On August 31, Chayan Yuese announced via its official Weibo that it had opened a new discount store named "Hard Discount Bulk GO" in Changsha. This store, located at 360 Huangxing South Road, Tianxin District, Changsha, features a two-story design and offers over 200 selected products, including tea, candies, biscuits, stationery, and cups, which are not available in its standard stores, mostly private label or self-distributed items. Additionally, it includes a "water bar" area, providing customers with a refreshing tea experience. For years, Chayan Yuese has adhered to a direct-operated model. In 2018, it received angel investment from Tiantu Capital (which led to the opening of 50 stores the following year), and subsequently received investments from leading domestic consumer investment institutions such as Shunwei Capital, Source Code Capital, and Yuansheng Capital. According to public information, in 2023, Chayan Yuese achieved a net profit of approximately 500 million yuan. Chayan Yuese performs well in its core business, so why is it venturing into an unfamiliar field? Is it pursuing short-term trends or based on long-term strategic planning? Intensifying competition in the domestic tea beverage business To analyze the logic behind Chayan Yuese's entry into the hard discount format, we must first look at the macro trends in the tea beverage market. In recent years, as the tea beverage market shifts from an incremental to a stock market, competition among milk tea shops has become increasingly fierce. The chain rate in the tea beverage industry has been rising, approaching 50% in 2023. Major brands such as Heytea, Naixue Tea, and Lelecha have expanded their franchise scales, leveraging economies of scale and brand effects to consolidate market positions. It is expected that the chain rate will continue to grow in the future. In this context, direct-operated milk tea shops, such as Chayan Yuese, are facing increasing difficulties. Among brands focusing on Chinese-style tea drinks, Chagee has nearly 4,000 stores, while Chayan Yuese has only over 500 stores. At the same time, under the influence of the economic environment, consumers are increasingly inclined to rational consumption, with a growing demand for high-cost-performance products. To stimulate store sales, major brands have begun to engage in price wars. According to the "2023-2024 China Tea Beverage Industry Annual Development Report" released by NCBD (a catering big data research and certification institution), among more than 50 tea beverage brands surveyed from 2021 to 2024, 56% have reduced prices to varying degrees. Among them, the three major brands originally positioned in the high-end market—Lelecha, Naixue Tea, and Heytea—saw the largest price cuts, with overall reductions exceeding 10 yuan. In the short term, price reduction strategies can indeed stimulate sales and attract a wave of traffic. For example, Heytea's 2023 annual report mentioned that its direct-operated stores performed well, achieving significant year-on-year monthly sales growth for 12 consecutive months, with the highest single-month year-on-year growth reaching 80%. However, simple and crude price reduction strategies do not always lead to sales growth. Taking Naixue Tea as an example, in the first half of 2024, Naixue Tea's revenue declined, with a net loss of 438 million yuan. Price cuts are not a panacea and may also affect brand positioning. As industry competition intensifies, Chayan Yuese, as a regional leader, also faces enormous growth pressure. Continuously experimenting with various retail formats Chayan Yuese has adhered to deepening its presence in its home base of Changsha, and after becoming a regional leading tea beverage brand, it has cautiously expanded to other cities such as Wuhan and Changde. Unlike other brands, Chayan Yuese has neither opened franchises nor reduced prices. Instead, it has been experimenting with multiple retail formats. This cross-industry entry into the hard discount market is not its first diversification attempt. As early as 2020, Chayan Yuese began expanding its product line, venturing into tea, tea powder, snacks, and other categories, and launched new retail store formats such as "Chayan's Tea Leaf Shop" and "Chayan Garden Party." In July 2020, Chayan Yuese started to lay out its e-commerce presence, launching tea and peripheral products on its Tmall flagship store. In 2022, Chayan Yuese further expanded its business scope, launching its new sub-brand "Yuan Yang Coffee," which officially opened in the Wuyi business district of Changsha, Hunan, sparking widespread discussion. In 2023, Chayan Yuese launched a new Chinese-style lemon tea brand "Gude Moning." To date, Chayan Yuese has launched multiple beverage sub-brands, covering tea drinks, coffee, and lemon tea tracks. In addition to developing new products, Chayan Yuese has also collaborated with multiple brands, such as opening a co-branded store with San顿半 (Saturnbird) and co-branding activities with Heytea, enhancing brand influence and visibility through these partnerships. Although these attempts seem not to have caused much of a stir and may be seen as chasing market hotspots, each attempt, whether successful or not, undoubtedly brings new attention to the brand. This time, Chayan Yuese is again attempting cross-industry innovation by launching the innovative discount store brand "Hard Discount Bulk GO." Is it merely an attempt to chase a hotspot, or does it genuinely believe in this track and enter? It is still difficult to determine. Doing Hard Discount: Easy to Enter ≠ Easy to Succeed But one thing is certain: succeeding in hard discount is not easy. In other market areas facing growth bottlenecks or limited market capacity, the hard discount format has successfully opened up new growth space with its high-efficiency, high-cost-performance product strategy, indeed attracting many entrants. It can even be said that the hard discount format now comes with its own traffic, and many cross-industry practitioners are just chasing hotspots. As long as they can reasonably control costs and avoid losses, it can bring positive customer traffic to the original brand. But the reality is that many entrants only stay at the trial stage and do not possess the core capabilities needed to do hard discount supermarkets well. Can the initial business model test succeed? Once scale expands to a certain stage, how can a stable supply of goods be ensured? Entering is simple, but doing well is difficult, and even experienced retail veterans find it hard to succeed easily. First, testing the initial model is crucial, with challenges in store area selection, product selection strategy, and store management. Whether newcomers or veterans in the retail industry, they all need to go through a long period of exploration and practice. Many discount brands only gradually develop a replicable successful model after opening dozens of stores. Here's an example. A certain discount store, at its inception, had a standard store format of 160 square meters. The first store achieved moderate success, with annual sales reaching the tens of millions, boosting the founder's confidence, and he quickly replicated this store format. However, a bottleneck soon emerged, and the overall performance of this format did not meet expectations. After deep reflection, the founder upgraded the original 160-square-meter standard format to a 2.0 version of 300 square meters, re-polished it, tested it repeatedly, and finally determined a replicable store format, entering a fast development track. Many tryers give up before they can figure out a replicable successful model. Second, building a supply chain with category advantages is no easy task. When the scale is small, stores can rely on distributors and other channels to solve supply issues, but to grow bigger, they must build a unique advantageous supply chain. Building an advantageous supply chain is premised on scale, which in a sense is a chicken-and-egg problem and the real difficulty of hard discount. Currently, China's multi-category hard discount systems are generally small in scale and still in a difficult exploration period. Even with full effort, succeeding in the hard discount field is not easy, and it is even more so for Chayan Yuese. Recommended Reading