Charlie Munger, a partner of the stock god Warren Buffett, once said that when you are sad about the world, go to Costco. “When you enter Costco, you don’t have to choose or look at the prices. Just close your eyes and buy it, it’s a belief.”
On August 27, the first Costco store in mainland China finally opened in Shanghai. For consumers, this is a long-lost event, and buying, buying, buying and shopping has once again returned to physical stores.
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How spectacular is the opening scene? We can look at a set of data: 160,000 membership cards, the computer at the cashier was down one hour after opening, it took 3 hours to park, and 2 hours to check out... 5 hours later, Costco, which was close to being "paralyzed", chose Give up and declare closure for half a day. Looking at the items on sale, there are Moutai, Hermès, PARDA, etc.; looking at the price, Moutai is 1,498 yuan, 50% lower than the 3,000 yuan on the market, and Hermès is 5,000 yuan lower than on e-commerce. These are reasons consumers cannot refuse.
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Of course, some people have also raised another topic: the issue of acclimatization. In fact, the original intention of business has no geographical boundaries. As long as the essence of business is adhered to, there is no distinction between local and local. The reason why we talk about water and soil issues is that we lose the essence of business. For example, a well-known building materials supermarket that entered Shanghai in 1998 was very popular with consumers in the first few years of its opening.Love, I am not acclimated in China. Later, there were more local employees, SKU profits increased significantly, promotion activities continued, excessive taxes and miscellaneous taxes were numerous, fancy marketing, etc., caused the business to lose its original intention, which led to low-quality products and If the quality becomes inferior, the water and soil will naturally become dissatisfied.
For Costco, which has never advertised in the media and does not have a dedicated media PR team, it can become the second largest retailer in the world and be at the forefront of consumer trends. Shanghai is booming, and its success is worth pondering. Is Costco subverting the perception of physical stores, or is it the success of the reverse e-commerce model? Such a hot sales scene in my memory was the opening of B&Q Beijing Sijiqing store ten years ago. It was like a temple fair: many people had a shower in their left hand, a water heater in their right hand, and a toilet sitting under their buttocks. At that time, it wasn’t that the event was well publicized, but that the items were big-name and really cheap. Therefore, no matter in any era, what consumers need is goods, not your marketing.
Some people say that Costco’s success is probably due to several aspects: It does not sell low-priced things, but sells quality at low prices; it does not pursue low prices. It is about high value and low price; it is not about pursuing product gross profit, but efficiency gross profit; it is not about reducing services, but only providing necessary services; it is not a shopping mall or a department store, it is a consumer supermarket; it relies on products to speak, not marketing; no Luxurious decoration, only luxurious product display; globally selected products, private brands.
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A well-known entrepreneur said that there are three companies that he remembers deeply: one is Tongrentang, which taught him to stick to quality; the other is Haidilao, which taught him Understand the importance of word-of-mouth that exceeds expectations from users; and the third company is Costco, let him understand how to lower the price of high-quality non-food department store products by 30% to 60% of the market price, and 10% to 20% lower for food products. %, the products in quantity are sold more cheaply. All three companies have solved the pain points of consumption and won respect; at the same time, they have also explained the importance of quality and reasonable price.
Today, some people are worried that Costco will face the impact of e-commerce. This is reasonable. After all, e-commerce channels have made great progress, especially with Double 11 as the Marking the era of e-commerce consumption, many people are crying wolf and increasing online sales, especially for daily necessities, fast-selling and shoe and hat brands, which has led to the closure of a large number of physical stores. If the decline of individual entities is understandable, after all, channels tend to be diversified, purchases tend to be more convenient, and product selection tends to be concentrated in categories. The cluster-like decline and transformation of commercial entities that have occurred in recent years seems to be somewhat in contrast to the popularity of Costco.
It was e-commerce that first raised the pain points of consumption. At first, e-commerce also solved the pain points of some consumers. Today, the increase in customer acquisition costs and rising operating costs have turned some low prices into low standards, causing differences between most brands online and offline. Consumers' old pain points have not been resolved, and new injuries have arisen. What are the pain points of consumers? Some people say it’s the last mile, but I think it’s the immeasurable product standard and spending money on something of low value. Costco's high value and low prices solve the main pain points of consumers. Therefore, consumers are willing to travel longer distances despite the hardship of queuing, and can only enjoy basic services. This may also be another interpretation of new retail, an interrogation of the nature of consumption, what do we really need? How much are we willing to pay? What is the main reason for our satisfaction?
In the new retail era, e-commerce is unstoppable. Where is the path for physical stores? The post-Costco era may be the direction. In the new retail era, where consumers’ pain points lie, Costco’s products may be the direction.
It's not that physical stores are failing, it's that the perception of physical stores is failing!
Author: Zhang Nianchao
