The Industrial Giant Reborn

Ordinary supermarkets have a certain coverage, while large warehouse supermarkets basically cover a city. When there is a successful warehouse supermarket in a city, others open another one, and the probability of failure is very high, especially When Costco's profit control is very low, other people basically have no chance, even the capital giants. This exclusivity is much stronger than that of fast food restaurants like McDonald's.

In order to secure a firm position, two points are needed. One is to cover enough cities, especially big cities, and the other is to reduce costs. This also requires more stores to increase purchases and reduce operating costs.

So 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 the most is whether the Walton family will notice warehouse supermarkets in advance because of his shareholding. However, according to his estimation, it is unlikely in recent years. Resources are used to expand and open new stores. At this time, it is 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 Wal-Mart's business model.

But in practice, this is impossible. Although warehouse-style supermarkets can be operated well, the cost can be lower than that of Wal-Mart, but 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 those smaller cities, and takes root in big cities first." Pierce said after a pause.

"Yes, I have the same idea. According to the talent training plan you mentioned, I estimate that there will be some effect in half a year to a year. After three years, a lot of talents will be cultivated. Next, the top 20 cities in the United States will be listed first. Take them down, and then use them as the core, and then expand to the nearby second-tier cities." Chen Zhiwen said confidently.

When Doshico first started, although it had a relationship with Fedmart, many suppliers were still unwilling to supply goods to a new supermarket before paying. And now with the successful opening of several new Costcos, the trust of suppliers has increased a lot.

Trust and confidence are a lot of money in many cases. When the supplier is willing to accept the payment after a period of time, the supermarket will enter a very asset-light operation mode. When expanding, it only needs to settle the cost of the store and the cost of personnel. The cost of all kinds of goods is borne by the suppliers first, which can make rapid expansion a reality. This is the case for Wal-Mart, and it is the same for any fast-growing supermarket. Otherwise, the huge funds for goods can crush the supermarket's capital chain.

Of course, another advantage of the goods payment cycle is that they have enough funds in their hands. Some adventurous and radical supermarkets will even use this fund to expand new stores. It is of course nothing if it succeeds. If it fails, the capital chain will completely collapse.

Although Costco has a large area, it does not have high requirements for location. As long as all aspects are suitable, the speed of expansion will be much faster. If the personnel are in place, it will not be a problem to settle the top 20 cities in the United States within two years.

"Although personnel training is also very tight, it is not a big problem, but if we are too scattered, there will be a new problem, and the logistics cost will increase significantly, especially because we are different from ordinary supermarkets. We are not in On the geographical level, we expand from the inside to the outside, but diversify investment, which makes it impossible for us to build a logistics center.” Pierce said his worries.

"Indeed, but there seems to be no way to do it. We can only find a way to deal with the logistics company, or we can set up a fleet to transport some of them, or branch stores in other cities to give more local procurement rights." Chen Zhiwen thought about it and thought nothing of it. good idea.

Normal supermarkets, such as Wal-Mart, start from one city, then to nearby cities, and then to nearby states. This model allows the procurement chain to run locally, reducing logistics costs. When there are more stores, they will form their own In the logistics center, the suppliers' goods are concentrated in the logistics center, and then according to the needs of each branch, the most cost-effective transportation is calculated to reduce the logistics cost with the greatest cost.

Similarly, Celtic Supermarket, which dominates the United States, also has logistics centers in many parts of the United States, as well as its own huge fleet to reduce logistics costs.

For small supermarkets 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 must consider this cost, especially Costco, because it can only be sold in big cities The degree of opening and dispersion is definitely the highest in retail history.

The logistics cost is one of the biggest costs of large chain retail supermarkets. In the non-Internet era, it generally accounts for 8% of the turnover. In the Internet era, computing power has been greatly improved, and the cost can be controlled at about 3%. This is Huge gap. It is rumored 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 cost of Wal-Mart logistics. One of the strong guarantees of the industry.

Pierce said: "I roughly calculated that there are almost 30 cities on the east coast that meet the requirements of our first investment. We can build a logistics center in California to be responsible for the west coast. The east coast will grant certain independent procurement rights. , and when the number increases in the future, we will build a second one.”

Chen Zhiwen nodded, and asked again: "Now in the five supermarkets, all the suppliers deliver directly to the branch?"

"Yes, the number of branches is small now, and the quantity of our individual items is not bad. Some suppliers deliver goods by themselves, and others use UPS logistics. But if we open another branch, we may go to Nevada or Arizona, it's up to us," Pierce said.

"How much investment does that logistics center require?" Chen Zhiwen asked. The logistics problem is indeed a big problem when there are more branches. In the United States, the price of large trucks is very expensive, and the wages of truck drivers 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 is the investment in internal equipment and trucks, as well as the cost of personnel." Pierce said: "A conservative estimate requires 5 million US dollars. Investment. The annual operation also requires two to three million US dollars, because our supermarket model is different from traditional supermarkets, and the company’s logistics team cannot estimate the exact value based on their previous experience.”