---
title: "Entering Beijing Doesn't Necessarily Mean 'Yue' for Every Household"
description: "Jiajiayue faces significant challenges in the Beijing market. Its second store in Beijing opened in Panjiayuan, but residents have noted higher prices compared to nearby supermarkets, and the company's aggressive expansion has led to goodwill impairment and losses."
author: "晴山"
publisher: "New Distribution"
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published: "2022-08-10"
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# Entering Beijing Doesn't Necessarily Mean 'Yue' for Every Household

> Jiajiayue faces significant challenges in the Beijing market. Its second store in Beijing opened in Panjiayuan, but residents have noted higher prices compared to nearby supermarkets, and the company's aggressive expansion has led to goodwill impairment and losses.

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In the future, Jiajiayue's development challenges in the Beijing market are not small.
**01 The Newly Opened Second Store**
"Just after the opening, there were many people here, but after walking around inside, I felt that the things sold were a bit more expensive than those in other nearby supermarkets. For example, the 500ml Tsingtao Pure Draft beer in the store sells for 7.5 yuan, while the nearby tobacco and alcohol supermarket sells it for 7 yuan a bottle, and the nearby Yonghui supermarket sells it for over 6 yuan a bottle." A resident who has lived in Panjiayuan, Beijing for 14 years told Ling Shou.
The store this resident evaluated is Jiajiayue's second store in Beijing.
On July 21, Jiajiayue's second store in Beijing officially opened at Dianmeihui Plaza, Huawei Road, Panjiayuan. The store has a business area of over 2,000 square meters. It is understood that this location was previously a Huapu supermarket, and after Huapu left, it became Jiajiayue after a period of time.
Recently, Ling Shou visited this store, and many residents expressed affirmation for its fresh produce, cooked food, etc.
A consumer buying fried fish in the cooked food area said, "The cooked food area is well-made. Since the opening, I've bought fried snow eel and fried large yellow croaker three or four times, and my family likes them. If you make fried fish at home, it's very troublesome, and sometimes it doesn't turn out well. Buying it in the store is convenient and tastes good. Also, they are fried fresh the same day."
In fact, near Huawei Road in Panjiayuan, besides Jiajiayue and Yonghui, there are several fresh food supermarkets and convenience stores, such as Qixian Life, Shixianfeng Supermarket, Xijiahui Supermarket, Bianlifeng, and Haijia Convenience Store.
Jiajiayue's second store in Beijing faces considerable competitive pressure.
In terms of the proportion of in-store products, fresh produce accounts for a relatively high proportion. A store manager said, "The fresh produce category in these two Beijing stores accounts for more than 60%. Originally, we were also a premium supermarket focusing on fresh produce."
In addition to the basic category areas, the store also has a kitchen, bakery area, noodle area, cold dish area, etc.
The cooked food area is particularly distinctive, featuring many Shandong specialty foods and seafood products, such as braised prawns with scallions, hand-torn pork head meat, soy-sauce-flavored pork hock, spicy boneless pig trotters, garlic-flavored ribs, and seafood products like breaded cod, fried sea eel, fried Spanish mackerel, fried large yellow croaker, and Jiaodong smoked mackerel, among many Shandong specialty dishes.
A staff member in the cooked food area said, "The fried items in the cooked food area are usually made twice a day, in the morning and afternoon, so customers can basically buy them hot."
Jiaodong big steamed buns have always been called the store's specialty product. Ling Shou found that when the first store opened in May last year, there were many fancy products on display, but now the first store's shelves no longer have fancy products, and the newly opened second store also does not have fancy products on the shelves.
In addition to the cooked food area, which receives high consumer attention, the cold dish area is also popular. Besides the currently popular lemon boneless chicken feet and spicy boneless chicken feet, there are also seafood products such as spicy fresh abalone, and home-style dishes made fresh that day.
In addition, the tea area also mostly features local Shandong teas, such as Laoshan green tea and Rizhao green tea. The store also introduces Beijing Daoxiangcun and Yueshengzhai, selling related products.
However, regarding Jiajiayue's entry into the Beijing market, some industry observers said that compared with other supermarkets, its familiarity in Beijing is not high, and the hypermarket format in the Beijing market is already saturated. Whether it can gain consumer recognition requires multiple tests.
**02 The First Store Opened Last Year**
In May last year, Jiajiayue's first store opened on the negative second floor of Building C, Beichen Fudi V Center, Changying, Chaoyang District, with a business area of over 3,500 square meters.
The Changying store is also a premium hypermarket focusing on fresh produce created by Jiajiayue. Its product categories are the same as the newly opened second store, covering fruits and vegetables, catering and cooked food, meat, poultry, eggs and milk, grain, oil and condiments, household cleaning, and more, with tens of thousands of products.
Regarding the cooked food area, which receives high consumer attention, a store clerk told Ling Shou, "Jiaodong flower buns, self-made cooked food, and cooked food products such as sushi on the shelves are all produced and distributed by the kitchen and fresh produce processing center in the Jiajiayue store. The freshly made one-yuan fried dough sticks are also selling well."
A consumer living in a nearby community came to the store with her daughter after work. She said, "I often come here to buy cooked food and such. My daughter also likes its crayfish. The price is 39.9 yuan per jin, which is really not expensive, and the taste is good. They are all made fresh, sometimes still hot. Including fried fish, roast chicken, and other cooked food, the prices are all reasonable."
The consumer said that for other items like grain, oil, condiments, and household cleaning, she usually chooses to buy online, because it is convenient and labor-saving, and also much cheaper. But for bulk cooked food, she needs to go to the store to pick it out herself and check the appearance. For example, for fried fish, she chooses the tail that her family likes, which has more meat and fewer bones.
According to Ling Shou's observation, compared with the newly opened second store, the cooked food area in this store has fewer categories, such as hand-torn pork head meat and soy-sauce-flavored pork hock.
In the store, besides the cooked food area having more foot traffic, other areas such as vegetables and fruits, beverages, meat, poultry, eggs and milk, grain, oil and condiments, and household cleaning can be described as empty.
The vegetable area had already started discount sales in the afternoon. For example, soybean sprouts were originally 4.9 yuan per box, discounted to 3.5 yuan; onions were originally 21.9 yuan per portion, discounted to 12.9 yuan; sweet corn was originally 19.9 yuan per portion, discounted to 9.9 yuan. Most other categories were also in a discount state.
From the perspective of site selection, there are already two similar stores around this store: Yonghui Supermarket and Beijing Hualian Life Supermarket (BHG). Many consumers also said that the things in several nearby supermarkets were relatively cheap, and they were used to going there often.
In this regard, an industry insider said that the supermarket retail industry in the Beijing area is in a relatively saturated state. Generally, there are multiple branded chain supermarkets around communities in mature areas. Moreover, for large-scale formats like Jiajiayue, many companies in the Beijing market are adjusting their models, starting to go down-market or adopt warehouse membership store models. For Jiajiayue, although its development strategy requires entering Beijing, the bridgehead for northern first-tier cities, from the perspective of site selection, model, and scale, it is a difficult start.
**03 There Are Advantages for Breakthrough but Also High Challenges**
In 2021, Jiajiayue began to lay out the Beijing market.
At that time, some analysts believed that entering Beijing was in line with Jiajiayue Group's development strategy of expanding market scale and improving brand awareness. In the future, it would promote the in-depth development of the national strategy in cross-regional model replication, supply chain strategic layout, and other aspects.
Previously, in October 2020, the first phase of Jiajiayue's logistics park in Zhangjiakou was put into use. This project was precisely to prepare for expanding the Beijing market.
However, in the past two years, while expanding the market, Jiajiayue has also been in a state of "opening stores while closing some loss-making stores."
In 2021, Jiajiayue closed 43 stores; in the first quarter of 2022, it closed another 17 stores, of which 16 were closed due to operations not meeting expectations.
Under the normalization of epidemic prevention and control, community consumption scenarios that are closer to consumers and have higher repurchase rates have become targets for retail companies to compete for. Whether it is platforms or brand chains, the community-centered "doorstep" business is becoming increasingly competitive.
In this context, Jiajiayue's expansion path in Beijing also faces considerable challenges.
As far as the Beijing market is concerned, there are not only local brands that have been deeply cultivated for many years, such as Wumart, Jingkelong, and Chaoshifa, but also old foreign supermarkets such as Walmart and Carrefour, as well as external brands with fresh produce advantages such as Hema and Yonghui.
Among them, Chaoshifa, Yonghui, Hema, etc., all focus on fresh produce. Jiajiayue faces considerable challenges in developing in Beijing.
Some industry insiders also said that at present, some brand supermarkets in Beijing are not particularly outstanding in fresh produce operation capabilities. If Jiajiayue can make good use of the supply chain of vegetables from Hebei and Shandong and seafood from Shandong, it may win some advantages by breaking through with "fresh produce."
However, the Beijing market has higher requirements for supermarket companies in terms of food safety, operational capabilities, product characteristics, digitalization, and even in-store display aesthetics and personnel and rent cost advantages. This may pose a high challenge to local enterprises that have just entered the Beijing market.
**04 The Aftermath of Expansion Becomes Prominent**
Jiajiayue's 2021 annual report shows a loss of 293 million yuan.
This is the first loss since 2011, and the reason for the loss is goodwill impairment.
Previously, Jiajiayue spent a total of 1.044 billion yuan to acquire two companies, resulting in a goodwill impairment of about 300 million yuan.
From the 2021 financial report, last year was the worst year for Jiajiayue since public data became available.
The performance forecast shows that in 2021, Jiajiayue is expected to achieve operating revenue of about 17.5 billion yuan, an increase of about 5% over the same period last year; the net profit attributable to shareholders of the listed company (referred to as net profit) is -260 million yuan to -300 million yuan, while the same period last year had a profit of 428 million yuan, turning from profit to loss year-on-year; the net profit after deducting non-recurring gains and losses is a loss of 304 million yuan to 344 million yuan, also turning from profit to loss year-on-year.
Public operating performance data began in 2011, when the company achieved a net profit of 156 million yuan. From 2012 to 2016, net profit remained at the 200 million yuan level. From 2017 to 2019, net profit was 311 million yuan, 430 million yuan, and 458 million yuan, respectively, with steady growth.
In 2020, the company's operating performance declined slightly, achieving operating revenue of 16.678 billion yuan, a year-on-year increase of 9.27%, and net profit of 428 million yuan, with non-GAAP net profit of 407 million yuan, down 6.54% and 6.95% year-on-year, respectively.
Regarding the loss, Jiajiayue once said that in 2021, the domestic COVID-19 epidemic rebounded sporadically from time to time, and with the normalization of epidemic prevention and control, chain retail enterprises also faced considerable operational challenges. The company's fourth-quarter profit declined significantly.
In 2020 and 2021, 132 and 117 new stores were added respectively (including stores merged through acquisitions). The new stores drove revenue growth, but due to the epidemic and economic downturn, the cultivation and ramp-up period for new stores was longer, and early operating costs were higher, increasing losses.
In fact, the main factor affecting the net profit loss was goodwill impairment.
As of the end of March 2022, the company had 1,000 stores under its umbrella, covering 6 provinces and cities including Shandong, Beijing, Hebei, Inner Mongolia, Jiangsu, and Anhui. In addition to hypermarkets and comprehensive supermarkets, the group also has department stores, convenience stores, specialty stores, and other businesses, with most physical stores being self-operated.
Jiajiayue once said that considering the impact of the epidemic, market environment uncertainty, and other factors, the company conducted goodwill impairment tests on its subsidiaries Inner Mongolia Weilehui Supermarket Co., Ltd. (referred to as Weilehui Supermarket) and Qingdao Weike Commercial Chain Co., Ltd. (referred to as Weike Commercial Chain).
According to Ling Shou, Weilehui Supermarket and Weike Commercial Chain were both acquired by the company during its early expansion. In March 2018 and January 2021, Jiajiayue invested 669 million yuan and 375 million yuan respectively to acquire part of Weike Chain's equity and 70% of Weilehui Supermarket's equity, totaling 1.044 billion yuan. With the 1.044 billion yuan acquisition, a goodwill impairment of about 300 million yuan was recognized, highlighting the aftermath of Jiajiayue's aggressive merger and acquisition expansion.
The unworkable path of merger and acquisition expansion seems to be a common bottleneck encountered by retail companies. The secondary market has long reflected Jiajiayue's aggressive mergers and acquisitions.
On June 30, 2020, Jiajiayue's stock price once reached 49.37 yuan per share, hitting a historical high. However, after reaching the peak, the stock price continued to decline. By August 1 this year, its stock price was 12.2 yuan per share.
In fact, the cross-regional expansion of local retail enterprises may perform well in the short term, but looking at ten years or longer, there are still few successful cases so far.
Whether Jiajiayue can better understand Beijing consumers in Beijing, and how to achieve matching of products and services, efficiency of the supply chain, and local integration of the team, are all key to whether it can continue to develop in the Beijing market. From this perspective, the challenges for Jiajiayue's development in the Beijing market in the future will also not be small. (Original work by Ling Shou Media)
Source: Ling Shou
(ID: lingshouke)
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