The time soon came to May, in the United States, in the suburbs of northwest New York City, several long lanes of traffic converged from several directions. It was the Costco Group's branch in New York City, which is currently Costco's largest store. branch.
"There are so many people here today. It feels like it is comparable to the Celtic Supermarket we went to yesterday." Chen Zhiwen said on the third floor of the property where the Costco supermarket is located, looking at the people coming in and out of the door.
“As early as three months ago, we were already promoting that on the first anniversary of the New York branch, a large number of products would be discounted by 10%. Costco’s products are already the cheapest in New York City. How many members would not be tempted by a 10% price reduction?" Pierce said with a smile.
Although he has reached the age of 60, he still looks full of energy. This may also be because his recent career development has been relatively smooth. As general manager, Pierce basically has no entrepreneurial pressure. At the same time, his boss Chen Zhiwen strictly requires him to have regular physical examinations. And follow the instructions of two nutritionists to control diet and increase exercise.
In the beginning, I was a little annoyed, but as time went by, my health actually improved a lot. Although it was not as good as when I was in my prime, I at least felt more than ten years younger than my peers.
"How many members do we have in the entire United States now?" Chen Zhiwen asked again.
"Now we have 35 branches in the United States, with a total of 2.122 million members." Pierce said, this is the most important data of the entire Costco company, and he needs to master every change in a thousand people.
"A supermarket has an average of 60,000 members, which is not bad." Chen Zhiwen nodded and said. The characteristic of Costco is that it can cultivate very loyal members. After all, its goods are cheap, and users pay membership fees. As long as you are a normal person, you will come here to make purchases, otherwise the membership fee will be in vain, unless you are really busy and have no time, but there are very few such people.
"Yes, plus the 9 branches we are about to open this year, the number of members should exceed 2.5 million by the end of this year. According to the previous average consumption data, by the end of the year, our monthly turnover will exceed 80 million US dollars. This This is the average annual turnover of US$1 billion." Pierce said with some excitement.
"One billion US dollars a year, this is really a watershed." Chen Zhiwen was also quite pleased.
By seizing Pierce, an older professional manager who doesn't fight for power much and knows how to operate a membership supermarket, and with his almost unlimited financial support, Costco's development speed can be said to be a miracle in the retail industry.
Target a small number of goods types, reduce procurement costs, target the middle-class families with the most spending power in a city through membership, and then use cheap products to cultivate user loyalty and stimulate their consumption. The ones that are now open are all super-large stores in the United States. City. With so many factors combined, it is difficult to succeed.
In its original history, even though it had stumbled through its own financing development, Costco opened 17 stores in three years, with single-store sales exceeding US$20 million. However, that was in the early 1980s, which may be five years behind now. But the impact should not be big, and since I have enough funds, I can open a larger branch and do more publicity to attract members.
"It's just that the scale has become larger, and some things can no longer be hidden. Eric, the Wal-Mart you invested in is also planning to build a warehouse-type supermarket." Pierce said.
"Wal-Mart? It's normal. It's expected." Chen Zhiwen smiled and shook his head.
The scale of large companies cannot be concealed. After all, there are so many industries. Relatively speaking, only those who have bought a house to collect rent and have no business activity can become invisible rich, such as the Zhang Yuliang family in Hong Kong, but as long as it involves Community development, with a large number of transactions, will definitely be dug out by the media.
This is especially true for supermarkets. There are so many cities, such a large area, and a lot of vigorous publicity. Other peers are not fools.
Costco is now a non-listed company, and there is no need to publish its financial data. However, the volume of goods entering and exiting the supermarket, the approximate consumption of members, and even the approximate number of members cannot be concealed. Even if others are wrong, they are only correct. Eighty percent, you know the scale.
Chen Zhiwen had no intention of hiding this information, just like Red Bull. However, being discovered was also a process. Whoever discovered it first among his colleagues might be a coincidence, but it might also be because he was really capable.
Sam Walton, probably the latter.
Pierce continued: "Walmart is planning to open a supermarket similar to our Costco in Fort Smith, Arkansas. It will also be member-based and open to all people."
"Arkansas is the headquarters of Wal-Mart. This membership store should be built there to test the waters. But, Pierce, how did you know about this?" Chen Zhiwen asked.
Not to mention now, even in the Internet era of later generations, if a company builds a supermarket, the news may not be posted online. When it is posted online, it may be just a drop in the ocean, and it will not be discovered by people who don’t know about it.
"Walmart poached people from me and a team of nearly 20 people," Pierce said.
"Oh, that's it." Chen Zhiwen nodded and said, "Just let them go. They want to open a warehouse membership supermarket, and we can't do anything about it. However, Wal-Mart is developing very fast now, and it is impossible for them to fully compete with us. Their The main competitors are large supermarkets like Celtic.”
Wal-Mart's entry into the game has long been expected by Chen Zhiwen. In the original history, in the early 1980s, Sam Walton noticed Pierce's original new business model, and then opened his own Sam's Club store, but it was a step later. It's like ten steps behind. Even though it has much more funds than Pierce, and Wal-Mart itself has the advantage of its supplier chain, Sam's Club still can't compete with Costco, but it has also achieved the world's second level, which is considered a very big threat. .
But in this life, Chen Zhiwen's capital investment in Costco was almost unlimited. If Costco's talent pool was not insufficient to support the expansion speed, building 70 supermarkets would not be a problem now.
In terms of capital and bank resources, perhaps Chen Zhiwen, who owns Midea Arcade, may not be as good as Wal-Mart, but it is impossible for Wal-Mart to invest too much in the field of member supermarkets, because Wal-Mart's main track is still ordinary supermarkets. Already having rich experience and achievements in the field of ordinary supermarkets, a large amount of funds will definitely be invested. It cannot stop on the way to expansion, because once it stops, it will be courting death. Banks, suppliers, and investors will not agree, and even It is impossible to pull out a slightly larger part.
"I know this, but if this Wal-Mart membership store develops very well, like us, then investors and banks will definitely invest funds, maybe other funds, and it has nothing to do with Wal-Mart itself." Pierce added .
"What you said is possible, but it may take a few years. In these few years, we can just occupy the megacities in the United States. In big cities like New York, we can build 2-3 to cover most of them. Population, as long as there are a large number of our members in this city, we will have no worries." Chen Zhiwen said lightly.
Unlike traditional supermarkets, member warehouse supermarkets have a stronger first-mover advantage because they require a membership fee. Once a person pays a membership fee at Costco, other peers want him to open another one of their own. membership, the difficulty will increase tenfold, and the cost will be lower when the scale is large. Just like Coca-Cola, how can outsiders compete? Not to mention the cultivation of shopping habits. Even if the price is the same, people will tend to choose the supermarket they often go to.
With so many moats, as long as they are established and they don't make big mistakes, the city will basically be able to sit back and relax. On the contrary, supermarkets like Wal-Mart, because they have more varieties of goods, more branches, and the advantage of distance, can Coexist in the same city as Costco and compete with each other through differentiation.
Later Sam's Club stores actually avoided the expansion of the cities where Costco was located. At that time, Costco was unable to expand on a large scale due to capital constraints, but it is different now.
"My idea is the same, but it will require a lot of funds, or borrow money from a bank in the name of Costco," Pierce said.
"No, I will allocate part of the funds to you. In addition, you also know that I am the major shareholder of Wal-Mart. Wal-Mart's stock has increased significantly in the past two years. Using these stocks as collateral, you can lend a lot of funds. "Chen Zhiwen said with a smile.
Midea's arcade business is very profitable. Although part of it was used to secretly acquire shares of Land and Wharf, most of it was still in overseas accounts. The reason why it didn't invest in the Hong Kong market to make quick money was because of the possibility in the United States. After all, Costco’s demand is of great strategic significance.
In 1975, in order to acquire Hutchison and deal with Hutchison's debt crisis, Chen Zhiwen used 12% of Wal-Mart's Wal-Mart stock to the extreme and mortgaged almost all the credit lines. However, when the time entered 1976, Hong Kong Real Estate When the market recovered a little, Hutchison Whampoa also sold a large number of various profitable businesses that Chen Zhiwen despised, cashed out a lot of funds, and also repaid part of the debt mortgaged by Wal-Mart stocks.
If you use Wal-Mart stocks as collateral now, you can get a loan of tens of millions of dollars without any problem.
"That's good. I can expand with confidence. Inflation in the United States is very strong now. All people are looking for cheaper products. Now is the best time for us to develop members. I am going to launch another event, very Members can come and experience Costco’s shopping environment, but only twice a year. I think many people are reluctant because we pay the membership fee first, but they can’t experience our shopping environment first. This is considered a It’s a contradiction.”
"In principle, I don't interfere in this kind of thing, and I don't know much about the marketing of membership supermarkets. However, as far as I know, many formal members only come once every two or three months, and other non-members can come once every six months. Isn't it a bit strange? Fair?" Chen Zhiwen asked.
"Then add a limit on the maximum consumption amount." Pierce thought for a while and said: "This is just an event anyway. I can choose one or two branches to test first and see the effect. If it is not good, cancel it. If it is good, I will cancel it. Promote it slowly.”
"Okay, then it's up to you." Chen Zhiwen nodded and said. The contradiction mentioned by Pierce does exist. The membership fee of dozens of dollars (different in different places) is enough to stop many people. After all, this is half a day for many people. Even a day’s income. It is normal to have a proper on-site experience, but taking too big a step will shake the entire membership system, so you need to be cautious.
"Then I'll summarize the results for you once I have them," Pierce said with a smile.
"Okay." Chen Zhiwen said. Although he spent most of his time in Hong Kong, Pierce would often sort out the situation at Costco and send it to him by mail and airlift.
Moreover, he also monitors the situation at Costco in real time. In every store, headquarters, and various departments, especially finance and personnel, there are Chinese assigned by Chen Zhiwen. These Chinese are either transferred from Hong Kong or from the United States. Recruited. Under normal circumstances, these people work normally. Once an abnormality is discovered, they will be reported to the contact person in Hong Kong.
At the same time, Chen Zhiwen will also specially hire a third-party financial institution to review Costco. Pierce also approves this behavior because it was discussed long ago. Chen Zhiwen gives him a lot of operational autonomy, but the relevant review will definitely No less.
"Also, there is one small thing." Pierce added: "I hope that the Hong Kong factory, in addition to producing Very Coke, will also produce some snack foods to reduce Costco's procurement costs."
"Snacks?" Chen Zhiwen raised his eyebrows and became a little interested.
"Yes, it's snacks. Many members of Costco will go shopping once a month or two months. The main choices are drinks and snacks. For drinks, Coke and Sprite are the main ones. Our own Coke is very cola. It’s cheap and many people choose it, and snacks are a bigger market. Our statistical data shows that the sales of snacks far exceed that of drinks.” Pierce said: “Another point is that drinks are filled with water, which is very It’s heavy and the transportation cost is very high, but snacks are much better and the profit margin is much higher, but a large part of it is not within us.”
"There are many types of snacks. Which ones do you want produced in Hong Kong?" Chen Zhiwen nodded and said.
When a large-scale supermarket reaches a certain level, it will inevitably find ways to produce some simple and high-selling products in-house. The easiest ones are beverages and food. These two have large sales and are easy to make. For example, RT-Mart, the largest supermarket in mainland China, has its own beverage and food brands.
However, not all simple products are produced, such as clothing. Although it is very simple, supermarkets are not the main channel for selling clothes, and clothing sales in supermarkets do not account for a large proportion.
"The snacks with the highest sales have always been potato chips, popcorn, chocolate, bread, and biscuits. Eric, which ones do you think are suitable for production in Hong Kong?" Pierce said.
"Potato chips are okay, but popcorn takes up too much space, and the cost of shipping it from Hong Kong is too high. Chocolate is not okay for the time being. Hong Kong has no production experience and no raw materials for this stuff. For bread and biscuits, you can also try it. , but whether it can sell well depends on the taste produced." Chen Zhiwen thought for a while and said.
"Of course, but as long as it's not bad and the cost is our own, we can further explore the price, which will attract users even more." Pierce said with a smile.
(End of chapter)
