Ordinary supermarkets have a certain coverage, while large warehouse supermarkets basically cover a city. When there is a successful warehouse supermarket in a city and someone else opens another one, the probability of failure is very high, especially When Costco's profit control was very low, others basically had no chance, not even capital giants. This exclusivity was much stronger than fast food restaurants like McDonald's.
To secure a position, two things are needed. One is to cover enough cities, especially big cities, and the other is to reduce costs, which also requires more stores to increase purchasing volume and reduce operating costs.
Therefore, even though funds are relatively tight now, Chen Zhiwen must first build up the scale of Costco, even if it temporarily loses money. What worries him most is whether the Walton family will notice warehouse supermarkets in advance because of his investment. However, according to his estimation, it is unlikely in recent years. The business of Wal-Mart Supermarkets is developing rapidly, and everything needs to be invested. Resources are needed to expand and open new stores. At this time, it is simply impossible to invest resources in other tracks, unless the market really proves that the performance of warehouse supermarkets far exceeds that of normal supermarkets and surpasses Wal-Mart's business model.
But in reality, this is impossible. Although warehouse-style supermarkets can operate at a lower cost than Wal-Mart, there are too many restrictions. In terms of future, they are far inferior to Wal-Mart supermarkets.
"Then let's stabilize on the east coast first, and then enter the west coast. Costco doesn't need to consider smaller cities. We'll take root in big cities first." Pierce paused and said.
"Yes, I have the same idea. According to the talent training plan you mentioned, I estimate that it will have some effect in half a year to a year, and a lot of talents will be trained in three years. Next, we will start with the top 20 cities in the United States. Take it down, and then use them as the core to expand to nearby second-tier cities." Chen Zhiwen said with confidence.
When I first started selling supermarkets, even though I had a relationship with FedMart, many suppliers were still unwilling to supply goods to a new supermarket before settling the bill. Even if they could delay the payment, they still needed to get their money back quickly. And now with the successful opening of several new Costco stores, the trust of suppliers has increased a lot.
Trust and confidence often mean a large amount of money. When the supplier is willing to accept payment after a period of time, the supermarket will enter a very asset-light operating model. When expanding, it only needs to deal with the cost of the store and the cost of personnel. The maximum The cost of all types of goods is borne by suppliers first, which can make rapid expansion a reality. This is the case for Wal-Mart and any fast-growing supermarket. Otherwise, the huge funds for goods can crush the supermarket's capital chain.
Of course, another benefit of the goods collection cycle is that they have enough funds in their hands. Some aggressive and adventurous supermarkets will even use this funds to expand new stores. Of course, it will not matter if they succeed. If they fail, the capital chain will completely collapse.
Although Costco is large in area, it does not have high requirements for location. As long as all aspects are suitable, the expansion speed will be much faster. If the personnel are in place, it will not be a problem to cover the top 20 cities in the United States in two years.
"Although personnel training is also very tight, it is not a big problem. But if we are too dispersed, there will be a new problem, and the logistics cost will increase significantly. Especially since we are different from ordinary supermarkets, we are not in At the geographical level, we expand from the inside out, but diversify investment, which results in our inability to build logistics centers." Pierce expressed his worries.
"Indeed, but there seems to be no solution. We can only find ways to deal with logistics companies, or we can set up our own fleet to transport part of it, or branches in other cities to give more local purchasing rights." Chen Zhiwen thought about it and it didn't matter. good idea.
Normal supermarkets, such as Wal-Mart, start from one city, then to a nearby city, and then to a nearby state. This model allows the procurement chain to run locally and reduce logistics costs. When there are more stores, they will set up their own In the logistics center, the supplier's goods are concentrated in the logistics center, and then based on the needs of each branch, the most cost-effective method of transportation is calculated to maximize the cost and reduce logistics costs.
Similarly, Celtic Supermarket, which dominates the United States, also has logistics centers in many places across the United States, as well as its own huge fleet of vehicles to reduce logistics costs.
When you have a small supermarket or several supermarkets, you don’t need to consider this issue. You can just outsource it. But when the scale is large and the branches are scattered far away, you have to consider this cost, especially Costco, because it can only be found in big cities. The degree of dispersion of openings is definitely the highest in retail history.
Logistics costs are one of the biggest costs for large chain retail supermarkets. In the non-Internet era, they generally accounted for 8% of the turnover. In the Internet era, computing power has greatly improved, and the cost can be controlled at around 3%. This is There is a huge gap. It is said that in the early 1980s, Wal-Mart spent hundreds of millions of dollars to purchase a large number of computers and launch a satellite into the sky in order to reduce the transportation costs of Wal-Mart's logistics. It was successful, which also ensured that it would gradually dominate retail. One of the strongest guarantees for the industry.
Pierce said: "I have roughly calculated that there are almost 30 cities on the East Coast that meet the requirements for our first batch of investments. We can first build a logistics center in California to be responsible for the West Coast, and the East Coast will be granted certain independent purchasing rights. , and when the number increases in the future, we will build a second one.”
Chen Zhiwen nodded and asked: "Now in the five supermarkets, all suppliers deliver directly to the branches?"
"Yes, the number of branches is small now, and the quantity of our single items is not bad. Some suppliers deliver the goods themselves, and others use UPS logistics. But if we open more branches, we may go to Nevada or Arizona, it's up to us," Pierce said.
"How much investment does a logistics center require?" Chen Zhiwen asked. Logistics problems are indeed a big problem when there are more branches. Large trucks in the United States are very expensive, and truck drivers' wages are even higher.
"The logistics center does not need to be in a prime location. The cost of land and construction is not very high. What needs to be invested heavily is internal equipment and truck investment, as well as personnel costs." Pierce said: "A conservative estimate is that it will cost US$5 million. Investment. Annual operations also require two to three million US dollars, because our supermarket model is different from traditional supermarkets, and the company's logistics team cannot estimate the accurate value based on their previous experience."
(End of chapter)
