Cherish the supermarket at your doorstep, for it may disappear one day. When the nest is overturned, no egg remains unbroken "This is the 20th year of opening the store, and also the worst year for business." Zhang Jian is the owner of a daily necessities supermarket near Beijing Fengtai Bus Terminal. In a store of less than 60 square meters, he displays daily necessities, snacks, and drinks, excluding fresh produce. He told Ling Shou that during the three years of the pandemic, the store has lost nearly 150,000 yuan. A while ago, when an outbreak occurred in Yuegezhuang, Beijing, Zhang Jian immediately went to Xinfadi to stock up on best-selling items like water, drinks, and snacks. He thought that since both wholesale markets are in Fengtai, and buyers often compare prices and move between them, Xinfadi might also be affected. Therefore, he stocked up on several thousand yuan worth of goods. Across the street from his store, there was a fruit and vegetable store operating last month, but now the door is plastered with a "For Transfer" sign. "The owner used to be in catering, but closed due to the pandemic. He thought fresh food stores were a trend, so he switched to this business. Now he probably understands the saying that 'different trades are separated by mountains,'" Zhang Jian sighed, pointing to the closed fruit and vegetable store across the street. As the very end of the city's capillaries, Zhang Jian's business is also a microcosm of the entire retail industry. According to statistics from the last fiscal year, chain supermarkets generally experienced their largest decline in nearly a decade. Repeated pandemic outbreaks, weak consumption, multi-channel competitive pressure, and rising costs are several main reasons. When the nest is overturned, no egg remains unbroken. Zhang Jian told Ling Shou that his business wasn't bad in the past; otherwise, he wouldn't have stuck with it for over a decade. He recalled that not far away was a wholesale market with heavy foot traffic. Passing bus drivers, retail workers, and travelers were enough to support the store. This store supported a family of five for over a decade, and they even bought a house and a car in their hometown. But under the pandemic, these past customers were blocked at the checkpoints entering Beijing, so business naturally suffered. In Zhang Jian's store, there are dense displays of bottled water from several brands, but further inside, many shelves are empty, some even with items scattered. "I know the principle of 'stack goods high to sell well,' but I dare not stock too much. If no one buys, they might expire. These cigarettes are in whole cartons, and I don't dare open them for fear of drying out. If someone buys, I can open them." The cigarette sliding cabinet was installed by Zhang Jian last year. He purchases nearly 20,000 yuan of goods from tobacco distributors every week, and these hundreds of cigarette brands are now the store's main source of income. Now, with the bus terminal at a standstill, no travelers, no drivers, business is bleak. But Zhang Jian also knows that these are objective reasons. In the past, he could make money because the retail model was simple. Now, with too many channels and more choices for consumers, "many peers have quit this year." Looking at the entire retail industry, in the past year, major listed supermarkets have been conservative in expansion. "Increasing revenue and reducing expenditure" has become the main theme, with store closures becoming frequent, especially for stores that cannot sustain themselves in the long term. According to 2021 financial reports, the most closures were by Lianhua Supermarket, with a total of 249; followed by Hongqi Chain with 146 closures, Zhongbai Group with 130, Bubugao with 52, and Renrenle with 37. There is even a saying circulating online: "Cherish the supermarket at your doorstep, for it may disappear one day." Facing rounds of struggle against the pandemic, physical retailers like Zhang Jian remain confused. They know well that survival is the prerequisite for all possibilities. So, they begin to learn to change supply channels, sell through multiple channels, expand categories, and so on, grabbing every straw that can save themselves. Price increases make business harder Every morning, the first thing Zhang Jian does when he arrives at the store is check for products nearing expiration. "It's not like before. Now, even if I pick out near-expiry items, no one buys them. Buy-one-get-one-free doesn't sell either, and this behavior even affects the store's business," Zhang Jian said. Although cooperation with distributors is one-stop, when business was good, he could take more goods and exchange them easily. Now that business is bad, he can't even ask for exchanges, and he dares not stock short-shelf-life products. Not far from Zhang Jian's store is a chain convenience store. "I feel my business is about the same as theirs. I mainly do business with acquaintances, and my prices are a bit cheaper than the chain store." Ling Shou compared the prices of the two stores. Zhang Jian's store does have an advantage: Haoliyou snacks sold at 7.5 yuan in the chain convenience store are sold at 6 yuan in his store, and the drink Nongfu Spring's Oriental Leaf is 1 yuan cheaper than the chain store. From a cost perspective, these mom-and-pop stores surviving in various corners of the city have lower costs compared to chain convenience stores, but naturally, their profits are not high either. However, recently, Zhang Jian found that the cost of his store, which already had little profit, has increased because the purchase prices of many goods have risen. For example, a box of instant noodles has gone up by 7-8 yuan, a box of cola by 3 yuan, and even a box of 30 packs of Xiaohuanxiong crispy noodles has risen to 25 yuan, but at the retail end, they can only be sold for 1 yuan each. Master Kong's bagged instant noodles used to cost 2 yuan to purchase, now it's 2.5 yuan, and the retail price is only 3 yuan. The rise in purchase prices of these goods makes the already sluggish small store even worse. Even though purchase prices have risen, Zhang Jian dares not easily raise prices. After all, the reason his store can compete with similar stores nearby is because of low prices. Only a few products with initially high prices might still have profit after the purchase price increase. Zhang Jian always thinks that opening a supermarket is for profit, but in the past two years, he hasn't been able to satisfy customers while also making money. The only high-margin general merchandise category has no sales at all, but he still needs to maintain a 25% profit margin for the store to survive; otherwise, he can only wait to close. A distributor of fast-moving consumer goods told Ling Shou that on one hand, brands raise prices due to rising raw material costs; on the other hand, due to the pandemic, logistics costs have increased, especially entering Beijing is too difficult. Even doubling the freight, no one is willing to come, and receiving goods is difficult, leading to high costs. Not only in Beijing, but also in many cities affected by the pandemic, commercial areas and street-side stores are very "depressed," but they still have to bear rent and personnel costs. These physical retailers at the very end dare not "lie flat" at all. Since May Day, all catering businesses in Beijing have suspended dine-in services, relying only on takeout. Many catering companies with food retail businesses directly set up stalls to "save themselves." Haidilao sells crayfish at the store entrance, some staff at Ziyuan Garden shout "salt and pepper prawns," and many hotpot companies directly sell fresh produce, both to increase income and reduce losses. Zhou Shen is a physical store operator. A few months ago, he started working part-time as a group leader for several platforms' pickup points. As a group leader, when his own store's business was too slow, he provided daily vegetable pickup services for nearby neighbors. Although the income was not much, he felt fulfilled. Under Beijing's pandemic, orders from neighbors and surrounding restaurants at his pickup point increased more and more, but he ultimately chose to close it. Zhou Shen said: "The growth in orders and customers is too large, and the risks double. There are too many links in the supply chain. If one goes wrong, it will implicate the entire neighborhood and surrounding physical businesses." Even so, he still maintains the WeChat group he established every day. Perseverance Zhang Jian is well aware that the poor business is not due to operational problems; the entire environment is like this, especially the consumer market. According to the National Bureau of Statistics, in April, total retail sales of consumer goods were 2,948.3 billion yuan, a year-on-year decrease of 11.1%, 7.6 percentage points lower than the previous value, the lowest since April 2020. Among them, retail sales excluding automobiles fell 8.4%, 5.4 percentage points lower than the previous value. Consumption remains a weak link in economic recovery. On one hand, this is related to the pandemic; on the other hand, it is also affected by residents' employment and income. In these four months, domestic demand was zero growth (down 0.2%), with April down 11%. In May, Shanghai was still under static management, and some urban areas in Beijing were also static. The passenger volume during the May Day Golden Week, which could boost consumption, also plummeted. Therefore, many predict that the decline in May will even exceed April, and if there is no "extremely exaggerated" revenge growth in June, then negative growth in social retail sales in the first half of the year is a foregone conclusion. Facing the difficulties of the real economy, Beijing's Chaoyang District announced a six-month rent reduction for state-owned properties for tenants. However, many merchants told Ling Shou that personal rent reductions are very rare, and the required procedures and paperwork are extremely complex. Even so, Zhang Jian still persists. "I feel like I'm 'locked in,' stuck in a deep pit. I signed a one-year contract with the landlord at the beginning of the year. I have to endure this year. Transfer is not allowed, and besides, with so many goods and inventory, it can't be cleared in a day or two." He considered whether he could transform his store into a specialty tobacco and alcohol store, but the cost is too high. Moreover, the current tobacco and alcohol market is oversaturated. Every buyer has a fixed channel, and operators have a large customer base. This path won't work, and the extra cost is something he cannot bear. If the transformation fails, the convenience store business won't come back either. Now, Zhang Jian only thinks about perfecting his products within his capabilities, ensuring quality, being responsible to consumers on one hand, and "self-protection" on the other. Additionally, he wants to expand more supply channels. For years, relying on a single distributor has meant no price advantage. He wants to see whether his distributor has raised prices too much or if the market is generally raising prices. Zhou Shen, on the other hand, told Ling Shou that he regrets it, but he can't hold on much longer; he feels like he's about to collapse. If the physical store goes bankrupt, he can accept it. He plans to join another industry next, as running a physical store is too exhausting. But Zhou Shen is no longer in a hurry to invest in the next industry. Instead, he wants to re-examine himself and figure out where he failed. (Original work by Ling Shou Media) Source: Ling Shou (ID: lingshouke) Author: Shili -END-