To find growth in offline business, chain retailers choose "warehouse-store complementarity"
Latest update time：2024-11-06
Reads：
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Instant retail is an extension of offline physical business.
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Author | Zhou Mingming
Editor
| Dai Congfei
The instant retail track, which had been quiet for a while, has become quite lively recently, with various "warehouses" attracting a lot of attention.
Sam's Club's forward warehouse business accounts for more than half of its total revenue and has achieved profitability, which has begun to feed back to offline stores. This is exactly what many retailers need. After the profit model was implemented, MINISO began to "open warehouses" on a large scale, and has now opened more than 500 "flash warehouses".
Why are retailers with mature offline channel layouts increasingly using the "warehouse format" to increase their instant retail business? What does "warehouse" mean to them?
01
Create incremental value for physical stores and feed back to offline stores
In the past, the instant retail supply model launched by Meituan, Lightning Warehouse, was mainly used in convenience stores. An important recent trend is that it has begun to extend to vertical sub-industries and retail brands with mature offline channels. Miniso is a typical example.
The lightning warehouse jointly developed by MINISO and Meituan is called 24H Super Store. It took 6 months of experimentation from the launch of the first store to seeing a clear profit trend.
In January this year, MINISO launched its first lightning warehouse, which was a trial run until June this year, during which 100 warehouses were opened. MINISO revealed that it had been iterating with Meituan during this period, including how to choose a location, where opportunities are, where problems are, and where problems are after the trial run.
Only after building a growth model and profitability did MINISO begin to accelerate its scale expansion. Currently, MINISO has more than 500 warehouses, making it the retail brand with the largest number of direct-operated flash warehouses, and plans to expand to 800 by the end of the year.
Before opening the Lightning Warehouse, MINISO spent a lot of time preparing and researching, starting in September 2023. Leifeng.com learned that before opening the warehouse, MINISO also went to Guangdong, Southwest China, and Northeast China to conduct in-depth research and exchanges with some local Lightning Warehouse brands. The result of the multi-party research is that the performance of the Lightning Warehouse exceeded MINISO's previous expectations.
What the outside world is curious about is that as a chain retail brand with a very mature offline layout and a high emphasis on offline, what is the intention of MINISO's "opening warehouse"?
The answer may lie in the differentiated complementarity of "warehouse" and "store".
First
, MINISO needs to expand the scene demand.
Its instant retail director Chen Zhenjie mentioned that previously MINISO's regular stores were deployed in shopping malls, which can well meet the needs of offline customer flow, but are limited by service time, and there are more needs for serving people within 5 kilometers around the shopping mall.
MINISO's instant retail business is to expand consumer touchpoints to areas that cannot be covered by conventional domestic stores.
"It's like a bottle is already full of stones, and opening a warehouse is to add sand to it."
Chen Zhenjie
said that instant retail can cover more people and more needs.
In the past, instant retail was simply regarded as a supplement to offline business, but MINISO concluded that the space and value of instant retail is huge and more possibilities can be explored. For example, the high demand of instant retail users is more in densely populated residential and office areas, and it can break the time limit and achieve 24-hour operation.
Instant retail is not a pure online business in essence, but an online extension of offline physical business. Nowadays, driven by "warehouse formats" such as lightning warehouses, its role in feeding back to offline businesses has become increasingly prominent
.
The core of this feeding back comes from "differentiation."
For example, MINISO and Sam's Club, when they run "warehouses", they do not simply migrate offline to online,
but rather
carry out differentiated operations.
Among them, the most important point of Sam's Club is to reduce the number of SKUs. Sam's Cloud Warehouse only has 1,000 SKUs, which is one-third to one-quarter of Sam's Club and even less than the 3,000 to 4,000 SKUs of ordinary forward warehouses. It provides consumers with convenient and urgently needed products, while further reducing the operating costs of goods.
MINISO is also doing differentiated operations on its products. MINISO is well aware that copying more than 4,000 offline SKUs to the Lightning Warehouse may not be suitable for instant retail consumption needs, which is a challenge. Chen Zhenjie revealed that the product difference rate between the 24-hour super store and regular offline stores is expected to reach 70%.
It cannot be ignored that MINISO already has its own mature supply chain foundation. While adjusting the pallets, MINISO will also add self-developed new pallets to supplement instant retail. During this period, Meituan Flash Purchase will also provide MINISO with customized pallet strategies based on MINISO's own supply chain advantages, combined with user needs and big data.
The obvious benefit of this differentiated operation is that instant retail has become a "pure incremental" offline business. It is understood that since entering Meituan in 2018, the number of new customers of MINISO has increased by more than 70% every year in the past five years.
MINISO regards instant retail business as the second growth curve of the domestic market, and it has chosen the path of increasing the flash warehouse format in a differentiated way. More and more retail brands have reached this consensus. In the future, large brands and vertical retailers with supply chain foundation and mature offline channel layout may cooperate with platforms to further deploy flash warehouses.
02
Retailers are increasing their investment, focusing on "warehouse-store complementarity"
In addition to MINISO, the beauty retail brand Watsons has also entered the "warehouse opening mode". The lightning warehouses opened by Watsons in cooperation with Meituan cover more than 10 first- and second-tier cities, and the warehouse order output has increased by 1.4 times. Large retailers in the department store track where MINISO is located, the beauty track where Watsons is located, and even the consumer goods track such as clothing and alcoholic beverages, refer to MINISO's experience in "warehouse-store complementarity". Their offline layout and business types are quite compatible with the lightning warehouse.
This is also why the industry generally expects that more and more large brands with mature offline layouts will accelerate their entry into the "opening of warehouses".
The development trend of the industry confirms this trend. More and more retailers in vertical tracks are "opening warehouses", which is an important reason for the rapid growth of the number of lightning warehouses.
Leifeng.com learned that Meituan's lightning warehouses currently exceed 30,000, and the vertical warehouses covered are constantly enriched. In addition to convenience stores, the lightning warehouses opened by retailers in categories such as digital home appliances, maternal and child toys, daily clothing, beauty and personal care, pet supplies, fruits, food ingredients, wine and beverages, flowers, and medical equipment are growing rapidly.
Retailers in vertical sectors are accelerating their entry into the "warehouse opening" market. Their goal should be the same as that of MINISO, which is "warehouse-store complementarity", with online feeding back to offline and promoting each other.
From the user experience point of view, stores and warehouses meet the needs of different user groups. The placement of store shelves and various designs need to take into account the experience of the consumer groups entering the store. Lightning warehouses are more oriented to people who are not restricted by time and space and want to consume anytime and anywhere. Combined with the differentiated pallets, differentiated locations, and longer business hours of lightning warehouses, for retailers, lightning warehouses can be said to "meet different needs with different goods." Lightning warehouses are combined with their existing offline channels to expand new customer sources, aiming to meet the needs of consumers across the region.
This forms the basis for "warehouse-store complementarity". Especially for retailers whose offline channels are already mature, "warehouse" is an incremental layout that not only helps their offline business to expand further online, but also brings more new customers by meeting needs that cannot be met by offline channels alone.
Collaborations like the one between Meituan and Miniso, where chain retail brands and platforms work together and physical stores and "warehouse formats" promote each other, will help make the online and offline retail ecosystem more prosperous.
03
From meeting emergency needs to one-stop shopping
If the rise of lightning warehouses and "warehouse-store complementarity" are regarded as an upgrade of the supply side of instant retail, this upgrade is essentially driven by the demand side. Consumers' demand for "buying everything by takeout" has become more intensive and more daily. In short, as the supply gradually enriches, instant retail is developing from an "emergency channel" to a "one-stop shopping channel."
Many instant retail merchants have found that, in addition to one or two emergency supplies, the other three or four items in consumers' shopping carts are probably long-term daily necessities. In the past one or two years, such "shopping carts" have become more and more numerous. In other words, "one-stop shopping" has gradually become a new positioning for consumers in instant retail.
In the past year, between 9pm and 6am, 124 million users placed orders on Meituan Flash Purchase to buy what they needed immediately. This has become a stable consumption with considerable space. Whenever consumers travel to other cities for fun or business trips, the instant consumption driven is also quite large. In Meituan Flash Purchase, more than 100 million people have such demand in a year.
Non-food consumption is surging in the instant retail scene. In the past year, Meituan Flash Sales sold 21.12 million facial masks, 1.78 million women's skirts, 3.46 million electric fans, 160,000 game controllers, and 40,000 washing machines and dryers. Most of these categories have achieved growth of more than 100%. Obviously, most of these products are not emergency products.
This is why instant retail is becoming a
"one-stop shopping channel" and a highly
certain lifestyle.
After years of infrastructure construction and the continuous entry of small and medium-sized businesses and big brands, the richness of instant retail categories can already meet all kinds of life needs, covering a wide range of categories from daily necessities, food and beverages, fresh food to medicines, electronic products, clothing, beauty, pets, etc., meeting the needs of various scenarios at home, in the office, and outdoors.
According to public data from the National Bureau of Statistics, the scale of instant retail sales grew by 26.2% from January to August this year, maintaining strong growth resilience. In the retail industry, there are only a handful of areas that can still maintain double-digit growth. Traditional retailers regard it as a "land of opportunity", and companies such as Meituan, Douyin, JD.com, and Alibaba are also investing heavily.
Chen Zhenjie, head of MINISO's instant retail business, summed up the industry in three words: "fast, fast, fast." He mentioned that the speed and changes of the industry are much faster than expected, and it is necessary to quickly adapt to the industry development and match market demand.
When consumers’ needs are reflected in instant retail, retailers will naturally join this field. “Chinese consumers already have a high certainty of consumption demand for instant retail. We are actually just doing one thing, as long as we appear next to consumers,” said Chen Zhenjie.
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