The Industrial Giant Reborn

Speaking of Fedmart or Saul Pierce, these two names are basically unknown to future generations, but there must be a lot of people who know about another company, Costco, which is Costco Supermarket.

As the eighth largest supermarket group in the world, Costco’s multi-year turnover will exceed 220 billion U.S. dollars in 2021. In the same year, Wal-Mart’s turnover will exceed 500 billion. The total amount is less than half of Wal-Mart’s. Only 700+.

The turnover of Lundan stores is absolutely No. 1 in the world in Costco supermarkets, and the core factor that can achieve this is its business model: a warehouse-style supermarket chain.

In fact, warehouse supermarket chains appeared in Europe and the United States as early as the 1950s, but the initial model was not for everyone, but for specific groups, such as the most famous Fedco in the United States in the 1950s, which provided services to American civil servants , because prices are much cheaper than outside supermarkets, many civil servants will buy a large truckload of goods even if they drive hundreds of miles, which can be used by their families for several months.

This mode of operation attracted the attention of Saul Pierce, who was refused entry when he went shopping. After a year of investigation, in 1954, he returned to his hometown of San Diego and opened his own warehouse supermarket Fedmart. , and then the revenue in the first year exceeded 3 million US dollars, far exceeding his estimated 1 million.

Under smooth circumstances, naturally, the second and third stores were opened later, and they were also very successful. In 1959, the company went public. At that time, Fedmart owned 5 supermarkets, with an annual turnover of 26 million US dollars and a net profit of 470,000 US dollars.

However, with its growing scale, the price of similar products on Fedmart is lower than other retail channels, which has moved too many people's cakes, and even Pierce has set his sights on gasoline, which is cheaper than refueling. After being rejected by the local gasoline company, he bought gasoline across state lines.

The result is that major brands have cut off supply to Fedmart and similar retail stores under the pressure of their own retail channels. In 2010, the company's capital chain had problems. In order to save the company, Pierce accepted the franchise system, laying the groundwork for future business failures.

In the 1960s, traditional department stores and supermarkets were also opportunities for rapid development. As a giant retail group in the United States, K-mart happened to open a lot of supermarkets around Fedmart. In addition, the group’s internal management was not good, and Pierce had no way to monitor it. Regarding the operation of supermarkets in other cities, in the 1970s, most of Fedmart's supermarkets were losing money, and only a few that Pierce stared at were still profitable.

Pierce was born in 1916 and will soon be 60 years old, so he had the idea of ​​selling the company or merging with other supermarkets, but no one agreed after searching for several supermarkets. Later, he went to Europe by chance. A supermarket owner hit it off and gave up the controlling stake in fedmart.

However, he was deceived. After the European supermarket acquired fedmart, he was directly kicked out of the board of directors. Pierce, who was almost 60 years old, suffered failure and was very unwilling. So he established the price club through bank loans and borrowing money two years later. It is also the predecessor of Costco, the most famous warehouse supermarket chain giant in later generations.

After Chen Zhiwen traveled through time, he spent a lot of time looking for suitable investment targets, that is, he only invests but does not participate in the operation, and occasionally guides the direction of operation.

In fact, the future technology giants do not need his guidance, and according to the laws of Western countries, no matter how many shares are controlled by outsiders, these technology giants cannot participate in the operation.

In other industries, the giants of later generations are basically century-old companies, and they have a history of several decades. However, there are very few companies that were established in the 1970s or gave him the opportunity to invest in shares. Costco is one of them.

Chen Zhiwen is also very interested in the retail industry. The influence of this industry is very large, a large number of terminals can be employed, and the procurement side can control countless suppliers. If there is an opportunity in the future, he will definitely invest in the retail industry in Hong Kong and the mainland in the future, but overseas , it is basically impossible for him to operate successfully.

This is different from technology companies. Western countries generally do not restrict the retail industry. The problem is that in the future, successful local retail giants in Europe, America, Japan, South Korea, and the mainland will go to other regions. It can be said that very few can be said to be successful.

European Carrefour, Auchan, and Metro’s investment in America and Asia, and Wal-Mart’s investment in Europe and Asia, although not a failure, can only be said to be in general. First, local brands in these places already have first-mover advantages and cost advantages. Another problem is that it is difficult to localize.

However, there are also relatively successful ones, and Costco is one of them, but its success may also have a lot to do with the fact that it has very few stores and is easy to manage.

Supermarket giants with well-established channels are unable to establish a retail business in other countries. Naturally, Chen Zhiwen will not have the confidence that he can imitate the original Costco in the United States and become a retail giant in the future. Then find the former founder , it is the best way to invest when he has not started his second business, especially since he is still planning to sell his own company.

"I want to sell fedmart, but not everyone can buy it." Pierce shook his head and said, "I hope to merge with other supermarkets and use the resources jointly owned to optimize integration."

"I understand this, but is it really so easy to integrate resources after the merger?" Chen Zhiwen said, "Unless you can sell Fedmart to a giant like Sears or Celtic, otherwise, two supermarkets of similar size will be merged into each other." You can’t get much advantage in procurement, and the so-called resource integration, doesn’t it mean that the other party needs to spend millions of dollars on Fedmart?”

"Then Mr. Chen wants to invest in Fedmart?" Pierce asked back.

"Yes, and no, I want to acquire fedmart. I want to invest in you. After the acquisition, Mr. Pierce, you will continue to serve as the president of the company. Everyone's position will not change. I will also inject capital separately for operations. At the same time , and at the same time, I will take out a part of the shares to reward the entire management, including Mr. Pierce." Chen Zhiwen said his purpose with a light smile.

"Buy all fedmart?" Pierce was startled. He didn't expect the young man in front of him to be so ambitious. Although Fedmart's stock has not been very good in recent years, and the oil crisis has caused the stock market to plummet, no matter what, it is still a company with a turnover of more than 100 million. If a supermarket chain in US dollars wants to delist it from the stock market, it will not be able to get it without tens of millions of dollars.