The neighbourhood convenience store collapsed: shutting down 168 stores, nearly half of Wumart's tray.

The neighbourhood convenience store collapsed: shutting down 168 stores, nearly half of Wumart's tray.

Shutting down 168 stores, involving thousands of case disputes

Near the convenience store, the entire "collapse" Wumart received nearly half of the stores.

Wei Jie, Jiang Zheng

Almost all of the founding team came from Seven-Eleven's neighborhood convenience store, which has attracted much attention since it was officially launched in May 2015. The fast-expanding company opened more than 160 convenience stores in more than two years. At last, because of the explosion of shareholder Shanlin Finance's P2P business, the capital chain was broken and all the stores were closed overnight.

More than three months after the closure, many convenience stores located in the core area of Beijing have been subleased or sought to take over. The court sealed up the property of the neighbour's property in accordance with the law, and nearly 3000 employees applied for arbitration.

Recently, a survey by a reporter from China Business News found that some of the original neighborhood stores have become brand new "multi-point convenience stores". The full name of multi-point convenience store is Beijing Lingxian Chain Convenience Store Co., Ltd. (hereinafter referred to as "Lingxian Chain"), and Beijing Wumei Convenience Supermarket Co., Ltd. (hereinafter referred to as "Wumei") is its wholly-owned shareholder. Why did wumi become the next man in the neighborhood? How will we make use of the neighborhood convenience store to achieve the layout of new retail?

Disputes involving 1516 cases

On November 3, the adjacent convenience store next to the Chegongzhuang subway station in Beijing was affixed with the seals and announcements of the People's Court of Xicheng District in Beijing. Because the neighborhood did not pay the current rent to the owner, the owner of the convenience store will resort to legal procedures to recover 500,000 yuan compensation from the neighborhood. Previously, the proclamations and seals of the courts of Xicheng District were also affixed on the doors of the adjacent convenience stores of Majiabao West Road and Fengqiao Road in Beijing. Ma Jian, a lawyer of Chengdu Zhongyan Law Firm, told reporters that if the other party fails to perform, the court can auction the company's fixed assets.

According to Tian Eye Check's industrial and commercial information, as of November 15, 2018, 1516 cases have been executed by neighbors whose neighbors are convenient to their neighbors. The execution courts are all the people's courts of Xicheng District, Beijing. In addition, Beijing Neighborhood Convenience Store Chain Co., Ltd., a wholly-owned subsidiary of neighbouring families, has been cancelled.

On September 25, 2018, a total of 60 judgments on labor contract disputes between neighbouring hourly workers and neighbouring families came into effect. The attorneys entrusted with the 60 judgments were appointed by the Xicheng Legal Aid Center. The judgment shows that the neighbouring family should pay the plaintiff's service fee, and if it fails to fulfill its monetary obligation during the period specified in the judgment, it should double the interest on the debt during the period of deferred performance.

As for employees'salary arrears, Sun Hongwei, a former manager of a convenience store in the neighborhood, told China Business News that nearly 3,000 employees in the neighborhood had applied for arbitration through more than 10 legal aid centers. Although the results of arbitration have come out, the employees are still waiting, and the problem of suppliers' arrears is also a problem. Still unresolved.

"If there is no executable assets, it is necessary to go into bankruptcy proceedings, after the completion of the proceedings, the workers will be paid first, but it may be a long time before the employees really get their wages." Wang Xibin, lawyer of Beijing Jingshi law firm, added.

It's easy to change the beauty of the neighborhood.

In addition to the current unfinished situation of the neighborhood, recently, reporters noticed that some of the original neighborhood convenience stores have become brand new "multi-point convenience stores". According to the Wechat Public Number "Multi-Point Convenience Store" which was certified on October 24, Dong Gang, General Manager of Wumei Convenience Store, served as Chairman, Legal Representative, Wang Lei, former CEO of the neighbouring family, Xu Shaochuan, COO of Wumei Group and Xu Lina, spokeswoman of Wumei News, served as directors.

In view of the current debt crisis in the neighborhood, will its stores affect other companies to continue leasing operations, Wang Guohua, a lawyer at Beijing Zhongwen Law Firm, told reporters that this requires the original landlord, debtor company and current tenant to sign a lease change agreement. A number of convenience store industry insiders told reporters that Wumart took over the neighborhood was facilitated by SASASAC, Wumart will not assume the entire debt of the neighborhood. For the SASAC to negotiate, Dong Dong told reporters that he did not know.

Reporters concerned about the public number of Weixin "multi-point convenience store", found that the account of the enterprise is known as Beijing Linxian Chain Convenience Store Co., Ltd., the enterprise was established on September 18, 2018, completed Weixin certification on October 24, 2018, its information and Beijing Linxian Chain Convenience Store Co., Ltd. business information is fully consistent. To be sure, a more convenient store operator is the neighboring fresh chain.

"Wumart will reopen its convenience store at its original location after it takes over its neighbor's convenience store. Wumart will also do convenience store business and let it operate independently." The insiders of Wumart group told reporters about the arrangements for the convenience store next door. According to industry and Commerce information, the adjacent chain of convenience stores has become a subsidiary of Wumart Group, with senior directors of Wumart Group and former CEO Wang Lei in charge of the actual operation.

"The middle and senior members of the neighborhood team, i.e. those above the manager level, have basically moved their original salary to the multi-point convenience store system. The former manager of the neighborhood convenience store also operates his own original store, and the operation mode is basically the same as that of the neighborhood." Sun Hongwei, the former store manager of the neighbourhood convenience store, told reporters.

According to industry and Commerce data, as of November 15, 2018, there were 16 stores that had opened in the Neighborhood Fresh Chain. The registration date was from October 12, 2018 to November 13, 2018. Among them, Dong Gang, general manager of Wumei Convenience Store, is in charge of 13 stores in Beijing, such as Magnetizer Kou Store, Baiziwan Store and Huajiadi Street Store.

As Wumei's new retail project, Liu Guihai, a partner of multi-point Dmall, told reporters that Wumei's existing stores in Beijing also have convenience stores, but the depth of digital experiments is not enough, so a number of convenience stores were selected for in-depth cooperation. However, more than 70 stores that have taken over from their neighbours do not necessarily turn into more convenience stores.

For the multi-point view of neighborhood resources and other issues, Dong Gang said that taking over neighborhood is (Wumei) group behavior, inconvenient to answer. Sun Hongwei told reporters that wumi's own convenience store is more inclined to the convenience of community convenience stores. Multipoint convenience stores have a stronger sense of technology and Internet gene. In addition, the location of neighborhood convenience stores is high-end convenience stores, and the unit price of target customers is higher. Affordable plus high-end, these more than 70 convenience stores have obviously enriched Wumart Group's convenience stores business level.

The reporter sent an interview letter to the relevant personnel of Wumei Group's Public Relations Department on the location and planning of multi-point convenience stores, but no reply was received as of the time of publication.

Loss of blood caused by running wild

"I was not surprised at the convenience of the neighbourhood convenience store overnight, and even felt it was inevitable." Sun Hongwei, who has worked in many convenience stores, told reporters that "because the unit price of customers in the neighborhood is higher than that of similar convenience stores, the gross profit can reach 60% or even 70%, but it has never been able to realize the profit of a single store. In order to open a sufficient number, as long as there is room to rent, will not take into account the local consumption level, passenger flow issues. Wang Lei, a former CEO of a nearby convenience store, told the media that investors had asked them to open 20,000 convenience stores a year.

According to Sun Hongwei's recollection, the senior neighbours at a meeting with regional neighbour managers said that the ultimate goal of the neighbours was to go public. When the neighbors have opened enough 300 stores and the operating capital exceeds 100 million yuan, they plan to go public, so the neighbors have been anxious to open stores.

Retail expert Hu Chuncai told reporters that if a convenience store is not profitable, it is not feasible to rely solely on size. This is also the reason why many supermarkets eventually closed down. Without making profits, single stores expanded desperately. As a result, the more stores they opened, the more blood loss they lost.

Zhang Peng, a practitioner of convenience store industry, describes the operation mode of neighborhood and other convenience store brands as "high-altitude steel wire walking". He admits that convenience stores have great prospects and development space, but some convenience stores have to adopt highly leveraged operation and raise funds in an inappropriate way. If neighbours use their own funds and lower leverage to borrow a small amount of money from banks, they will never end up today. The earliest start-up funds of Seven-Eleven came from employees'savings and bank loans. The prudent attitude of opening stores and locating them has become the benchmark of convenience stores.

Following the closure of 168 adjacent convenience stores overnight in early August, on September 18, 131 convenience stores in Beijing issued a notice that they could not operate normally due to the problem of capital turnover. The successive closures of convenience stores opened a corner of the industry's long-standing problems of high cost and profit difficulties. Wang Hongtao, deputy secretary-general of China Chain Business Association, once described convenience stores as a place of chicken feathers.

According to a report issued by China Business Industry Research Institute, convenience stores have developed rapidly in China in recent years. The number of stores has blowout. In 2017, the growth rate of China's brand convenience stores industry reached 23% year on year, and the market scale exceeded 190 billion yuan. According to statistics, there are more than 260 convenience store brands in China, but the concentration of convenience stores is very low. At present, there are only more than 5,000 convenience stores in Shanghai and Guangdong, and the total number of convenience stores in most areas is less than 1,000. Deloitte analysis, under the impetus of capital and policy, the concentration of convenience store industry is expected to be improved rapidly in the future, and the industry competition will become more intense.

Zhang Peng said that the money of the fund-raising platform comes and goes quickly, and the convenience stores that depend on them to survive are hundreds of stores, hurting tens of millions of innocent convenience store employees.

Liu Yang (a pseudonym) who used to work in a nearby 131 convenience store has changed his profession and worked as a programmer in an Internet company in China. According to Sun Hongwei, Liu Yang was once a manager who could raise the daily sales of an ordinary convenience store from 5,000 yuan to 30,000 yuan.

However, Liu Yang was reluctant to mention his past business experience. He only said to reporters, "Seeing him rise from a high building and see his building collapse. I went to a convenience store and went to a Huang family. The original ambition now looks like a joke, will not return to the convenience store industry in the future, can not play.

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