Shenzhen Sam's supermarket has recently become a hot spot for Hong Kong people to buy in the north, in fact, Hong Kong as early as the 90s there was a large warehouse supermarket Carrefour, but in the end it was defeated by the market competition and lost, after more than 20 years, the same type of Sam's supermarket was sought after by Hong Kong people, what is the magic of Sam's? With different business opportunities emerging under the Sam's Effect, can Hong Kong "replicate" a giant Sam's supermarket to revitalise the market?

Hong Wen, a member of the Legislative Council Election Committee, pointed out to "Hong Kong 01" that Sam's is a membership-based store under the Walmart Group, the world's largest retailer, regardless of the scale of the supply chain and procurement, which cannot be easily handled by Hong Kong's supporting facilities. Other economists believe that the Sam's phenomenon is only temporary, and Sam's sales target includes catering or retail groups, unlike Hong Kong supermarkets, which mainly serve the general public, so it is not suitable to operate Sam's in Hong Kong.

▼ "Hong Kong 01" Sam "Invasion" Hong Kong Report Series No. <>▼

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Legislative Council Member (Election Committee Constituency) Hung Wen pointed out that Sam's success lies in the fact that the "behind-the-scenes financier" is Wal-Mart, the world's largest retailer, which has achieved product differentiation and high cost performance due to its huge supply chain and procurement volume, so it is very popular. (File photo/Ou Jiale photo)

Sam's "gold owner" is the "first brother" of global retail, with high cost performance and differentiation

She pointed out that Sam's products have two characteristics, the first is that Sam's business model is similar to that of the wholesale market, and the products sold are in large packages and in large quantities, for example, shampoo is packaged in ordinary portions in Hong Kong and sold in single bottles, but Sam's sells the same type of shampoo, which may be in extra large portions or bundled together, which is much cheaper than in Hong Kong. So Sam's products are very cost-effective.

The second is that Sam's products are differentiated to procure. In fact, one of the reasons why Hong Kong people love Sam's products is that they are not available in Hong Kong or online shopping platforms, and even if they are ordinary daily necessities, many of them are Sam's own customized products, which are different from those bought in ordinary supermarkets in terms of quality. Hong Wen pointed out that Sam's parent company is the global Walmart Group, and its product supply chain is large, and it collects global data to analyze customer preferences, which is the most critical reason for Sam's success.

Sam's knows that Sam's products are particularly popular, and will help you choose them based on big data, and their purchase volume is very large, and they can even directly ask the manufacturer to help them customize the products, which can meet the requirements of Sam's products and buy them elsewhere, so that their products are differentiated and cost-effective, which makes Sam's very popular. Legislative Council Election Committee Member Hung Man

Shenzhen-Hong Kong product standards are different from the business system, and procurement cannot share the cost of the supply chain

Hung Wen added that although Sam's is popular, it is not suitable for opening a branch in Hong Kong, first of all, the biggest reason is that Hong Kong and the mainland are completely different in terms of food and product safety standards, as well as business systems, and most importantly, Hong Kong and the mainland cannot share the supply chain of goods.

A friend once asked me if I could ask Sam to open a branch in Hong Kong, and I thought it must not work! Legislative Council Election Committee Member Hung Man

She quoted a friend who is engaged in a supermarket group as pointing out that even if the same supermarket brand operates stores in Hong Kong and the mainland separately, even if they belong to the same group, the two can only share a maximum of 5% of the supply chain, and the remaining 90% of the goods have to be procured and sorted out by themselves, so the supply chain of the mainland branch cannot be used because of its popularity.

Therefore, if Sam's comes to Hong Kong to open a branch, the supply chain of many goods will be different, and the goods from the mainland cannot be directly taken for cross-border sales, and they need to be repackaged, for example, all products must be converted to traditional Chinese labels and packaging, and many export certificates and licenses must be applied, and food nutrition labels must be added in accordance with Hong Kong's laws and standards, etc., which may be different from the practice in the mainland, and the cost of each label may be as high as $1. Ninety-five percent of them have to be reorganized, so if Sam's opened a branch in Hong Kong, the supply chain of the products will be different, and the cost will be much more expensive."

In addition, Sam's operation is huge, so almost all departments and cities are self-built properties, if Sam's comes to Hong Kong to settle down, according to its past model, he must build his own properties, if he wants to apply to the government for land approval, I am afraid it will take at least 10 years, Hong Kong Wen said with a smile: "If you ask him (Sam) to go to Biandu, you can rent a large-scale shopping mall storefront? Actually, it's not realistic." Sam's also has high requirements for the location of the store, and there must be perfect transportation facilities, which are difficult for Sam's to settle down.

Carrefour loses money and loses warehouse-type large supermarkets in Hong Kong to compete with traditional supermarkets

In fact, Carrefour, a large French retail group, entered Hong Kong in 1996, and at its peak, it had branches in many districts in Hong Kong and Kowloon, all of which were warehouse-type supermarkets similar to Sam's, selling large-scale packaged products, but it has been losing money for many years, losing to the competitive offensive of Hong Kong supermarket groups, and finally lost in 2000, closing the remaining four branches at that time.

At that time, there were warehouse supermarkets in Hong Kong, Carrefour, all of which were loss-making, and they had to withdraw from Hong Kong if they didn't have to deal with it, so you want to copy (copy) a Sam's in Hong Kong, I think it's not possible! Legislative Council Election Committee Member Hung Man

On the other hand, the total population of the mainland is as high as 14.1 billion, so Sam's has been able to successfully achieve a large scale in the mainland, and in recent years, there have been frequent exchange rate changes, and the renminbi is close to 1 to <> to <> against the Hong Kong dollar, so the price of mainland products is at least <> to <>% cheaper than Hong Kong, which is very popular with Hong Kong people, but if Sam comes to Hong Kong to open a store, the situation will not be so ideal. Hong Kong Wen added that the business and legal systems in Hong Kong and the mainland are different in many aspects, coupled with the rent pressure in Hong Kong, "it is very difficult for Sam's Store to open in Hong Kong, and then the goods are the same, the price is the same, even if the products are the same, the price must be the same", so if Sam's comes to Hong Kong to settle down, there may not be a burst of purchases.

Restore the basic steps Hung called on the Hong Kong industry to enhance the quality service experience of consumers or tourists

For example, large shopping malls should take the high-end consumption route, or focus on European and American products, which cannot be bought in the mainland, while small shops in Hong Kong should take the characteristic route, such as nostalgic items or food items that highlight Hong Kong's characteristics, but the most important thing is to improve the service quality so that Hong Kong consumers or tourists can experience the quality of service, so as to actually help increase the flow of people.

Chong Tailiang, Associate Professor of the Department of Economics at CUHK, believes that the Sam phenomenon will not become a trend for long. (File photo)

Chong Tai-liang, Associate Professor of the Department of Economics at CUHK, also believes that it is not feasible to operate a Sam's store in Hong Kong, and he has noticed that Sam's has indeed appeared recently, because Hong Kong people have always "bought at the edge of the day", but he believes that it may not become a trend in the long run, "because it is not always about selling expensive goods, only a few supermarket products, and the price may not be very different."

He also pointed out that the business system in Hong Kong is different from that of the Mainland, especially a membership-based supermarket like Sam's, which may be subject to a different degree of supervision than the general supermarket in Hong Kong. Coupled with Hong Kong's small size and high rent, it is believed that it is difficult for Sam's to find a suitable place and follow the model of the mainland to open a branch, and Hong Kong's population is only more than 7 million, which is less than the 14.<> billion population in the mainland.

On the contrary, he believes that if these reverse purchasing agents make a special trip to the north for Hong Kong people to search for some products that cannot be bought in Hong Kong, and then send them back to Hong Kong directly, and the freight is not too expensive, "there will indeed be a market limit". Because the problem in Hong Kong is that supermarkets will charge suppliers a shelf fee for goods, many times we see that supermarkets do not have a wide range of products, and a large reason is that the shelf fee problem discourages many suppliers.

As for whether the Hong Kong supermarket group can counterattack and go north to "copy" Sam? Mr. Chong pointed out that some local supermarket groups have already opened branches in the mainland, for example, in Kam Kwong Wah Plaza, they are taking the high-end consumption route, and they will not operate in different modes to break through like ordinary supermarkets in the mainland.

What if a local supermarket group takes the lead in opening a Sam's store in Hong Kong? Sam's is a fee-based membership supermarket, and if it wants to set up an annual fee to recruit members in Hong Kong, it will spend a lot of money on publicity, and secondly, unless the product is much cheaper than other supermarkets, it will be difficult to attract consumers to pay to join the membership. In addition, Sam's sales in the mainland include many catering and retail groups, on the contrary, the customers in Hong Kong are mainly ordinary citizens, so Sam's is not suitable to settle in Hong Kong.

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