The trend of store renovation reaches individual operators "The 150,000 yuan franchise renovation fee turned out to be a lesson," Chen Chen said helplessly. He runs two supermarkets in a third-tier city. Thanks to prime locations and years of accumulated reputation, his daily revenue was stable at around 10,000 yuan. While not booming, the business was steady. However, since last year, the market environment has changed dramatically, and a crisis quietly descended. Initially, several bulk snack stores opened nearby. Although they didn't completely steal customers, their impact gradually became apparent. In the second half of this year, the situation worsened as these snack stores collectively transformed into wholesale supermarkets, with product categories highly overlapping Chen's supermarket but at lower prices, directly diverting a large number of customers. His daily revenue plummeted from over 10,000 yuan to 5,000-6,000 yuan. To recover performance, Chen decided to join a discount supermarket brand, hoping the renovation would attract customers again and even restore previous revenue levels. But reality did not meet his expectations. After joining, the first "renovation plan" Chen received was just a rough floor plan with no detailed guidance on layout. He had to adjust shelves himself to make the store look more like a "discount supermarket." "Throughout the process, the brand's 'support' was simple and perfunctory," Chen commented. Worse, there were supply issues: the brand's product assortment was highly unstable. Especially for milk, oil, and rice, due to regional cross-selling problems, goods couldn't arrive, leaving shelves frequently empty. After the renovation, the brand required the store to completely cut fresh produce categories, directly causing a massive loss of old customers. Even after reopening, performance didn't improve but further declined, with daily revenue dropping from 5,000-6,000 yuan to around 3,000 yuan. Two months after joining, Chen had to admit that this "renovation" was a complete failure. Facing continuous shortages and stockouts, he had no choice but to switch back to local supply chains and rebuild the product assortment. In contrast, Zhao Kang, also in a third-tier city, was slightly luckier. His supermarket also underwent a closure for renovation but reopened after a month. Zhao said, "The first month after reopening was okay, mainly due to marketing and promotion; revenue increased by 20%, but costs also rose, so profits were basically flat with pre-renovation levels, sometimes even lower." "I was very cautious about the renovation, inviting several supermarket renovation consultants for advice, but in the end, I was still taken advantage of," Zhao told the author. It is reported that supermarket renovation consultants in the market are mainly of two types: one type consists of senior managers who previously worked at Pangdonglai, including regional managers or large store managers, who achieved significant results in regional markets, helping companies turn profits and reach billions in scale. These consultants charge higher fees, typically 1 million yuan per store. The other type includes store managers from local or national chain supermarkets, such as Beijing Hualian, Vanguard, and Yonghui, with relatively lower fees, generally around 100,000 yuan. The work of renovation consultants typically includes analyzing store conditions, formulating product preparation and operational standards, and participating in short-term management after opening, usually lasting about a month. However, the success rate of such renovations is not optimistic. "Store renovation is a matter of life and death; there are successful cases, but most end in failure," an industry insider admitted. Across the industry, "renovation" has become a trend in retail. First, in the first half of the year, Pangdonglai initiated assistance renovations for companies like Bubugao and Yonghui, followed by traditional supermarkets such as Vanguard, Lianhua, and Ginza starting their own renovations. Behind this renovation wave is a "ice and fire" situation in retail: on one hand, Sam's Club and Pangdonglai continue to stand out; on the other, almost all listed retail companies are impacted by competition. Now, this renovation trend is reaching the smallest capillaries of retail. Product structure is key Zhao Kang revealed to the author that the plans offered by market consultants cover multiple aspects, including product structure adjustment, employee assessment and training, supply chain team building, procurement optimization, and system and marketing strategies. Among these, product structure adjustment is considered the top priority. In Zhao's 1,200-square-meter supermarket, the renovation started with product structure. They removed categories like porcelain, kitchenware, and small appliances that occupied significant space but had low sales per square meter. Zhao agreed with this, as these products no longer meet current consumer needs and fail to create value for the store. The freed space was re-planned to optimize product structure. Second, the FMCG area was changed to a fresh produce and fruit section, connected to the snack area, with air-curtain cabinets added on both sides for fruits and low-temperature dairy products. The bulk snack area was combined with beverages and snacks to create a smoother shopping flow. End-cap displays were also adjusted, shifting from relying on display fees to reorganizing product structure. Ultimately, over 5,000 slow-moving items out of 15,000 SKUs were replaced to improve overall sell-through rates. However, the renovation results were not satisfactory. Zhao admitted that despite investing nearly 300,000 yuan, the opening day attracted 5,000 customers, but foot traffic declined daily, eventually returning to pre-renovation levels. Afterward, Zhao tried promotions like durian sales to attract younger customers, but the effect was short-term. While meat and egg products were traffic drivers, they mainly attracted elderly customers, leaving the single-customer-base problem unresolved. Additionally, the high cost of equipment selection during the renovation put significant pressure on store operations. Zhao's experience is not unique. In the current retail renovation wave, product structure adjustment is one of the core directions. Take Pangdonglai's guidance of Bubugao store renovation as an example: Bubugao removed 9,773 SKUs (74.72% of total) and introduced 7,347 new SKUs (64.44% of new additions), bringing the store's product structure to over 90% alignment with Pangdonglai's standards. Pangdonglai's private-label products, such as DL large cookies, craft beer, and mineral water, also entered Bubugao's shelves. This penetration of private labels was jokingly referred to by netizens as an increase in "Pangdonglai content." In Yonghui's renovation, product structure adjustment was also a focus. Yonghui, referencing Pangdonglai's model, removed about 70% of old SKUs and introduced nearly 5,000 new SKUs, bringing the total SKU count to nearly 9,800. The bakery and deli area expanded from 10% to 30% of the store, becoming the most popular section. In both supermarkets' renovations, the "Pangdonglai content" was not high. Most product suppliers were not from Pangdonglai, especially in Yonghui stores, where private labels, imported brands, and large-pack items further diluted the "Pangdonglai content." Pangdonglai's repeated "standout" from traditional supermarkets in recent years is due to its product innovation and service differentiation, creating a unique consumer experience. Its private labels and high-sell-through products not only drive precise customer traffic but also form its core competitiveness. For supermarkets seeking transformation, product innovation and differentiation have become a major direction to imitate Pangdonglai. Unique products not only demonstrate a company's ability to create distinctive items but also bring significant traffic. For example, Sam's Club has frequently trended on social media due to its hit products, and Aldi's 9.9-yuan liquor became a hot topic on social platforms. However, as Zhao's experience shows, renovation is far more than just replacing products or upgrading decor. Finding a balance between differentiated product strength, operational efficiency, and cost control is the key to successful supermarket renovation. Breaking away from the "second landlord" model and embracing direct sourcing In this renovation revolution, the second breakthrough is the procurement model. Recently, Yonghui and Jiajiayue announced trials of direct sourcing models. By removing intermediaries and lowering procurement prices, they purchase at the original factory price. For a long time, traditional supermarkets' business was more like "collecting rent" than being a "second landlord," relying on charging suppliers for barcode fees, display fees, promotion fees, and even additional deductions during store anniversaries to sustain their business. Consequently, all these high costs were passed on to purchase prices, leading to high retail prices that consumers ultimately paid. With the rise of hard discount models, traditional supermarkets have fallen into trouble due to high costs and lack of price competitiveness, gradually losing business. Facing price wars, many supermarkets can only operate at a loss or even close. In contrast, the core of direct sourcing is to eliminate all backend fees in procurement, no longer charging suppliers for barcode fees or display fees, but purchasing directly at factory prices. The aforementioned insider told the author that with direct sourcing, supermarkets also demand pricing autonomy: first, requiring supply prices to be on par with distributors, eliminating intermediate links from the source; second, supermarkets can set retail prices themselves, no longer restricted by brands. This makes products under the direct sourcing model more price-competitive, attracting consumers with low prices. But it also places higher demands on supermarkets. After removing backend fees, supermarkets need to bear more inventory management and logistics costs, and require stronger supply chain management capabilities. If supply chain capabilities are insufficient, it may lead to unstable product supply and further compress profits. Moreover, supplier cooperation is crucial; if suppliers are unwilling to adjust supply models, the implementation of direct sourcing will face resistance. More importantly, it tests cash flow. Traditional supermarkets relied on various fees from suppliers, which not only eased financial pressure but also provided stable cash flow. The direct sourcing model eliminates these fees, requiring supermarkets to bear the full cost of product procurement themselves, posing a huge pressure on those with insufficient cash flow. In fact, Pangdonglai's success proves the potential of self-purchasing and self-operated models. Through a high proportion of self-purchased products, Pangdonglai effectively controls product quality and costs, achieving high gross margins. This high margin provides room for implementing a high salary system, motivating employees while improving service quality. Customers remain loyal due to excellent service, ultimately leading to sustained revenue growth, forming a virtuous cycle of "high margin—high salary—quality service." However, this model is not easily replicated by all supermarkets. In Zhao Kang's renovation, he followed the consultant's advice to adjust employee salary structures, aiming to motivate staff, but the workload increased after renovation. Since the renovation didn't bring significant performance growth, the increased salary costs further compressed profit margins, with unsatisfactory results. Zhao admitted that the pressure multiplied after renovation: "Don't rush into renovation; you might end up being someone else's cash cow."