---
title: "2017 Retail Latest Casualty List! Hypermarket Closure Wave Still Fierce, New Retail Rises"
description: "Supermarket listed companies significantly improved profitability in 2017, but adjustments continued. According to Lianshang.com statistics, 14 listed supermarket companies opened 1,169 stores in 2017, up 3.18% year-on-year, and closed 828 stores, up 14.84% year-on-year. By the end of 2017, they operated 11,010 stores in total."
author: "联商网 崔旭升"
publisher: "New Distribution"
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published: "2018-05-18"
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# 2017 Retail Latest Casualty List! Hypermarket Closure Wave Still Fierce, New Retail Rises

> Supermarket listed companies significantly improved profitability in 2017, but adjustments continued. According to Lianshang.com statistics, 14 listed supermarket companies opened 1,169 stores in 2017, up 3.18% year-on-year, and closed 828 stores, up 14.84% year-on-year. By the end of 2017, they operated 11,010 stores in total.

Supermarket listed companies significantly improved profitability in 2017, but adjustments continued.

According to Lianshang.com statistics, **14 listed supermarket companies opened a total of 1,169 stores in 2017, up 3.18% year-on-year from 1,133 in the same period last year; they closed 828 stores, up 14.84% year-on-year from 721.** By the end of 2017, the 14 companies operated 11,010 stores in total.

▲ Store openings and closures of 14 listed supermarket companies in 2017 (unit: stores)

Note: The above data are from annual reports of listed companies, with "/" indicating that the data was not disclosed in the report.

**I. Expansion: Experimenting with Innovative Store Formats**

▲ Store openings of 14 listed supermarket companies in 2017

**According to Lianshang.com statistics, the 14 listed supermarket companies opened nearly 1,200 new stores in 2017, with an average of 84 stores per company. Among them, Yonghui Superstores, Lianhua Supermarket, Zhongbai Group, and Hongqi Chain each opened more than 100 stores.**

Yonghui Superstores opened the most stores among the 14 companies, with 332 new stores, more than triple the number in 2016. In 2017, Yonghui opened 133 Bravo stores, 172 Yonghui Life stores, and 27 Super Species stores, bringing its total store count to 806 by the end of 2017.

Seven companies, including Sun Art Retail, opened fewer than 20 new stores each. Sun Art Retail notably slowed its store openings in 2017. According to Lianshang.com, RT-Mart, under Sun Art Retail, opened 42, 34, 45, 40, 31, and 33 new stores from 2011 to 2016, but only 17 in 2017. In addition, CP Lotus and New Huadu opened fewer than 10 stores each, with 8 and 6 respectively.

In terms of total store count, by the end of 2017, the 14 companies operated more than 11,000 stores, with Lianhua Supermarket, Hongqi Chain, and Zhongbai Group each exceeding 1,000 stores.

Lianhua Supermarket still ranked first with 3,421 stores, but this number decreased by 197 from the end of 2016 due to the closure of loss-making stores. CP Lotus was the only company with fewer than 100 stores, operating just 72 by the end of 2017.

Facing major industry changes, exploring new store formats has become key to corporate transformation and upgrading. Various new retail innovative formats saw concentrated growth in 2017. Yonghui's Super Species, New Huadu's Haiwuhui, and Bubugao's Fresh Food Evolution were launched one after another. Meanwhile, Renrenle also introduced new formats such as Le super premium supermarket, Le life lifestyle supermarket, and Le fresh fresh food supermarket.

**II. Adjustment: Closing Loss-Making Stores**

▲ Store closures of 14 listed supermarket companies in 2017

While accelerating the opening of innovative stores, disposing of stores with no hope of turning around became a key adjustment focus. According to Lianshang.com statistics, **the 14 listed supermarket companies closed more than 800 stores in 2017, an increase of 107 from the previous year, with an average of nearly 60 closures per company. Nine companies closed more than 10 stores each.**

Lianhua Supermarket closed the most stores among the 14 companies, with 492 closures, nearly 200 more than its new openings, and it had closed 477 stores in 2016. The main reasons for closures were **first, lease expirations, and second, proactive closure and adjustment of stores with operational difficulties.** Most of the closed stores were franchise stores. Lianhua stated that franchise stores faced the same market issues as directly-operated stores, and that the company had strictly regulated its franchise business.

Zhongbai Group also closed more than 100 stores, with 116 closures in 2016. Zhongbai stated that the continuous significant store adjustments, although impacting current profits, also alleviated historical burdens.

Beijing Jingkelong and New Huadu also closed more stores than they opened. Beijing Jingkelong closed 1 hypermarket, 5 supermarkets, and 35 convenience stores due to lease expirations, closure of loss-making stores, and demolition. New Huadu slowed its expansion pace, opening fewer stores than expected while closing and disposing of 10 stores.

In addition to direct closures, transforming and upgrading existing stores has also become a core part of store adjustments. For example, Yonghui Superstores accelerated the expansion of Bravo green-label stores while upgrading its red-label stores. Zhongbai Group explored the "fresh food + dining" model while promoting green-label store coverage and red-label store upgrades, and adjusted to expand fresh food operating area, forming a "red-label store + simplified fresh food" operating model.

**III. Planning: Focusing on Small Formats**

▲ Total store counts of 14 listed supermarket companies as of the end of 2017

Innovative small formats are being embraced by companies, and many listed supermarket companies' 2018 business plans show they will rapidly replicate these store formats.

Among them, Yonghui Superstores plans to open 1,235 new stores this year, including 100 Super Species and 1,000 Yonghui Life stores under its Yunchuang subsidiary. Renrenle plans to open 50 new stores, mainly including new formats such as **Le super premium supermarket, Le life lifestyle supermarket, and Le fresh fresh food supermarket.** Jiajiayue plans to open no fewer than 100 new stores using newly upgraded hypermarkets and lifestyle supermarkets.

**At the same time, transformation and upgrading of existing stores will also accelerate.** Zhongbai Group plans to introduce fresh food elements into small supermarket formats, implementing a dry goods + fresh food model. Jingkelong will accelerate the transformation of traditional convenience stores, positioning them as **community fresh food stores "Family Kitchen"**, increasing the proportion of fresh food products, continuously adding fixed-quantity packaged goods, and promoting fresh food operation version 3.0 based on version 2.0.

**In addition, small community supermarkets will also become a key focus for future development.** Lianhua Supermarket plans to open 205 new stores this year, focusing on developing premium supermarkets, community fresh food enhanced supermarkets, and new convenience stores. Sanjiang Shopping Club plans to open no fewer than 40 new stores this year, including upgrading and transforming traditional community stores. Hualian Supermarket plans to open 20-30 stores this year, establishing community retail centers and adding new business types. Hongqi Chain will cooperate with Yonghui Superstores to open 150 fresh food stores.

From the store openings and closures of listed supermarket companies in the past two years, it is not difficult to see that **most companies are undergoing transformation and upgrading in full swing, but the results remain to be seen.**

Zhou Yong, a professor at Shanghai Business School and director of the Lianshang Senior Advisory Group, analyzed: **After store upgrades, consumption scenarios become diversified, category structures are dominated by fresh food, product quality improves accordingly, and the customer base undergoes a younger transformation.**

However, Zhou also pointed out that some supermarkets attempt to upgrade stores but remain at the level of improving "physical scenes" such as environment and layout, without fully exploring consumers' psychological needs. If the "psychological scene" is not well designed, it is difficult to gain consumer recognition. Some supermarkets even still rely on "low-price promotions" as the main sales driver, without focusing on understanding customers' inner needs. Such transformation and upgrading are doomed to fail.

**In the past, supermarket development mainly spent money on store construction; now, to survive and improve efficiency, supermarkets should spend more on studying consumption and category planning.**

At the same time, Zhou believes that supermarkets are increasingly dominated by fresh food, and fresh food increasingly requires nearby and convenient purchase, which provides a basic direction for supermarket transformation site selection: nearby and convenient. Therefore, **the miniaturization and small-format development of supermarkets has great potential.**

Source: Lianshang Supermarket Home

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