Is it a good business? Hema aims at the goal of "10,000 stores": 60,000 yuan to join, 400 stores in 8 years

In the first half of the year, Hema was caught up in rumors of a sell-off. Now, Hema has shattered the rumors by saying that the number of stores has exceeded 400.

Joining the "400" club of Chinese chain supermarkets is an achievement that Hema should be proud of. Compared with the opening of new stores, the news that Hema is opening up to franchisees for the first time is more likely to attract market attention. Why did Hema, which has insisted on direct operation for 8 years, embrace franchisees?

On June 27, Hema announced that with the opening of 5 new stores this week, the number of new stores opened in June reached 12, and the total number of Hema Fresh stores exceeded 400, joining the "400" club of Chinese chain supermarkets.

Today alone, five new stores will open across the country, located in Shanghai, Hangzhou, Nantong, Chongqing and Jiaxing. For example, the newly opened Jiangqiao Wanda store in Jiading District is a remodeled Carrefour supermarket. The store covers an area of ​​over 7,000 square meters, covering all categories currently operated by Hema Fresh stores, including bakery, aquatic products, refrigerated and frozen, cooked food, leisure, fresh-cut meat shop, Western food island, etc. There are more than 6,000 kinds of goods in the store, and more than 30 affiliated merchants have settled in, which can meet the one-stop "shopping and eating" needs of citizens.

"The purpose of setting up new stores is not only to attract more new users, we also want to improve the experience of existing users." Mei Xiang, head of HEMA's national development and site selection, said that half of the newly opened stores recently cover new "Hequfang", such as new stores in Changzhou, Changshu, Tongxiang and other cities; the other half enrich the store network within the original delivery range, aiming to improve the experience of existing users.

According to reports, the new stores that have recently opened have further upgraded their offline displays, changing from sales-oriented to experience-oriented. "In the past, the store entrance was filled with hot-selling products such as milk and fruit, but now it has been changed to popular products such as flowers and baked goods, so that consumers can see colorful flowers and be attracted by the rich cream fragrance as soon as they enter the door." Mei Xiang said.

In Shanghai, there are 60 Hema Fresh stores and 26 Hema mini stores, totaling nearly 90 stores, which basically cover the area within the outer ring road. If we add X Member Store, NB Outlet and other formats, Hema has achieved full coverage of Shanghai's 16 districts through the layout of different formats.

Some analysts believe that as a self-operated chain supermarket, Hema has not only achieved continuous growth in the number of stores, but also has a presence in more than 30 cities across the country. On the one hand, this reflects the possibility of mass replication after the model is stabilized, and on the other hand, it also shows that the power of its products has been recognized by the mainstream market.

In the middle of this month, the 110th Hema NB outlet store opened in Chongmingbao Town, Shanghai, with a business area of ​​about 700 square meters, offering more than a thousand products, covering fruits, vegetables, seafood, cooked food and bakery, frozen fast food, beverages and snacks, rice, flour, grain and oil, household daily necessities, etc. Among them, the price of Hema NB's own brand products is only 50% of the same type of products sold in hypermarkets.

Whether in terms of site planning or product selection, Hema NB outlet discount store is more like a community supermarket. What makes this Chongming store special is that it not only completes Hema's business territory in Shanghai, but is also the first franchise store in Hema's business format.

At present, the Hema NB Outlet franchise store in Chongming is the only pilot store and has not yet been opened, but the Hema NB self-pickup business has officially announced that it is fully open for franchising.

Let me first give you some basic knowledge. Hema has deployed NB and outlet models in the sinking market, which are mainly divided into three categories: Fresh Outlets focus on fresh food discounts, usually taking over the tail goods of fresh food categories such as Hema Fresh and X Member Store; NB Outlets focus on community hard discount stores, focusing on comprehensive daily necessities; Hema NB self-pickup is almost equivalent to community group buying.

According to Hema's investment information, there are three ways to join the Hema NB self-pickup store: the first is independent cooperation, that is, renting a store by yourself to open a Hema NB self-pickup store; the second is cross-industry cooperation, that is, adding Hema NB projects to existing stores to achieve business growth; the third is group point cooperation, which is a Hema NB self-pickup group point at the doorstep, mainly for freelancers who have no money and time and want to do part-time jobs.

According to the recruitment information of Hema NB self-pickup store, franchisees need to prepare 60,000 yuan of funds, including 30,000 yuan of deposit, 10,000 yuan of platform usage fee, and an estimated 10,000 yuan of decoration and equipment fees. Hema provides franchisees with site selection assistance, training and new customer acquisition, and operation and system support. The franchisee's income comes from a fixed commission on net GMV, store delivery fees, and the company's monthly rewards.

According to the previous plan of Hema founder Hou Yi, Hema NB outlet store will implement the "215" profit model, with a monthly sales volume of 150,000 yuan and a gross profit margin of 15%. Once the profit model is implemented, it will rapidly expand across the country, with 500 stores to be opened in Jiangsu, Zhejiang, Shanghai and other places this year, and the scale of 10,000 stores will be achieved in the future.

After eight years of growth, Hema has become one of the top chain supermarkets in China. On June 6, the China Chain Store & Franchise Association released the "Top 100 Chinese Chain Stores in 2023", in which Hema Fresh ranked eighth, with total sales of 59 billion yuan in 2023 and a 20% year-on-year increase in the number of stores.

As a benchmark in the new retail industry, Hema Fresh announced last year that it had achieved full profitability, which was regarded by the industry as a phased success. "New retail is not a money-burning model, but a sustainable profit model."

The overall environment for retail supermarkets is indeed not good. The China Chain Store & Franchise Association pointed out that last year, comprehensive retail and supermarkets faced great growth pressure, with less than 30% of companies achieving year-on-year growth in sales and store numbers. The Kantar Worldpanel report pointed out that hypermarket sales will accelerate in 2023, with a 1.8% drop in sales share in the overall market. This year, large formats will continue to face huge shocks.

Hema cannot remain immune to the impact, but it is still actively trying to save itself.

Introducing the franchise system and rapidly expanding the scale is a trump card. In the past two years, franchising has become a new choice for domestic chain brands. Haidilao, Heytea and other brands that used to insist on direct operation are actively embracing franchisees, and Mixue Bingcheng, which adopts a full franchise model, has become a role model to learn from.

After all, only with scale can we better negotiate the supply chain, get lower purchase prices, higher profits, stronger bargaining power, larger market share, higher visibility, etc. For chain enterprises, expanding scale is one of the keys to survival.

It took Hema 8 years to open 400 directly-operated stores, but if it wants to quickly achieve the "10,000-store scale", franchising is almost the only option.

The diversified layout is also the key to Hema's success through continuous trial and error.

Hema Fresh, as the main business format, has a large number of stores and a stable customer base; X Member Store targets the mid-to-high-end market, and is oriented towards family, offline, and experiential consumption scenarios. In the face of the more down-to-earth community and even rural markets, NB Outlet Store may become Hema's largest customer base.

"Consumers don't want only high-end products, otherwise imported products would have monopolized the market long ago. Consumers don't want only low prices, otherwise everyone would go to rural markets to shop." Retail industry expert Wan Deqian believes that after NB opened up for franchising, HEMA has entered a period of store expansion bonuses in the sinking market. The ability to deeply adapt products to local consumption characteristics and the discounts brought by the reconstruction of the supply chain are the value that consumers would rather spend money on than queue up.