On January 12th, the first Costco Shenzhen store in South China opened to welcome customers. This is the sixth store opened in Chinese Mainland by market opening customers, and also the first offline store opened by market opening customers from East China to expand business layout in South China. The shopping area reaches 15000 square meters, and the three story parking lot has set up nearly 1000 parking spaces,
On the day of the opening of the market, it attracted attention. It is said that some people went to queue in the early morning, and during peak hours, they had to queue outside the store for more than three hours. Moutai, Herm è s, and Strawberry Bear were basically "in seconds", and the scene was very popular.
At 9:00 am on January 13th, a reporter from Huaxia Times arrived at Kaishike's Shenzhen store for an on-site visit. Compared to the first day of opening, there was no crowded traffic on Saturday mornings, making it more enjoyable. On that day, signs and guidance were set up on surrounding roads, and the pedestrian walkway near the opening of Longhua People's Road still had a long warning line. From the under construction Xinghe Kaishike Global Business Center, walk southwest along Minda Road for about 300 meters to reach the entrance of the supermarket. Along the way, the reporter did not see the crowds rushing in. The flow of people did not seem to be high, and there was no need to queue outside the store.
However, when the reporter arrived at the parking lot on the second floor of the store through a narrow diversion entrance, they saw a scene of crowds. Consumers had to follow the crowd of Wu Yang through dozens of "S" shaped fences to reach the entrance of the store. The store is also bustling, but overall there is a cooling trend and it is not as crowded as before.
On January 15th, residents living near the Shenzhen branch of Kaishike told our reporter that Kaishike now not only does not need to queue, but also no longer needs to be diverted and can enter directly through the main entrance.
Exploring the First Weekend of the Opening of the Shenzhen Store for Market Customers
"There was indeed not much foot traffic in the morning, perhaps because today is the weekend and everyone is still sleeping in the morning on a day off." On the 12th, an employee of the opening store responsible for handling membership cards at the entrance of the store told a reporter from the Huaxia Times.
As soon as you enter Minda Road, you can see the staff of the opening customers wearing eye-catching red vests. Their main task on this street is to guide and assist consumers in opening membership cards. Roughly speaking, there are about seven or eight staff members responsible for card issuance work. When applying for a membership card, a staff member emphasized to the reporter, "You can't go in and make purchases without applying for a card." On that day, the previous discounted card price of 199 yuan/year has been restored to the original price of 299 yuan/year.
Subsequently, the reporter and a group of consumers in groups of three or two walked through more than ten "S" shaped fences to reach a remote small door leading to the parking lot. Consumers had to climb up the second floor of the dimly lit staircase that only accommodated two people in parallel to reach the parking lot on the second floor of the opening store. As soon as we arrived upstairs, what caught our eyes was the long and majestic queue. The parking lot is crowded with people, requiring dozens of S-shaped fences to reach the entrance of the store. In the crowd, there were people carrying oversized hiking bags, pulling suitcases, filming videos, making phone calls, and the parking lot was buzzing like a swarm of bees. Someone joked, "After walking so much, it's just like exercising." "Spring Festival travel doesn't have so many people, right?"
However, due to the continuous flow of people, the reporter entered the parking lot around 9:15 pm and the entire journey into the store only took about 15 minutes.
However, the reporter noticed that at the entrance of the store, no staff member requested the reporter or consumers in the same group as the reporter to present their membership cards, and non member groups were not screened. The verification at the cashier is not strict, and consumers who have not carried or applied for a membership card seek help from the opening customer members to settle the bill. There are also many posts on social media platforms, such as "Holding Costco secondary cards and exchanging Sam's secondary cards", becoming an online exchange point for opening customers and Sam's membership cards.
In the store, there was a bustling scene of people jostling one after another. During the investigation, the reporter found that the main areas that attract consumers to gather and stop are the fresh vegetable and fruit areas and the dairy baking areas, with the most dense passenger flow. In these two areas, consumers need to avoid each other in order to avoid larger shopping carts piling up together and blocking the passage. However, a consumer who came shopping for two days told reporters, "Saturday is no longer the craze of the opening day."
According to relevant media reports, some people even went to queue up at 4am on the first day of the opening of Kaishike Shenzhen store; There was a traffic jam of nearly 2 kilometers near 8 a.m; When the passenger flow is maximum, it takes at least three hours to queue for entry, and it also takes about one hour to pay. On that day, in addition to consumers who held the mentality of "tasting the first bite", there were also many people who came to admire international luxury brands such as Moutai and Herm è s, as well as Disney Strawberry Bear dolls.
A resident living in a nearby residential area told reporters, "I came over after dinner last night and saw so many people queuing outside at night. Any discounts offered on the opening day were not very popular, so I directly 'advised them to leave'. According to her, customers only dispersed after 10:30 pm on the opening day.".
Six bottles of 53 degree Maotai liquor were sold out half an hour after opening on the 12th. It is understood that this batch of Maotai is sold in full boxes at a price of 20499 per box, with a total of six bottles per box. On the 13th, the on-site staff told the version reporter that it should not be re listed.
From consumer shopping carts, it can also be found that products such as food, fruits, and fresh produce are more popular, especially the 1.5kg large fruit diameter strawberry priced at 109.9 yuan and the 2.5kg 3J cherries priced at 189.9 yuan, which are popular products that can be seen in every shopping cart. Many consumers have also purchased the popular Disney Strawberry Bear, and signature products such as grilled chicken and steak have also been popular. The reporter found out that the medium-sized Disney strawberry bear priced at 399 yuan had been sold out after only an hour of opening on that day. A consumer bought the last large strawberry bear priced at 1999 yuan in the store, and there were few small dolls left with a hot water bag inside.
Many consumers believe that it would be quite good without so many people. A couple with a family told reporters that they chose to come to the market to spend the weekend because of the high-quality products, but the overcrowding left them quite disappointed. On that day, at the exit of the supermarket, there were many people queuing up at the card exit.
On January 15th, residents living near the Shenzhen branch of Kaishike told reporters that Kaishike now not only does not need to queue, but also no longer needs to be diverted and can enter directly through the main entrance.
Close combat with Sam
Less than 4 kilometers away from the Shenzhen branch of the City Guest, there is another well-known warehouse supermarket, Sam's Club, which opened in 2017.
Coincidentally on the weekend, there was also a lot of foot traffic at Sam's Longhua store. The reporter saw in the videos sent by consumers shopping at Sam's Longhua and Foton stores that although there is no need to queue up when entering the store, the consumers inside are also crowded. The reporter learned that many Sam's members believe that the opening of the market can attract a large part of the customer flow, but it seems that in response to the loss of customer flow, Sam has played a price war card of reducing product prices.
During an interview with the Huaxia Times, Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, analyzed that the Shenzhen store of Kaishike is less than 4 kilometers away from the Sam's Longhua store. This location selection is beneficial for Kaishike to gain more market share and consumer attention in the fiercely competitive market, and to achieve a gathering effect with Sam's Club stores, as well as a price and service comparison effect.
However, Yuan Shuai, Executive Vice President of the Agricultural, Cultural and Tourism Industry Revitalization Research Institute, told the Huaxia Times that although the opening customers may hope to expand market share and enhance brand awareness through competition with Sam's Longhua stores. But it also needs to face competition and challenges from other warehouse style member stores.
It is worth noting that compared to Sam's expansion, the actions of the opening customers in China are clearly conservative. In 1996, Sam's first store in mainland China landed in Futian, Shenzhen. As of January 10, 2024, Sam has opened 47 stores in China.
At present, there are more than 870 stores and 120 million members in 14 regions around the world. However, the first store in Minhang, Shanghai, officially entered the market in Chinese Mainland in 2019, opening Suzhou stores, Pudong stores, Ningbo stores and Hangzhou stores successively.
Lai Yang, a member of the Expert Committee of the China Federation of Commerce, stated in an interview with the Huaxia Times that the consumer profile of market opening customers is mainly focused on the middle and high-income groups. They value shopping experience and service quality, value high quality, and also value cost-effectiveness. "The reason why market opening customers choose to open their first store in South China in Longhua may be due to factors such as dense population, convenient transportation, and good commercial environment, which meet the requirements of market opening customers for store location selection. In addition, there are many high-end residential areas and large enterprises in Longhua, which also provide potential target customer groups for market opening customers." Lai Yang said.
Hong Yong, an associate researcher at the E-commerce Research Institute of the Research Institute of the Ministry of Commerce, stated in an interview with the Huaxia Times that Shenzhen is one of the special economic zones in China, with high consumption capacity and commercial vitality. In addition, Shenzhen's proximity to Hong Kong may also help attract consumers from Hong Kong and surrounding areas.
As of the opening day, the number of membership cards opened exceeded 140000, ranking first in the world, with 10% of Hong Kong residents applying for them; The sales volume also refreshed the sales data on the opening day of the Chinese market, ranking first in the country. According to social media reports, Hong Kong tour groups have started to come to sweep goods over the weekend.
According to public information from the Industry and Information Technology Bureau of Longhua District, Shenzhen, in order to facilitate Hong Kong customers to come shopping, "opening shuttle buses" have been set up at Shenzhen North Station and Hongshan Metro entrance since the opening day. In addition, cross-border buses from Hong Kong to open customers are also under planning and are expected to be opened around the 20th of this month.
Has the warehousing and membership store business model been successful despite the dual nature of ice and fire?
Costco's first quarter financial report for the 2024 fiscal year showed a revenue of $57.8 billion, a year-on-year increase of 6.2%, and a net profit of $1.589 billion, compared to $1.364 billion in the same period last year.
Jiang Han, a senior researcher at Pangu Think Tank, said that the reason why market makers can stand out among many competitors is firstly due to their premium effect as "internet celebrity" brands and strong market competitive advantages. On the one hand, Kaishike has won the favor of consumers and formed a strong brand influence with its unique membership retail model, high-quality products, and high-quality service experience. This brand premium not only increases consumer willingness to pay for the products of the opening customers, but also sets it apart from many competitors. On the other hand, the omnipotent and disadvantageous membership business model, strong product strength advantage, and price advantage comparable to discount stores are all core advantages that differentiate opening customers from traditional supermarkets.
Bo Wenxi stated that in order for warehouse style member stores to stand out in fierce market competition, they need to have high-quality goods and services, efficient supply chain management and cost control, attractive membership benefits and services, as well as continuously launching innovative products and marketing strategies to adapt to changing market demands and consumer tastes.
In recent years, the domestic retail industry has evolved into a dual trend of ice and fire. On one hand, traditional hypermarkets and supermarkets staged scenes of store closures, evacuations, and major setbacks; On the other hand, warehouse style membership supermarkets are expanding rapidly.
But just by the surface heat, it is hard to say the success of the warehousing membership store business model. Yonghui, Carrefour, Renrenle, etc. have all entered the warehouse club, but it seems that they have not achieved outstanding results.
According to Lai Yang's analysis, in the long run, the supermarket format and e-commerce lack competitive advantages in terms of cost and convenience. The current success of Kaike and Sam's Club in China is essentially the success of the supply chain, not the success of the warehousing membership store format. The history of Wankelong and Metro AG in China is obvious to all. Chinese supermarkets blindly imitating market opening customers and Sam's Club stores have no future.
Hong Yong believes that the emergence of warehouse style membership stores such as Kaishi Ke may have a certain impact on traditional commerce. These member stores usually sell large quantities, low prices, and high-quality products, attracting a large number of consumers. This may lead to a certain degree of market share compression for traditional businesses. However, traditional businesses can also cope with this impact through their own advantages and characteristics. Traditional business can focus on providing more personalized and professional services to create a unique shopping experience. In addition, traditional business can strengthen interaction and communication with consumers, establish good customer relationships, and improve consumer loyalty.