled giant, is so sought after, and the 'consumption password' hidden behind it is thought-provoking.
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Stores were crowded on the first day of opening
At 8:30 a.m., Costco's first store in mainland China opened to welcome guests. Swarming consumers quickly filled many shelves, and Costco's star products such as roast chicken, mini kosong and cupcakes quickly ran out. Some people buy laundry detergent boxes by boxes, while others buy 20 bottles of limited whisky at a price of 2559.9 yuan. One hour after opening, all 22 cash registers were full of customers, waiting for at least 30 minutes, and high-priced commodities such as Maotai wine and big brand bags were quickly robbed.
Different from the common supermarket hypermarkets in China, the furnishings of Costco stores are more like the storage area of IKEA, where boxes of goods are stacked with high shelves, and even the volume of shopping carts is twice that of ordinary supermarket shopping carts. It is understood that the first Costco in the mainland is located in Minhang District, Shanghai, covering a total area of 20000 square meters and a shopping area of 14000 square meters. It adopts the first floor of American Costco standard specifications, and has 27 major categories and nearly 4000 single products.
The burst of people on the first day of opening has something to do with Costco's brand awareness and opening commodity discount. According to Costco officials, Costco's non food department store prices are 30% to 60% lower than the market price, while food prices are 10% to 20% lower. During the opening period, 60 kinds of commodities including household appliances, fresh food, daily necessities, travel equipment, etc. were covered by the preferential commodities in the store. For example, a sharp 45 inch TV costs 1755.9 yuan for Costco, and 1899 yuan for products of the same model in sharp tmall flagship store; One bottle of Feitian Maotai is 1498 yuan, which is 1 yuan cheaper than the official retail price; A box of 24 bottles of 300ml Coca Cola costs 44.9 yuan for Costco and 48 yuan for tmall supermarket.
Pay 299 yuan before you go shopping
"In Jinshan company, when executives go to the United States on business, everyone will go to Costco. The things inside are cheap and of good quality." Lei Jun, founder of Xiaomi, is undoubtedly a super fan of Costco. He has repeatedly mentioned in his public speech to learn from Costco: 'the essence of Internet thinking is to make things to the extreme. Costco can still live well when the gross profit of goods is reduced to 1% to 14%. Although it is a traditional industry, it is a new thinking. "
As the second largest retailer in the United States, the seventh largest retailer in the world and the first Dalian lock membership warehouse supermarket in the United States, Costco has more than 700 stores all over the world, covering North and South America, Europe and Asia. According to Costco's latest financial report, the revenue in the third quarter of fiscal 2019 was US $34.74 billion, a year-on-year increase of 7.4%, realizing the growth for 15 consecutive fiscal years, and the net profit was US $906 million, which is roughly consistent with the member revenue, which means that Costco, which wins at a low price, mainly relies on the membership revenue.
Different from the operation mode of domestic supermarkets, Costco does not charge channel fees from background suppliers, nor does it earn the front desk purchase and sales price difference of goods. Its main operation focus is to attract consumers to join members with cost-effective, private brand and selected commodity strategies to obtain high loyalty. By 2018, the total number of paying members had reached 51.6 million, and the global membership renewal rate was 88%.
At Costco's first store in Shanghai, the annual fee of members is 299 yuan. You can apply for a family card free of charge, which is held by family members over the age of 18. Costco sold 199 yuan / year membership card in advance in Shanghai, quickly accumulated tens of thousands of members, and has returned to the normal price since the opening day.
Membership system or acclimatization?
'once I've been to Costco twice, I can't leave Costco anymore.' This is a joke of many American consumers. For curious Chinese consumers, the new beautiful customized suitcase of more than $100, the Dyson vacuum cleaner of more than $200 and the CK brand T-shirt of more than $20 are undoubtedly very attractive. However, when these customized big brand goods enter China, they will still face high tariffs and the price will not be too close to the people.
Lai Yang, vice president of the Beijing Institute of business economics, believes that Costco may not be able to maintain the obvious price advantage in the United States according to China's existing tariff system.
Previously, the membership supermarket model has been acclimatized in China. The reporter learned that the paid membership model was first brought into China by Sam's Club under Wal Mart in 1996. In the same period, Metro, pullsmart, Wankelong, etc. but they have experienced setbacks in their subsequent development, or cancel the paid membership system, or withdraw from the Chinese market. At present, only Sam's club still adheres to the paid membership system, with a minimum membership fee of 260 yuan.
"The U.S. population is scattered, and the cost of delivering goods home is very high. For American consumers, it is just necessary to go to the suburbs for large-scale one-stop shopping on weekends. But this is not the mainstream lifestyle of domestic consumers. " According to Lai Yang's analysis, at present, online shopping in China is very convenient, including cross-border purchase of characteristic imported goods. The formats of hypermarkets and supermarkets are not optimistic. " The Internet has revolutionized the commercial circulation system and brought about the collapse of the traditional price system. Domestic local retailers such as RT mart, Carrefour and Yonghui are also actively seeking integration and transformation. Costco chooses to enter China at this time and faces great challenges. "
The reporter noted that Costco's fresh food accounts for a relatively low proportion due to its remote location and foreign consumption habits. According to the company's announcement, Costco accounted for 11% of fresh food in 2005 and only 14% in 2018. This product structure is logical for American consumers who prefer milk and meat and mainly consume cold food, but it is also a problem whether it can be accepted by Chinese consumers who mainly consume hot food and are used to daily fresh purchase for a long time.