The top spot in retail has changed hands, from Suning.com to Walmart. In 40 years of chain retail in China, a foreign company has topped the list for the first time. Suning, representing traditional formats, has declined—Carrefour can tell you why. Walmart has broken through against the trend—Sam's Club provides the secret. Where is the future of China's chain retail? The top 100 chain stores list includes Hema, Meiyijia, Pangdonglai, as well as Mingming Henmang, Baiguoyuan, and Guoquan, all of which can inspire you. 40 Years of Chain Retail Turmoil China's chain retail landscape has seen 40 years of change. In 1981, Guangzhou Friendship Store opened a self-service supermarket; three years later, Li Ka-shing's Hong Kong-based ParknShop began opening stores in the mainland; that same year, China Resources Vanguard was established in Hong Kong, later merging with Vanguard from Vanke and renaming to CR Vanguard. In 1987, Huang Guangyu opened the first Gome (00493.HK) in Beijing's Zhushikou; the same year, KFC entered the Chinese market, with its first restaurant opening nearby at Qianmen. After years of preparation, the chain retail atmosphere in the Chinese market gradually formed. In 1990, Zhang Jindong and his brother founded Suning (002024.SZ) in Nanjing; the first supermarket in the mainland, Meijia Supermarket, was born in Humen Town, Dongguan, Guangdong. The following year, Lianhua Supermarket was founded in Shanghai. Within just a few years, various chain formats flourished in the Chinese market. However, the most lively were chain supermarkets. After all, home appliances and furniture are occasional purchases, but supermarkets are for daily needs. Around 1995, the first peak of China's chain retail finally arrived. The year before, Dr. Zhang Wenzhong, a systems science PhD, returned from abroad. To promote his self-designed cash register system, he opened a model supermarket. Unexpectedly, Wumart's business was a huge success, and Dr. Zhang inadvertently entered the chain retail industry. At the time, Fortune magazine compared Wumart to "China's Walmart": "If you want to see the future of retail, you can save a trip to Walmart and just buy a ticket to Beijing to see Wumart." In 1995, after years of preparation, Carrefour opened its first store in China in Beijing. Li Binlan left Vanguard and founded New Yijia in Shenzhen—a new Vanguard. The first Jiajiayue (603708.SH) opened in Weihai, Shandong; Zhang Xuansong, who didn't finish high school, served in the military, and worked as a beer distributor, founded Yonghui Superstores in Fuzhou; food salesperson Wang Tian opened the first Better Life (002251.SZ) in his hometown of Xiangtan, Hunan. These later became private representatives among Chinese chain supermarkets. This was followed by a golden decade for China's chain retail, with foreign giants like Walmart and Metro entering, state-owned enterprises like Lianhua, Bailian, and Zhongbai (000759.SZ) leveraging local advantages, and private giants rising rapidly on operational strengths. To understand the development of China's chain retail, just look at the annual "Top 100 Chain Stores" list released by the China Chain Store & Franchise Association. In 2001, the list revealed a rough-and-tumble atmosphere, marking the early stage of the top 100. Supermarkets dominated the list, and it's hard to imagine that several "X Kelong" stores were among the top 100 back then. That year, Lianhua Supermarket (00980.HK), Beijing Hualian, and Shanghai Nonggongshang Supermarket topped the list. With China's WTO accession, foreign companies accelerated their layout in the Chinese market, seizing the perfect opportunity as the consumer market rose. By 2011, RT-Mart, Carrefour, Yum China, and Walmart had entered the top 10 of the chain top 100, with the top positions also changing hands to Bailian, Suning, and Gome. In the following 10 years, the supermarket format declined overall, but private players emerged; vertical chain players Gome and Suning completed the nationalization of the home appliance retail market and, after forming a north-south rivalry, took turns as kings. Since then, the chain list has seen few new stories. Retail Leader Changes Now, the biggest change in over 20 years has occurred in the China Chain Top 100 list. Recently, the "2023 China Chain TOP 100" was released, with Walmart becoming the leader. This is the first time a foreign company has topped the retail top 100 list since its inception. After entering the Chinese market in 1996, Walmart was consistently suppressed by fellow foreign companies RT-Mart and Carrefour. It wasn't until acquiring Trust-Mart that Walmart upgraded. In recent years, as Yonghui, RT-Mart, and CR Vanguard stagnated, Walmart was pushed to the top of the supermarket rankings. In fact, Walmart's supermarket business isn't doing well either, with frequent store closure rumors in recent years, and even reports of selling stores to Wumart. Fortunately, Walmart had already incubated a new format: Sam's Club. Sam's Club began laying out its Chinese market in the 1990s. Before 2018, it was the only supermarket in China to insist on a paid membership system. In recent years, as membership-based consumption rose in China's chain supermarket industry, Sam's Club accelerated store expansion, now operating at least 37 stores in first- and second-tier cities like Beijing, Shanghai, and Shenzhen, even creating a Sam's Club lifestyle. From the annual chain top 100 list, it's clear that Walmart has been shrinking its store count in recent years, from a peak of 442 in 2019 to 365 now, but sales revenue has increased from 80 billion yuan to 120 billion yuan over the past two years. The replacement of Walmart supermarkets by Sam's Club is very evident. The one dethroned by Walmart is Suning, which had topped the list for 8 consecutive years and been the retail leader over ten times—and this is not a simple Suning, but a super giant that merged with Carrefour, another top 10 chain. From a small store on Ninghai Road in Nanjing, Suning quickly grew into a regional home appliance chain leader. In the new century, Gome and Suning engaged in a home appliance chain acquisition war, with the more aggressive Gome leading for several years; it wasn't until Huang Guangyu was imprisoned that Suning overtook it. At its peak, Suning had tens of thousands of stores, covering home appliances, 3C, mother and baby, supermarkets, department stores, fresh food, etc., becoming the largest all-retail giant. At the same time, Suning made "money-throwing" investments in its ecosystem, including Nubia phones, Suning Consumer Finance, 8 Days Online, TTK Express, Lama Bang, Wanda Commercial, and in 2019 acquired control of Carrefour China. However, Suning's chronic inability to achieve business profitability remained unresolved. The acquisition of the giant Carrefour accelerated the exposure of problems, ultimately triggering a liquidity crisis. Although with the mediation of Jiangsu state capital and Alibaba, Suning has passed its hardest time and its business is slowly recovering, it has had to accept a significant contraction in scale. According to the chain top 100 list, in 2023, Suning had 12,027 stores, a slight increase, but sales scale was 94.09 billion yuan, down 15.5% year-on-year, dropping directly from first to third. Other local brands behind Suning haven't fared much better. Yonghui Superstores, RT-Mart, Wumart, and CR Vanguard are still at the top of the list, but scale decline and performance pressure remain unresolved. More desolate are former top players like Gome, Red Star Macalline (601828.SH), and Better Life, which have completely disappeared from the top 100 list. Innovation Brings Light The root of all business pressure lies in the business model itself. Local chain leaders are almost all in decline, several giants have disappeared entirely, and for the first time in 40 years, the top spot has been ceded to a foreign brand. The fundamental reason is a lack of model innovation. Whether chain supermarkets or home furnishing, home appliance, or pharmaceutical chains, most still use business models from 30 to 40 years ago. So, capital market confidence in traditional retail has hit rock bottom. Take Yonghui, the local supermarket leader: it has over 10 billion yuan in cash and wealth management products, first-quarter revenue of 21.665 billion yuan and net profit of 736 million yuan this year, and has been exploring new businesses, yet its market value is only about 25 billion yuan. In contrast, foreign brands have gradually moved away from tradition and achieved leaps on two fronts: either extreme products and services, like Sam's Club and Costco; or extreme efficiency, like the convenience stores that have performed well in the chain top 100 in recent years, such as Lawson, 7-Eleven, and FamilyMart. They too have experienced the darkest moments of China's chain retail. It's just that they hit the trough first and also crossed the cycle first. The path to breaking through for China's chain industry is also hidden in this year's chain top 100 list, which has seen major changes. Meiyijia, which has been aggressively attacking lower-tier markets in recent years, had nearly 34,000 stores in 2023, up 12.8% year-on-year, with sales of 54.19 billion yuan, up 20.1%, entering the top 10 of the chain top 100 for the first time. Meiyijia is no ordinary player; it was born from Meijia Supermarket, the first supermarket in the mainland. Today, after several iterations, this old supermarket is no longer the inconspicuous street-corner store it once was, but has developed multiple formats including fresh food convenience stores, earning the nickname "Mixue Bingcheng of convenience stores." Even more noteworthy is Pangdonglai, which made the list for the first time, with its own halo. Last year, it had only 13 stores but sales exceeded 10 billion yuan. Founder Yu Donglai once revealed that Pangdonglai's profit in 2023 was 300-400 million yuan. Pangdonglai becoming "China's Costco" is no secret. Regional focus, extreme service, supply chain, price advantage, and employee co-construction mechanisms. But it's easier said than done. Now, Pangdonglai is helping Better Life and Yonghui Superstores (601933.HK) by replicating its model essence and supply chain externally. A few years ago, Wang Tian, founder of Better Life, never imagined he would need a helping hand from "Brother Donglai." In addition, the rise of various specialized chains—bulk snack, hotpot ingredients, fruit chains, etc.—are all taking business from supermarkets and department stores. Mingming Henmang, Guoquan, Baiguoyuan, Xianfeng Fruit, etc., all occupy a place in the chain top 100 list. They are like beams of light, illuminating the long night of China's chain retail. From August 20-22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Era of Shrinkage," along with the "3rd China FMCG Hard Discount Conference" and the "3rd China FMCG Distributor Conference," will be held grandly in Shanghai. At this conference, all roles in the FMCG industry chain will gather, allowing you to see industry trends at a glance, understand hot track indicators, penetrate industry resources, precisely connect with leading brands, top retail platforms, and national excellent distributors with over 100 million in sales, providing you with precise decision-making, efficient cooperation opportunities, and on-site learning of exclusive methodologies from FMCG giants! Keynote speeches, roundtable dialogues, report interpretations, closed-door salons, and networking dinners—this thousand-person event has something for you! 🔺Scan for ticket inquiries🔺 Recommended Reading