Why did Sam achieve great success in the Chinese market?

Sun, 11/10/2024 - 19:55
Agriculture Universe

47 Chinese stores generate 84.3 billion yuan in sales, with an average of 1.67 billion yuan per store. Some popular stores even have an annual revenue of over 3 billion yuan. In 2024, Sam's Club is highly likely to achieve a revenue scale of billions. This has allowed the outside world to rediscover the strong consumption power of China's middle class.

By focusing on the middle class with a monthly salary of over 20000 yuan and selecting high-quality products for these members, Sam's has risen against the trend in the retail industry that has been baptized by ice and fire.

The key to the success of membership supermarkets like Sam's and Costco lies in carefully selected products and a well-designed membership system. Attracting a large number of middle-class fans by saving members time in selecting and providing "no rollover" products. Even in times of increased macroeconomic uncertainty, downward cycles in housing prices, and turbulence in the capital market, one can still make huge profits.

On video platforms, various "buying strategies" have become popular, and many consumers have developed a certain degree of admiration for this super foreign brand, even leading to extreme topics such as "dividing Swiss rolls".

It is not an exaggeration to say that Sam's Club has become a phenomenal retail enterprise in China, and its momentum has exceeded the expectations of all industry practitioners, which is worth further research.

Over the past five years, the sales scale of the top 100 supermarkets has continuously declined. In 2023, it was 868 billion yuan, only 88% of that in 2019; After reaching a peak of 31,000 stores in 2020, the number of stores dropped to 23,800 by 2023, a decrease of nearly a quarter.
 

Even Wal Mart, Sam's parent company, has closed nearly 60 stores in China in the past two years. In the first half of this year, at least 17 stores closed their doors.

With the rise of membership stores, Wal Mart has gradually shifted its focus to Sam. According to statistics, Sam's average sales per store exceeded 1.6 billion yuan, accounting for two-thirds of Wal Mart's sales in China with nearly 50 stores.

In 2022, Sam's Club's sales will be approximately 66 billion yuan, with a growth rate of 28% to 84.3 billion yuan in 2023. At this pace of development, it is expected to exceed 100 billion yuan by 2024.

In the second fiscal quarter of fiscal year 2025 (the first three months as of July 31), Wal Mart's net sales in China reached US $4.6 billion, a year-on-year increase of 17.7%, and the net sales of e-commerce business increased by 23%, mainly due to the strong performance of Sam's business and e-commerce business.

According to the law of transformation of American supermarkets, member stores will only enter a rapid growth stage when their per capita GDP exceeds the critical point of $10000. In 2019, China's per capita GDP reached $10000, and membership manufacturers took advantage of the dividend of the growing middle class to rise in the wind.

By the end of June this year, the number of private cars in China had reached 294 million, laying the foundation for large-scale shopping at once. For the convenience of shopping, both Costco and Sam's Club will set up a large number of parking spaces, such as the recently opened 50th Sam's Club Dongguan store, which has 1050 parking spaces planned for the third, top, and basement floors.

Unlike other large supermarkets that often have tens of thousands of SKUs, Costco and Sam's Club select products with high repurchase rates, good quality, and strong brand power. Their SUK is only about 4000, but each category is extremely deep. And it can collaborate with selected top suppliers to create new products.

With a massive number of high spending customers and the ability to grow freely in the strategic swing zone, it is foreseeable that Sam's Club will have almost no competitors in China in the future.

User Beliefs
Establish the belief of "channel brand" in the hearts of the middle class.

Rather than saying that Sam's success is entirely based on quality, it is more accurate to say that Sam has successfully planted a belief in its "channel brand" in the hearts of the Chinese middle class, which is also the key to his success.

 

 

Source
巨潮WAVE