---
title: "Avoiding the Sharp Edge and Striking the Weakness: Community Group Buying Spurs Accelerated Change in the Supermarket Industry"
description: "The frenzy of community group buying has reinforced the need for transformation in the supermarket industry. Despite first-quarter sales declines, many supermarkets now report steady improvement, with lower foot traffic but higher average transaction values and growing online sales. The impact of community group buying, coupled with regulatory intervention, is pushing supermarkets to optimize products and services to better meet consumer needs."
author: "赵述评 赵驰"
publisher: "New Distribution"
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published: "2021-06-03"
language: "en"
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# Avoiding the Sharp Edge and Striking the Weakness: Community Group Buying Spurs Accelerated Change in the Supermarket Industry

> The frenzy of community group buying has reinforced the need for transformation in the supermarket industry. Despite first-quarter sales declines, many supermarkets now report steady improvement, with lower foot traffic but higher average transaction values and growing online sales. The impact of community group buying, coupled with regulatory intervention, is pushing supermarkets to optimize products and services to better meet consumer needs.

**The frenzy of community group buying has reinforced the need for transformation in the supermarket industry.**
Recently, Beijing Business Today learned from several supermarket companies that although many saw sales decline in the first quarter, **compared with before, store sales performance is now stable with some improvement. The biggest change compared with before is that foot traffic has declined, average transaction value is rising, and the online share is gradually increasing.**
In fact, in the just-concluded first quarter, many supermarkets experienced varying degrees of decline. Even leading players such as RT-Mart and Yonghui saw both revenue and net profit decline.
This stands in stark contrast to their impressive performance during the pandemic last year. It is precisely this sharp contrast that led Wang Tian, chairman of Better Life, to state at an industry forum that **due to the impact of community group buying, the supermarket business has reached a dark moment of life and death.**
Some analysts believe that community group buying is a good supplement to physical supermarkets, but under the push of short-sighted capital, it has deviated from the true concept of serving the people and suppliers, leading to an irreconcilable situation. **However, with regulatory intervention, community group buying has gradually calmed down, and physical supermarket companies must continuously optimize their products and services and truly understand consumer needs.**
**-01- Supermarkets collectively sluggish**
In the just-concluded first quarter, the performance data of many supermarkets was unsatisfactory. However, there has been some improvement recently.
A person in charge of Beijing Huaguan Supermarket also admitted to Beijing Business Today that under the massive subsidies of community group buying platforms, store foot traffic has been affected to some extent. "But the biggest change compared with before is that foot traffic has declined, average transaction value is rising, and the online share is gradually increasing."
It is worth noting that in the first quarter, among 13 supermarket companies including Sun Art Retail, Yonghui Superstores, and Jiajiayue, 12 saw year-on-year revenue declines, with four experiencing double-digit declines; eight companies saw both revenue and net profit decline.
On May 26, Lin Xiaohai, CEO of Sun Art Retail, also expressed his views on community group buying at an industry forum. He said, **the community group buying model has certain competitive advantages. Pre-sale and self-pickup not only bring low inventory and high turnover but also reduce the cost of last-300-meter delivery. The combined cost is 5% to 7% lower than that of hypermarkets.**
**"If the price difference between community group buying and hypermarkets is only 5% to 7%, it is reasonable to use this difference to trade for a one-kilometer trip for users, and it should be fair competition with hypermarkets. But the problem now is that due to the power of capital, the price difference may not be 5% to 7% but 50% to 70%."** Lin Xiaohai said.
In fact, affected by the pandemic, community group buying, a model that had been declining, has regained vitality. From the end of last year to March this year, capital pushed community group buying to its peak. With the support of capital, community group buying is penetrating every corner at an extremely rapid pace. Under unlimited subsidies, an innovative model has gradually degenerated into a battlefield of low-price competition.
**-02- Community group buying as an accelerator of change**
According to a person in charge of a branded chain supermarket who spoke on condition of anonymity, the pandemic indeed accelerated the process of online consumption, and many consumers developed the habit of shopping online during the pandemic. However, the decline in supermarket performance in the first quarter is only partly due to the impact of community group buying; there are also reasons such as shrinking consumer confidence and spending power.
In addition to the above reasons, the person believes that domestic retail enterprises have not done well in terms of products and services.
In fact, even today, as the impact of the pandemic gradually fades, many consumers still choose to buy certain products offline. "For example, standardized products such as water and milk are more often purchased online. But for products that require sensory experience, such as meat, aquatic products, and vegetables, consumers are more willing to go to physical stores.
From the source of origin, production, processing, to transportation, if this chain is done well, there is no need to fear price competition. We can guide production from the consumer end, and by upgrading technology or the industrial chain, we can build barriers, and there will be no disruptors."
In the view of the above person, the pandemic and community group buying have actually told physical supermarket companies that consumption is diverse and how to meet the changes in consumers. In the past, many physical supermarkets may have felt that the online share was optional, as long as it existed. **But after the pandemic, offline supermarkets have also begun to pay more attention to online sales.**
Looking back at the development history of supermarkets, compared with more than ten years ago when physical supermarkets encountered the first wave of e-commerce impact, after experiencing the pandemic and this wave of community group buying, the supermarket industry has responded faster. Many supermarkets have begun to make adjustments.
According to the person in charge of Huaguan Supermarket, Huaguan Supermarket mainly focuses on two points: **first, how to make customers continue to like you; second, how to sell products efficiently.**
"We first determine the target customers, then lock in the service area, and then from the perspective of creating value for customers, we develop categories in depth and create value. At the same time, through technological upgrading, digital operation, and an omni-channel development path, we improve operational efficiency and enhance corporate benefits."
**-03- Avoiding the sharp edge and striking the weakness**
Wei Bo, secretary-general of the Intelligent Retail Committee of Beijing E-commerce Association, believes that **in the Internet era, community group buying is actually an extension of the business model and a good supplement to physical supermarkets, which also conforms to the current trend of commercial development.**
**But under the push of short-sighted capital, community group buying has clearly changed its nature. In order to gain traffic, attract new users, and increase platform activity, platforms engage in unlimited price competition, violating the concept of truly serving the people and suppliers. This has led to an irreconcilable situation among physical stores, service providers, and community group buying.**
"Because community group buying can only be refined in certain categories, it is difficult to cover all products. For example, for direct-from-origin products, when community group buying platforms do one or a few single products, they can do them very well and optimize prices to meet consumer needs," Wei Bo said.
It can be seen that with regulatory intervention, the crazy community group buying has gradually calmed down, but it has not stopped. For supermarket companies that have long been impacted by e-commerce, supermarkets still need to continuously optimize products and services and truly understand consumer needs.
"The supermarket industry actually provides consumers with a food solution. In the future, physical stores can start with extreme freshness and diversification." In the view of Hu Chuncai, a retail expert and general manager of Shanghai Shangyi Consulting, although e-commerce has advantages in efficiency, no matter how much e-commerce impacts, China's physical retail will never be eliminated. Physical retail should avoid competing with e-commerce on standardization and instead try to demonstrate differentiation as much as possible.
Source: Beijing Business Today, Authors: Zhao Shuping, Zhao Chi


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