---
title: "Demystifying the 'Pang Gai'"
description: "A year after the initial hype, the 'Pang Gai' (Pang Donglai-style makeover) of supermarket chains like Yonghui has cooled, revealing structural flaws in the imitators. The transformation, which borrowed Pang Donglai's brand and products, boosted sales temporarily but failed to sustain momentum due to high costs, a mismatch with price-sensitive customers, and a lack of genuine organizational change."
author: "十里"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-09-22"
categories: "Retail Formats"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/HgtwVfPYoZsfEyX9CGmkMQ"
translation: "https://xinjignxiao.com/zh/articles/%E8%83%96%E6%94%B9-%E7%A5%9B%E9%AD%85-3d0f9c9b.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/demystifying-the-pang-gai-3d0f9c9b/"
citation: "十里. “Demystifying the 'Pang Gai'.” New Distribution, 2025-09-22. https://xinjignxiao.com/en/articles/demystifying-the-pang-gai-3d0f9c9b/"
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---

# Demystifying the 'Pang Gai'

> A year after the initial hype, the 'Pang Gai' (Pang Donglai-style makeover) of supermarket chains like Yonghui has cooled, revealing structural flaws in the imitators. The transformation, which borrowed Pang Donglai's brand and products, boosted sales temporarily but failed to sustain momentum due to high costs, a mismatch with price-sensitive customers, and a lack of genuine organizational change.

### **Source** | Lingshou **ID** | lingshouke Author | Shili

Demystifying the 'Pang Gai'

"A year ago, going to that newly opened Yonghui felt less like shopping and more like attending a popular exhibition."

Zhang Chen recalls her first visit to a 'Pang Gai' store, her pace unconsciously quickening: "The crowd pushed you forward, the air mixed with curiosity and heat. You weren't there to buy; you were there to 'witness'—to see how a myth was transported here."

She remembers clearly: she and her friend squeezed through crowded aisles, excitedly discussing the new magnifying glasses on shelves and trying on the thick gloves hanging on freezers; finally, in the beverage section, they managed to grab two bottles of the limited DL craft beer.

However, when asked if she still goes often now, her tone noticeably flattened: "Now? It's just a supermarket, a bit pricey." She added, "That novelty wore off long ago. The beer is either out of stock or limited to one bottle. I went last month; not many people, very quiet, which even made me a bit uncomfortable."

This shift from fervor to indifference is not an isolated case.

Yang Xin in Chengdu had a similar experience: "On the opening days, the whole family went to join the fun; it was indeed different. But after the excitement faded, the vegetables and meat were a bit pricier, and there was no compelling reason to go. Later, we went back to the market near home for groceries."

When this sentiment repeats across countless customers, it carves a clear downward curve in operational data.

Take Yonghui's first remodeled store in Zhengzhou Xinyuan Plaza as an example: on opening day, sales surged 13.9 times year-on-year, and foot traffic increased 5.3 times. A brief, dazzling commercial explosion. But months later, the average daily sales growth had halved, and some stores' performance even began to decline.

From another perspective, this is a normal reaction after the traffic bubble is punctured by reality.

"The initial brilliance of 'Pang Gai' was essentially a clever 'brand equity arbitrage,'" Zhang Chen described to the author. Yonghui, in a very short time, borrowed the brand credibility and fan effect accumulated by Pang Donglai over two decades by introducing its team and private labels. Customers flooding into the stores were not drawn by 'Yonghui' but by the 'Pang Donglai soul' temporarily housed there. And the private labels were the hardest currency in this traffic feast.

The problem is that this external 'stimulant' has a short shelf life and is not replicable.

As Pang Donglai tightened supply quotas for private labels, this traffic engine began to slow. The real test followed: Can the store's own product strength and operational capability catch the huge traffic brought by the 'myth' and turn it into its own asset?

**A High-Stakes Gamble**

The cooling on the consumer side is just the prelude; the real storm is brewing on the business operations side.

For national chains like Yonghui and Wumart, 'Pang Gai' is not just a simple store and supply chain optimization but a transformation action staked on finance, strategy, and organizational culture. It has solved some problems but also exposed deep-seated hidden dangers.

The first impact of the transformation is increased costs.

According to a securities firm's estimate, the renovation cost of a single store may exceed 8 million yuan. Based on Yonghui's planned 200-store renovation, the required funds could reach billions of yuan. This huge sum is almost instantly poured into layout redesign, lighting upgrades, equipment replacement, and also bears the inventory losses from large-scale SKU elimination and new product procurement costs—these are visible investments.

The invisible accounts are even heavier. Financial reports show that in 2024, Yonghui lost 1.465 billion yuan; in the first half of 2025, both revenue and profit declined, with net profit attributable to shareholders turning from profit to loss, a year-on-year decrease of more than 500 million yuan. The single-quarter loss in Q2 almost swallowed all the meager profit from Q1, completely breaking the already fragile financial structure during the transition.

Behind the financial difficulties lies a fatal operational paradox. 'Pang Gai' increases investment in environment and labor, meaning it must raise gross margins to cover costs; but once prices rise, it directly drives away the price-sensitive customer base that forms the foundation.

As one consumer bluntly said: "After the change, prices went up a lot, and there aren't as many people as before." The final situation is that the high-end market hasn't opened as expected, while the mass market is starting to lose ground. Without sufficiently unique product value, new customers aren't firmly attracted, and old customers have quietly drifted away.

More tricky is that this deadlock is not just at the financial level but also seeps into strategic choices.

"I was quite puzzled; I thought it was Pang Donglai's product, but when I picked it up, I found it was Yonghui's," Zhang Chen recalled to the author.

Yonghui's private label development is almost a close copy of Pang Donglai. From juice packaging and pricing to the variety of cooked food, even the color scheme of sandwiches, it hints at the existence of a 'cheap substitute.' This goes beyond imitation; it's more like a conditioned reflex when lacking confidence in originality.

What she found even more off-putting was the purchase experience itself. "Every time I buy a Pang Donglai product, I'm asked if I have a Yonghui Life membership." The scarcity of these star products is deeply tied to Yonghui's own APP membership system, using extremely low marketing costs to achieve precise and efficient traffic diversion.

This half-dependent, half-confrontational stance puts 'Pang Gai' companies in a state of self-consumption. The procurement department is exhausted fighting for limited Pang Donglai quotas; the R&D team is urged to produce look-alike competitors in the shortest time. Resources and energy are pulled in two opposite directions, and the organization, like a rope pulled from both ends, gradually loses its resilience under continuous tension.

The result of lacking a unified strategy is that the brand's outline in consumers' minds becomes blurred. "It's neither purely Yonghui nor fully Pang Donglai," Zhang Chen said. What customers perceive is not a double advantage but a diluted mix.

Finally, and most fatally, is the misreading of the essence of reform.

'Pang Gai' attempts to win customer trust under the name of Pang Donglai, but the imitation mostly stays on the surface. Renovation, shelf rearrangement, and SKU elimination—these visible changes can be piled up with money in a short time, and some even claim that the product structure is over 90% similar to Pang Donglai. However, this 'similarity' is just the shape on the surface, not the core strength of the supporting system.

The real difficulty lies in the invisible parts, such as a stable and efficient supply chain, the culture internalized in the organization, and management methods. These are the decisive factors in maintaining customer experience in daily operations.

In the supply chain, Yonghui adopted a 'shock therapy' approach, quickly eliminating a large number of original suppliers without building matching product development and quality control capabilities in advance, leading to new products not keeping up and unstable quality, directly causing a gap in product strength and a decline in customer perception.

This practice of cutting off the original supply network without quickly replacing it has gradually shown the side effect of 'the faster the change, the deeper the loss' in performance.

On the staffing side, if wages are raised without supporting respect and empowerment, it only buys a standardized smile, not genuine initiative and responsibility. Customers may feel procedural politeness but not heartfelt service warmth.

So, when a reform is keen on changing the stage scenery but avoids adjusting the beams and foundation supporting the stage, it can only bring brief noise. After the noise passes, what remains for the enterprise is higher cost pressure and a more blurred future direction.

**After Demystification**

The stagnation of 'Pang Gai' is not a failure of the Pang Donglai model, but rather that it, as a mirror, too accurately reflects the structural pathologies within the imitators.

Pang Donglai was originally a customized solution for a specific soil; when it is used as a universal prescription, it inevitably triggers 'rejection reactions,' thus exposing the systemic imbalances of the imitators themselves.

Pathology 1: Alienation of product strength.

Over the past two decades, the profit model of large supermarkets in China has quietly transformed: on the surface, they still sell goods, but in reality, their main income comes from 'selling shelves'—charging suppliers various backend fees such as slotting fees, barcode fees, and display fees. Whoever pays more gets their products on the shelves.

In this model, the supermarket's role has shifted from 'retailer' to 'commercial real estate sublessor.' Whether a product is good or not is no longer the core criterion for listing; instead, it's the supplier's ability to pay. This directly leads to the degradation of product selection capabilities, the 'hollowing out' of product strength, and the continuous weakening of consumer trust in the store.

Pang Donglai's logic is completely different: it adopts a buyer system, making decisions around 'making products more valuable' from selection, negotiation, quality control, to supply chain collaboration. Sales profits are based on customer repurchase, not on how much suppliers pay.

Although Yonghui and others have adjusted their SKU structures in 'Pang Gai,' seemingly learning from Pang Donglai's product thinking, the underlying profit model has not changed. When SKU reduction and new product replacements lead to reduced backend fees, reform and revenue come into direct conflict. On the surface, it's 'optimization,' but in reality, it's hollowing out their own profit sources.

Pathology 2: Scale becomes a negative asset.

In the past, scale was the moat for chain retail. Now, the national, hierarchical procurement and operation systems appear clumsy and slow. The headquarters' centralized procurement orders, from layers of approval to implementation, often become disconnected from local real needs by the time they reach the regions. This not only creates a large amount of unsold inventory but also causes frequent misallocation of resources.

To maintain such a huge system, enterprises have to pay high management costs; the decision-making chain is too long, departments set up barriers for each other, and internal communication friction is constant. All this continuously erodes the already thin profits.

The reason Pang Donglai responds quickly is precisely because it is deeply rooted in the local market, with a short and flexible supply chain, able to sense demand and adjust categories at great speed, and directly convert efficiency into price and quality advantages. In contrast, Yonghui's size has made it lose this agility. Without restructuring the organizational structure, any attempt to 'learn efficiency' will only remain superficial.

Pathology 3: Misallocation of human capital.

On the human resources issue, many 'Pang Gai' stores have stepped into the biggest pitfall.

In the traditional retail financial model, employee compensation is classified under 'cost of sales' or 'administrative expenses,' and the management logic is simple: as long as the store can operate, find ways to compress this expense. The result is low wages, high turnover, and low engagement, a model that almost presupposes long-term low service quality.

Pang Donglai's thinking is the opposite. It treats human resources as an investment that can bring returns—high pay and high welfare are not a moral stance but based on sober economic calculation. This investment yields extremely high retention rates, very low internal friction, and employees' motivation to proactively solve problems. These directly improve customer satisfaction and repurchase rates, strengthen brand stickiness, and form a positive cycle.

The problem is that many imitators only learn the surface action of 'raising wages' without shaking the underlying logic that 'employees are just a cost.' Without supporting empowerment, trust, and culture building, the so-called 'ownership consciousness' cannot be formed, and service quality just gets a more expensive shell.

When the traffic boom recedes, the true value of this industry shock, accidentally triggered by a regional retailer, becomes apparent. It marks the end of the era of 'taking shortcuts through imitation.' For companies like Yonghui, the question is no longer how to become the next Pang Donglai, but how to face and repair the structural defects that have been thoroughly exposed during imitation.

It can be said that the real 'adjustment and reform' has just begun.


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## Citation metadata

- Publisher: New Distribution
- Author: 十里
- Published: 2025-09-22
- Canonical: https://xinjignxiao.com/en/articles/demystifying-the-pang-gai-3d0f9c9b/
- Original source: https://mp.weixin.qq.com/s/HgtwVfPYoZsfEyX9CGmkMQ

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