Chapter 665 – The supermarket have competitors!
The first meeting between both of them went smoothly. Liu Yonghao felt that even if Feng Yu did not invest in Minsheng Bank, it was fine as Feng Yu had expressed his intention of joining the Guangcai Program.
Liu Yonghao was not the decision maker. Although he was one of the founders who suggested this venture, it was still the government that has the final say.
Feng Yu was in no hurry. If this bank could wait until 1998, it would be best. It was not worthwhile to invest now. But after 1998, Feng Yu would have made a killing from the Asian Financial Crisis, and he will have lots of funds to invest.
Furthermore, Feng Yu knew that it was impossible for Minsheng bank to be set up next year. The earliest will be 1996. He might as well let other people invest in the bank first, and he invests after 1998. He wants to get bank loans from Minsheng Bank, but he knew this was not possible now.
Tai Hua Supermarket’s expansion still needs to get bank loans from other banks. Feng Yu in charge of contacting the China banks and Fu Guangzheng, and the rest will contact the Hong Kong banks. They will compare the interest rates and conditions before deciding to get the loan from which bank.
But Feng Yu remembered in his previous life, Li Zekai had gotten a considerable loan amount with just one project. Hong Kong side should not be a problem as Superman Li was one of the shareholders of Tai Hua Supermarket.
Feng Yu felt that funds were not the priority now. Suitable locations were their top priority. They must get it before any competitors appear.
Currently, there were already some small supermarkets, like BHG, in China. They were registered earlier than Tai Hua Supermarket, but their scale was not significant. Their product variety, service, product display, marketing, sales strategy, etc. were far behind Tai Hua Supermarket. Although BHG also wanted to set up a hypermarket, their hypermarket was only a bigger supermarket.
Having a good location means a steady flow of customers. This was very important.
In Shanghai, BHG’s supermarket had affected Tai Hua Supermarket’s development. Although BHG only have two branches, their profits were high.
But after Tai Hua Supermarkets opened up two branches in Shanghai, BHG’s profits start to decline.
Feng Yu’s strategy was to snatch away the BHG market share. After all, BHG’s management model, product placement, supply chains, operational models could not be compared to Tai Hua Supermarket. Even their buildings were old, and wires could be seen everywhere. BHG supermarkets were messy, unlike Tai Hua Supermarkets.
The supermarket manager of the branches in Shanghai also starts to poach BHG staffs. Tai Hua Supermarket was paying better than BHG and had better benefits and prospects.
Those staff that joined Tai Hua Supermarket were told that Tai Hua Supermarket will continue to expand and there will be many more new branches set up. If they were picked to go to the new branches, they will have an increment and might even be promoted to the management staffs.
The new branches might not be far from Shanghai. It might be in Suzhou or in Shanghai. The staffs will not need to work far from their home.
Tai Hua Supermarkets had a steady supply chain, and the products they got were much cheaper. Tai Hua Supermarket staffs will visit BHG supermarkets to check on their pricing and then set lower prices for the same products.
At first, Feng Yu thought the profits from supermarkets will not be high. It should be 20% of profits at most. But after the supermarkets were opened, the profits were much higher than expected.
A pair of stockings were sold for 10 RMB in the shopping malls. The cost of the stockings was only 3 RMB, and Tai Hua Supermarket sold it for 8 RMB. The profits almost doubled off the cost.
China’s Great Wall Red Wine was selling for over 20 RMB in most stores. But the cost price Tai Hua Supermarket got for this wine was less than 10 RMB, and it was sold for 18 RMB per bottle. Just this wine alone attracted many customers.
The profits for those imported products were even higher. These imported products were usually sold by some companies for several times profits.
But for the same product, it was much cheaper at Tai Hua Supermarket. But the profits were still more than double the cost.
All the items in the Tai Hua Supermarket were selling cheaper than other places. Even the eggs were less expensive than the market.
Coupled with marketing, there was a constant flow of shoppers visiting the supermarkets every day. For example, the two branches in Shanghai attracted shoppers living far away. This was because the products in Tai Hua Supermarket were on average cheaper by 10%. Some items were even 20% less expensive than in other places.
The profits were not low, and the sales keep increasing. There were promotions daily, and Tai Hua Supermarkets total revenue was growing every week.
The success of Tai Hua Supermarket had a significant impact on BHG. This was what Fu Guangzheng wanted. Fu Guangzheng had set his sights on BHG supermarkets’ locations. If he could buy over those two BHG supermarkets, he can build a new shopping mall at the site. The business will surely be great. Although it will take a few months to build the new mall, the potential profits make it worthwhile, and it will eliminate one future competitor.
Not only in Shanghai. Many shopping malls in Beijing, Bing City, Tianjin, Shenzhen, Jinlin and many cities had been converted into Hypermarkets. They were trying to imitate Tai Hua Supermarkets.
For instance, two-stories of a shopping mall in Bing City was converted into a supermarket. Even the shelves, the space of the aisles, product placements were identical to Tai Hua Supermarket.
Feng Yu called Zhang Ruiqiang to ask him about this. He had wanted to buy this mall previously, and the City government refused to sell it because they wanted to have a shopping center. How come this supermarket suddenly appear?
Zhang Ruiqiang replied embarrassedly. It was his men who made this decision, and he was not aware of it. When he knew about this, the supermarket was almost set to open. All the shelves were built, and they could not remove it. Furthermore, this was only a small supermarket. It will not affect Tai Hua Supermarket at all.
Feng Yu does not mind. Tai Hua Supermarkets was able to catch up from behind even when the good locations were taken in cities like Shanghai, Shenzhen, and Guangzhou. What’s there to worry about that small supermarket?
Fu Guangzheng was also interested in the location of that mall in Bing City. He wanted to buy over the mall.
Tai Hua Supermarket had strong marketing, and many people had seen this supermarket on the news. They will want to visit this supermarket out of curiosity. Once people entered Tai Hua Supermarkets, they will realize how cheap the products were.
After the introduction of the membership and shopping cards, Tai Hua Supermarket was able to retain most of the shoppers. After Tai Hua Supermarket opened up, all the grocery shops, markets, shops, etc. nearby were affected. Their businesses were not as good as before.
The locations Fu Guangzheng and the rest scouted were mostly taken up by other supermarkets, and the solution they had was merger!