Suning Store lost 300 million yuan in the first seven months of this year. According to a public statement by Bao Junwei, the person in charge of Suning Store, on July 28, the number of Suning Store stores will reach 1,200 by the end of July. Calculated based on this apportionment, each Suning store probably suffered an average loss of about 250,000 yuan.
For Suning Store, the market’s views are polarized. I am not optimistic about it, mainly because the current operation and management of Suning stores seem to be relatively extensive. After a quick copy, there are many operational-level contents that have not been kept up.
On the other hand, those who are optimistic believe that there is no problem with the strategy. As long as Suning Group can persevere and there will be no "repetition" in future operations, in the convenience store market, Suning Store and Meiyijia will likely become the two major local national brands.
"Business Observer" tends to agree with the latter. We believe that the timing of Suning Store's entry into the market is OK. Expansion through direct sales is another operating model to "avoid" falling into the "red ocean" competition of the existing franchise system of convenience stores. At present, the franchise system of some regional convenience store operators has been unable to expand, and it is difficult to expand across regions because the market competition is fierce and the profit space for franchisees is limited.
From this perspective, if Suning Store expands through franchising, it may not be able to achieve its goal of opening a store at all. Franchise operators may not have the patience to accompany you to cultivate the market. Suning chose the direct operation method to introduce the market, probably because it planned its business from a layout perspective.
A model that means stronger control through large-scale direct sales is an operating method based on current technological advancements.
Theoretically, the direct operation system can achieve better data return, operate the business through the system and data, and use data to select products and configure the supply chain. This is a new business direction. As some people in the market currently say, "Franchising is about monetization, and direct operation is about compound interest."
The basis of "compound interest" is that stores are not only a business that captures the price difference between the purchase and sale of goods, but also a business that monetizes online and offline traffic. After the digitization of offline stores, it is still a business introduced by digital marketing tools (advertising), and based on data accumulation, it becomes a business introduced by consumer finance.
Of course, to do this will test your financial capabilities and subsequent improvement capabilities. The direct operation model must be fully implemented.