On November 6, it was reported by Lianshang Online that Wal Mart may start small store model testing in Shenzhen and Yunnan, and these small stores may learn from and imitate the form of Sam's cloud warehouse, relying on Wal Mart's large stores, select items, and expand online business in the previous warehouse model. On November 7, the interface news sought confirmation from Wal Mart, but no response was received.
In fact, Wal Mart tried the small community store model in 2018, opened about 10 "community stores" in Guangzhou, Shenzhen and other places in three years, but closed this business by 2021.
In the above report, Wal Mart's small store mode is probably the front warehouse mode. Although no hypermarket has set foot in the front warehouse mode at present, Sam, a member store brand of Wal Mart, has already played this mode skillfully.
Since 2018, Sam's Club has implemented the "store+cloud warehouse" model, achieving full coverage in multiple cities. At present, Sam's has nearly 500 pre warehouses nationwide, with an average daily order volume of about 1000 orders per warehouse and a unit price of over 200 yuan per customer. According to the convenient e-commerce delivery service launched by Sam's Club, members can enjoy various delivery options such as "Express Delivery", "City wide Delivery", and "National Delivery" through the Sam's Club app, achieving a convenient shopping experience of online ordering and fast delivery.
These front warehouses, relying on Sam's stores, have brought performance returns to Wal Mart for many consecutive years.
On August 15, Wal Mart announced its results for the second quarter of fiscal year 2025. Specifically for the Chinese market, the net sales for the quarter were 4.6 billion US dollars, a year-on-year increase of 17.7%, and the growth rate continued to expand for two consecutive years. Among them, the net sales of e-commerce business increased by 23%. In terms of sales, Sam's Club's membership store and online business continue to strengthen, with an e-commerce penetration rate of 49%, an increase of over 200 basis points compared to the same period last year.
On the contrary, in the past five years, the number of Wal Mart stores in China has continued to decline. According to the data of previous fiscal years, the number of Wal Mart stores in China has declined from 412 in fiscal year 2020 to 296 in fiscal year 2024 (as of January 31, 2024), and the number of stores has decreased by 116 in five years.
Every fiscal year, the negative growth of Wal Mart's performance in China is balanced by another business type, Sam. Wal Mart's financial report has repeatedly stated that the performance in China is mainly driven by Sam and e-commerce business.
This is related to the overall depression caused by the decline in offline customer flow and product homogenization in China's hypermarkets, and listed retail companies generally suffer losses. Yonghui Supermarket (SH: 601933) had a net profit attributable to its parent company of -1.32 billion yuan in 2023, while RT Mart's parent company, Gaoxin Retail (HK: 06808), had a revenue of 83.6 billion yuan and a net profit of 109 million yuan in the 2023 fiscal year.
In order to improve the current situation of losses, large supermarkets have entered the stage of adjustment and upgrading. In January of this year, it was announced that the first batch of 29 hypermarket stores in 8 cities across the country had completed upgrades. The upgrade actions included more segmented operations in terms of products, discount strategies, and expanding sales channels to all channels, gradually restoring the previous operation.
In June this year, Wal Mart was also exposed to the possibility of exploring other retail ecology. The retail we media Business Observer reported that Wal Mart was recently planning to build a new business model for the third tier market. This business model will "give up" the idea of building a supermarket with fresh food as the main diversion category, and will complement Sam's Club Stores, and make smaller packaged goods with the help of Sam's existing supply chain.
At that time, Wal Mart responded to the interface news that the above information was untrue.
If Wal Mart chooses to test the pre warehouse mode this time, it is likely to see the recent positive performance of players in the pre warehouse. Taking Dingdong Maicai, which specializes in pre positioned warehouses, as an example, its pre positioned warehouses are usually located near densely populated communities. By developing differentiated hot products (self operated pre made dishes, seasonal foods, etc.) and lower delivery thresholds, Dingdong Maicai obtains online customers. In order to ensure delivery efficiency within 30 minutes, Dingdong Maicai's approach is to place the goods in the corresponding warehouse in advance. After consumers place orders, the goods are delivered from the nearest warehouse to shorten delivery time.
Although this early model caused Dingdong to lose money year after year due to its high cost, in the past two years, with the increase of online ordering population and the closure of loss making city outlets, Dingdong's vegetable shopping ushered in profits. The latest Q3 2024 financial report shows that Dingdong Maicai's GMV was 7.27 billion yuan, a year-on-year increase of 28.3%, and its revenue was 6.538 billion yuan, a year-on-year increase of 27.2%. The net profit under Non GAAP accounting standards was 161 million yuan, a year-on-year increase of over 9 times. Dingdong Maicai is expected to achieve significant year-on-year growth in the fourth quarter.
In addition, Meituan Xiaoxiang Supermarket, Sam's Cloud Warehouse, and Pupu Supermarket are all outstanding players among pre warehouse players.
With the help of Sam's experience, the logic of Wal Mart's involvement in the front warehouse was established. But the challenge is that Sam's commodity quality and stable membership group have been verified in the Sam's Club Store itself. Wal Mart's front warehouse needs to go out from a crowd of front warehouse players. It is not easy to have differentiated commodity power, supply chain logic, and how to show the advantages of backwardness in this channel.