The rise of bulk snack stores has triggered a new round of channel transformation in the industry, with 'low price' and 'discount' becoming key words. In this changing environment, can Bestore's premium route still work? Upon reflection, the high-end market of an industry will never completely disappear. Although consumers' shopping intentions have become more rational after the pandemic, this does not mean their interest in high-quality products has waned. Channel transformation weakens store advantages Currently, competition in the leisure snack industry has reached a fever pitch, and a new round of channel evolution has begun. First, traditional e-commerce channels are seeing sluggish growth, prompting brands to increase their offline presence. Second, among offline channels, the bulk snack channel has become a standout, achieving high cost-effectiveness and rapid product updates by upgrading efficiency and cutting out middlemen, thereby cultivating consumer mindshare and expanding aggressively. New Distribution recently observed in Chengdu that a Bestore store and a Snack Ming store located just 10 meters apart showed starkly contrasting foot traffic, with the former being very quiet. Why is this happening? Why has Bestore lost its advantage compared to bulk snack stores? First, in terms of price: In 2019, to avoid homogenization and low-price competition, and to differentiate itself, Bestore was the first in the industry to propose a premium snack brand positioning. The company claims that 'premium' means 'high appearance, high quality, and high experience,' but high quality implies higher costs for selected ingredients. Additionally, Bestore's investments in advertising, packaging, and other aspects to build its premium image are hidden costs reflected in product prices. According to data from Zhaimen Restaurant, the average order values for Bestore and Lai Yifen are 56 yuan and 61 yuan respectively, while bulk snack stores have an average order value of 38 yuan, with product prices generally around 70% of those in traditional channels like supermarkets. Price-sensitive consumers may be more inclined to shop at bulk snack stores. Second, in terms of variety: What is Bestore's strategic goal? To become the 'aircraft carrier' of the snack industry through multi-category and omni-channel operations. In summary, it's 'big and comprehensive,' so product richness is a key dimension in Bestore's plans. For consumers, having a complete and diverse product range is also very attractive. By the end of 2022, Bestore had over 1,600 SKUs, placing it at the forefront of the industry. In the same period, Three Squirrels had 400+ SKUs, and Lai Yifen had over 1,000 products. However, after the rise of bulk snack brands, they sell a collection of upstream manufacturers' products, resulting in very rich in-store SKUs, generally exceeding 1,000. When SKU numbers are not significantly different, bulk snack stores offer consumers more brand choices compared to Bestore stores. As a result, Bestore's advantage in having a complete product range becomes less prominent. It is worth noting that the impact on Bestore stores is not unique; it is a challenge that bulk snack stores pose to all brand-exclusive stores. As bulk snack stores continue to expand, more direct conflicts between brand-exclusive stores and bulk snack stores may erupt. Sticking to the premium route When conflicts arise between brand-exclusive stores and bulk snack stores, how does Bestore position itself? Based on recent moves, Bestore continues to solidify its premium route and has launched social-oriented stores to explore scenario-based services. Bestore was founded in 2006, facing competition from large local enterprises like Qiaqia Food and online newcomers like Three Squirrels. Bestore quickly captured e-commerce market share with low-priced nuts, successfully achieving a strategic layout of parallel online and offline development. During the internet dividend period, Bestore became a top player in revenue scale. At the same time, Bestore and Three Squirrels used asset-light OEM models to quickly launch new products and enrich SKUs, but the industry gradually fell into a homogenization trap. To seek differentiation, Bestore proposed a premium snack market positioning. Despite the recent boom in bulk snack stores, which has shown consumers the appeal of low prices, Bestore remains steadfast on its premium route. The company believes that no matter how the market environment changes, there will always be consumers who demand high-quality products. As long as it stays user-centric and meets their needs, the company can continue to grow. So, in an industry focused on cost-effectiveness, can Bestore's premium route still work? Liu Chunxiong, a digital marketing expert and advocate of new marketing, once said that in a poor macro environment, premiumization may not see volume growth now, but it will once the environment improves, and it is the future mainstream. He also mentioned that premiumization provides added value that satisfies desires. In my view, consumers seeking affordability does not equate to rejecting premium products; the key is to make consumers feel that products are worth the value. True 'premium' requires companies to highlight their advantages in quality and emotional value, thereby creating significant differentiation in service experience from peers. For example, the snack chain brand Panda Momo has won consumers' favor with its live-cooking and live-frying scenes. With so many nut sellers, why can Panda Momo keep expanding? The reason is that this scene builds consumer trust in product quality and provides sensory satisfaction. Recently, Bestore's 'Snack Kingdom' store opened in Wuhan. Located in a shopping mall, it features sections for children, coffee, and photo-taking, creating a social space. Covering 1,200 square meters, it is an upgraded format based on Bestore stores. Compared to bulk stores and community stores, this is a reverse move, but it reflects Bestore's interpretation of its 'premium' positioning by creating scenarios for segmented groups and enhancing customer experience. In recent years, Bestore has consistently explored scenario and emotional value as peripheral aspects of its products. During the New Year shopping festival, Bestore produced short films like 'Bestore on the Table is the New Year' to infuse emotional meaning into festive gift boxes. During the pandemic, the company's public welfare short film 'Listen to Her, Thank You' told the stories of women on the front lines, and it partnered with Himo Photo Studio to launch a public welfare activity, taking family photos for 12 ordinary heroes and presenting them with 'Bestore Thank You' gift boxes. Bestore also pays attention to gift box packaging. Its 'Dunhuang Trend Gift' Mid-Autumn gift box, created in collaboration with the Dunhuang Museum, cleverly incorporates cultural elements from the desert, such as flying apsaras, three-eared rabbits, and nine-color deer, into mooncakes, allowing people to feel the wind and sand of a thousand years while tasting the delicacies. Additionally, Bestore has launched other distinctive sub-brands for different consumer groups, such as the sugar-control brand 'Jie Tang You'. It is reported that the company has opened a 'Jie Tang You Sugar Friend Food Store' in Wuhan, offering one-stop shopping for sugar-control needs, which has attracted attention from that demographic. How to respond to channel transformation? Whether Bestore can achieve better development hinges on how it flexibly responds to external environmental changes while adhering to its original strategic route. 1. Investing in the bulk channel Bestore told the author that consumer demand is clearly stratified, with some seeking high-quality products and services, and others prioritizing price over quality. Bestore uses its main brand to deeply cultivate refined operations and services for middle-class families, while actively investing in the bulk snack track to capture more snack market share and drive performance growth. Previously, Bestore not only launched its own bulk snack store 'Snack Wanjia' but also invested in 'Zhao Yiming' snack stores. The current status of the former is unknown. This raises a question: will the coexistence of several store formats under Bestore create internal conflicts? From available information, 'Bestore' stores sell their own products; 'Snack Wanjia' mainly sells own products plus third-party brand products; 'Snack Kingdom' mainly sells own products plus imported products, totaling over 3,000 products, with a rich product matrix and certain discounts on imported products. The company's own products sold in different stores show no significant differences. Referring to how bulk snack stores use brands for traffic and white-label products for profit, Bestore can also use discounted third-party brands to attract traffic without affecting its own product pricing system. However, Bestore needs to carefully consider store locations to avoid internal competition. 2. Creating scenarios for segmented groups In recent years, Bestore has launched different product solutions for various groups: refined mothers, new white-collar workers, urban blue-collar workers, established middle class, fitness enthusiasts, and children. In the 'Snack Kingdom' that opened in July, different areas such as coffee, children's entertainment, and Marvel figurines are scenario divisions for different groups, with detailed display designs to enhance the experience for various customer segments. The 'Snack Kingdom' achieved sales of over 760,000 yuan in its first three days, demonstrating its growth potential. 3. Continuing to expand store scale Facing environmental changes, Bestore has not stopped expanding and shows a trend of further scale growth. In my view, Bestore stores may face certain constraints in future development, especially with its direct-operated and franchise models. Will franchisees remain confident in Bestore stores amid the rise of bulk snack stores? In the Q1 2023 report, besides a significant decline of about 30% in e-commerce and group buying businesses, Bestore's franchise business sales also slightly declined by about 3%. In terms of store numbers, during the reporting period, Bestore opened 80 new stores and closed 122, including 93 franchise stores and 29 direct-operated stores. There remains some uncertainty about whether Bestore's overall store growth and layout will achieve the desired results in the future. In summary, amid channel evolution, Bestore adheres to its original route of premiumization, multi-category, and omni-channel, and on this basis, incubates the brand 'Snack Wanjia' to supplement the bulk snack channel, while launching the upgraded format 'Snack Kingdom' with more granular scenario divisions. This reflects its premium philosophy evolving from focusing on products to creating scenario-based stores. In the past, Bestore successfully carved out a place in the market through a dual online and offline strategy, becoming a leader in the industry. With the disappearance of internet dividends and the rise of offline bulk channels, Bestore is bound to experience growing pains. However, supplementing channels while keeping its original strategy unchanged also helps mitigate risks from future market changes. Final thoughts In recent years, with the gradual disappearance of e-commerce dividends, various new retail formats have emerged like mushrooms after rain. These changes have brought new challenges and opportunities to snack brands, especially retail-oriented companies like Bestore, Three Squirrels, and Lai Yifen. Compared to Three Squirrels building its own factories and Lai Yifen launching 'Lai Ka' to enter the coffee track, Bestore appears more steadfast and persistent in its strategic direction. Whether it can once again become an industry benchmark remains to be seen.