Source | Retail Business Finance At a critical juncture of old and new forces in the retail industry, Pangdonglai and Tao Xiaopang present contrasting paths, reflecting deep differences in retail philosophies. While the former exposes shortcomings in quality control and public opinion management, the latter rises rapidly with an 'asset-light + digital' model. What are the core differences? A visit to Tao Xiaopang's store reveals the answer. On April 11, during a weekday lunchtime, at the Tao Xiaopang supermarket in Zhengzhou Zhenghonghui, more than a dozen people gathered around the food court, either waiting for freshly made noodle soups or fried rice, or self-serving dishes for boxed meals. The dine-in area was packed. An employee working in the mall told the author: "(Tao Xiaopang's boxed meals) are cheap, 12 yuan for a portion with self-serve dishes, great value!" Image: Tao Xiaopang's dining area at Zhengzhou Zhenghonghui Zhenghonghui is one of the core business districts in Zhengzhou High-tech Zone. The entire eight-story mall has nearly a hundred restaurants, but Tao Xiaopang's dining area is still bustling. Many consumers also buy cooked food and drinks in-store to complement their fast food. Tao Xiaopang Supermarket was established in December 2021. The Zhenghonghui store is its fourth outlet and the first in downtown Zhengzhou. To date, Tao Xiaopang has opened six stores in Henan Province, including Anyang and Shangqiu. Walking into a Tao Xiaopang store, you can feel various heartwarming service details, such as free tea, simple cages for temporarily storing pets, free wet wipes for wiping shopping carts, and even free tasting of liquor in the self-operated liquor section using disposable cups... Image: Tao Xiaopang's service details In a nutshell, Tao Xiaopang has a strong 'Pangdonglai flavor'. Even without looking at the in-store service details, Tao Xiaopang was founded in Henan, its first store opened in Changge, Xuchang, and its founder comes from Pangdonglai. The brand name even includes 'Pang', which inevitably sparks endless associations among consumers and industry insiders. From a retail industry perspective, being a 'disciple' of Pangdonglai is an important lens to understand Tao Xiaopang's business model and strategic goals, but this may only be the starting point of Tao Xiaopang's strategic ambition. ****Tao Xiaopang is full of 'Pang flavor' When it comes to learning from Pangdonglai, Tao Xiaopang has the most authentic 'flavor'. One key reason is that Tao Xiaopang's founder, Guo Juntao, was formerly a regional manager of Pangdonglai's supermarket division, general manager of Pangdonglai's procurement department, and also served as a senior executive of Xuchang Pangdonglai Commercial Group Co., Ltd. and legal representative of the famous liquor store of Xuchang Pangdonglai Supermarket Co., Ltd. However, these business relationships were all terminated before March 7, 2022. Tao Xiaopang, with its Pangdonglai background, learns from Pangdonglai's successful experience from top to bottom. For example, interviewees for Tao Xiaopang, whether hired or not, are rewarded with 150 yuan as a token of appreciation. Internally, there is a 'Customer Touched Award', and outstanding employees are regularly sent on overseas team-building trips. Tao Xiaopang's store services also attempt to emulate the essence of Pangdonglai, such as providing wetter devices on plastic bags, plastic handbags for easy tasting in the deli area, and employees using rulers to measure the spacing of products to ensure neat and aesthetically pleasing shelf displays. Image: Other service details at Tao Xiaopang Of course, Tao Xiaopang cannot yet achieve the ultimate Pangdonglai-style service. According to the author's field research at Tao Xiaopang stores, the fruit-cutting area reminds customers to distinguish fruit sugar levels using different numbers and colors, but unlike Pangdonglai, the fruit-cutting products do not have labels directly attached for easier differentiation. Image: Left is Tao Xiaopang, right is Pangdonglai Differences in service details stem from different brand positioning, length of establishment, and even local labor costs and competitive intensity. However, the area where Tao Xiaopang is 'most like' Pangdonglai and learns most thoroughly is product selection. In terms of product selection strategy, Tao Xiaopang's private-label products can be said to 'closely benchmark' Pangdonglai. Not only do its main private-label products (fresh juice, craft beer, laundry detergent, cooking oil, etc.) highly overlap with DL brand, but the private-label brand name (Tao Xiaopang's private label is 'tao') also follows a similar approach of being derived from the store name. The design style is also predominantly white, but with red as the accent color. Image: Comparison of Tao Xiaopang's private label logo and Pangdonglai's private label logo A noteworthy detail is that when comparing Tao Xiaopang's and Pangdonglai's deli sections side by side, consumers may find it hard to tell which is which. Image: Left is Tao Xiaopang, right is Pangdonglai Additionally, Tao Xiaopang offers a wide range of imported goods, such as canned Coca-Cola from Japan priced at 9.8 yuan, and Colgate toothpaste from Poland priced at 39.9 yuan per tube. These novel, higher-priced items are also common on Pangdonglai's shelves. Image: Tao Xiaopang's imported goods Data shows that Tao Xiaopang has an average of over 7,000 imported items, accounting for 40% of total categories. From the product selection approach and the emphasis on private-label products, it is clear that Tao Xiaopang, like Pangdonglai, aims to drive consumption upgrades for lower-tier market consumers or local new middle class. These consumers will no longer only look at price, nor will they accept being overcharged or shortchanged, but will weigh quality and price to choose the best option. As Pinduoduo's Huang Zheng famously said about 'consumption upgrade': It's not about letting Shanghai people live like Parisians, but about letting people in Anqing, Anhui have kitchen paper and good fruit. Compared to Pangdonglai, which only opens stores in Xuchang and Xinxiang, Tao Xiaopang's store location strategy avoids direct competition while penetrating third-tier prefecture-level cities (such as Anyang and Shangqiu). On the other hand, it focuses on county-level markets in the suburbs of central cities (such as Xinzheng and Xingyang, both county-level cities under Zhengzhou). Specifically, although Tao Xiaopang's Zhengzhou Zhenghonghui store is located in the city, it is in the western suburbs of Zhengzhou, less than 20 kilometers from Tao Xiaopang's Xingyang and Xinzheng stores. The store is also relatively smaller and lacks the more comprehensive service facilities found in the Xinzheng store, such as a separate bakery section and a dedicated tea sales point. Considering the higher rents and more competitive retail formats in downtown Zhengzhou, Tao Xiaopang's strategy of simplifying facilities and reducing area is commercially logical. It is understood that Tao Xiaopang plans to open at least three stores in 2025, further deepening consumption upgrades in lower-tier cities and county markets, which requires stronger product capabilities as support. Supply chain strength is the trump card In Tao Xiaopang stores, you can see promotional slogans explaining its product philosophy: ultra-high cost performance. The core logic is simple: ensure quality while keeping prices as low as possible. For some categories, Tao Xiaopang does achieve a certain cost-performance advantage. For example, 500ml Nongfu Spring natural water and 596ml Wahaha purified water, which sell for 2 yuan at convenience stores, are priced at 1.5 yuan and 1.2 yuan respectively at Tao Xiaopang. Image: Tao Xiaopang's Longhu Town store in Xinzheng City Huangdanhe edible raw eggs, almost a must-have in premium supermarkets, are priced at 37.8 yuan for 15 eggs at Tao Xiaopang, while the same product costs 39.8 yuan at Hema in Zhengzhou. Image: Left is Zhengzhou Hema, right is Tao Xiaopang In the current consumer market, cost performance has become the core goal for almost every retail supermarket, and the underlying paths are similar. For example, Pangdonglai enhances procurement scale through joint procurement, goes deep into production areas and factory sources, and creates higher cost-performance private-label products. Tao Xiaopang's ability to support its cost-performance advantage with only six stores may also rely on support from Pangdonglai. It is understood that Tao Xiaopang has already connected to Pangdonglai's joint procurement system. As early as a 2008 interview, a Pangdonglai executive stated that due to the large demand from the four companies, joint procurement reduced purchase prices by 30%-50% year-on-year for many products. Not only the joint procurement system, but Tao Xiaopang has also been focusing on private-label products since 2024. To date, it has developed over 100 private-label products, including alcoholic beverages, personal care, and grain and oil, which once accounted for 30% of sales in some stores. In fact, private-label products also test a retailer's product control and deep supply chain participation capabilities. In this regard, Tao Xiaopang's private-label suppliers are mostly manufacturers with years of deep industry experience and the ability to OEM for KA brands. Although their own brand awareness is weak, their product capabilities are solid. Image: Some suppliers of Tao Xiaopang's private-label products For example, Tao Xiaopang's private-label laundry detergent is supplied by Guangzhou Jieyi Daily Chemical Co., Ltd., established in 2006, whose products are exported to over 20 countries including the US, Germany, and Japan. Another example is the private-label pressed peanut oil supplier Jiangsu Jinzhou Grain and Oil Food Co., Ltd., established in 2011, which is a major supplier to COFCO, Sinograin, and Luhua, and provides OEM services for JD.com, Metro, and China Resources Vanguard. China is a manufacturing powerhouse, especially in FMCG daily chemicals and food deep processing, where there are more 'product expert' enterprises. Now, the private-label strategies of Tao Xiaopang and Pangdonglai are precisely about discovering high-quality manufacturers and pushing them toward brand building through strong offline channels. However, compared to Pangdonglai, which has been established for over 30 years, Tao Xiaopang still has homework to do in private-label products, such as the bakery category. Its signature taro and sesame crisp cakes, purple sweet potato and egg yolk crisp cakes, and mascarpone cakes do not indicate specific suppliers, and their appearance and specifications are highly similar to Pangdonglai's. Image: Left is Tao Xiaopang, right is Pangdonglai Tao Xiaopang is also working hard on the product side. It is understood that the bakery category is one of the key areas Tao Xiaopang will focus on this year, with plans to build a new bakery processing plant of over 3,000 square meters in Zhongmu County, Zhengzhou. Perhaps imitating Pangdonglai is just the starting point of Tao Xiaopang's strategic 'ambition'. Ambition goes beyond 'replicating' Pangdonglai From service, product selection to store operations, although it resembles Pangdonglai in many ways, Tao Xiaopang does not just want to 'copy' Pangdonglai. Externally, Tao Xiaopang has always stated that it has no relationship with Pangdonglai. Its Zhengzhou Zhenghonghui store manager Han Shixuan also revealed in an interview that the store's opening and operations have nothing to do with Pangdonglai. From the founder's perspective, the biggest difference between Pangdonglai and Tao Xiaopang is that Yu Donglai is more willing to speak publicly, and his personal image is almost saturated on the internet. In contrast, Guo Juntao is very low-key and has never appeared in Tao Xiaopang's official video accounts. Being low-key may be Guo Juntao's personal choice, but it may also be wise. Because Tao Xiaopang's direct or indirect allusions to its relationship with Pangdonglai, even creating a 'disciple of Pangdonglai' perception among consumers, is a very clever marketing strategy that does not require the founder to be more exposed. Initially learning from the Pangdonglai model to open stores is not only due to the founder's background and shared supply chain resources, but also because Tao Xiaopang, as a startup retail brand, can be more quickly accepted and recognized by consumers by learning from predecessors' successful experiences. Netizens on social media jokingly call Tao Xiaopang a 'knockoff Pangdonglai', which to some extent is also praise. Image source: Xiaohongshu In Guo Juntao's words, 'surviving first' is important. "Our main purpose in opening stores is not to seize the market first or expand scale, but with the idea of 'open one, succeed one', our primary pursuit is to achieve profitability as soon as possible. If we don't profit, it's hard to continue; we can't afford losses," Guo Juntao said. Guo Juntao once stated that the Xingyang Wuyue Plaza store, which officially opened at the end of December 2024, achieved profitability at the beginning of its opening, as did other stores. According to reports from Longshang.com Supermarket Weekly, Tao Xiaopang Supermarket's total revenue in 2024 reached 600 million yuan, and it is expected to reach 1 billion yuan this year. With 600 million yuan and six stores, Tao Xiaopang Supermarket has managed to stand firm in the current volatile retail landscape. Now, the large-store model of traditional chain supermarkets is receding, but Yonghui Supermarket's 'Pang-style renovation' has achieved results. It is actually a return to the essence of retail, such as products and services. "Today, many hypermarkets have withdrawn, but consumers still need one-stop shopping, and more importantly, an immediate experience," said Wang Wei, founder of Fresh Legend. Tao Xiaopang has seized the trend of the Pangdonglai model returning to the essence of retail. Its target is no longer the elderly consumers who love to browse supermarkets and are price-sensitive, but young middle-class consumers with a certain pursuit of quality of life. Relevant data shows that in 2024, among offline supermarket customers, the proportion of consumers under 30 surged from 18% in 2019 to 37%, and the gross profit contributed by this group increased by as much as 52%. According to Nielsen research, 72.8% of consumers choose offline shopping because they can 'touch products', and 55.6% regard supermarkets as leisure places. Next, Tao Xiaopang will certainly strive to create a retail scenario more suitable for consumption upgrades among lower-tier populations, solving consumers' 'clothing, food, housing, and transportation' needs as much as possible in one stop. Tetsuo Suzuki, founder of Japan's '52-week MD' theory, once divided Japanese supermarkets into four categories: low-price-oriented, convenience-oriented, lifestyle-proposal-oriented, and value-oriented. Among them, convenience-oriented supermarkets are close to consumers with moderate prices and variety; lifestyle-proposal-oriented supermarkets add dietary solutions for consumers on top of convenience-oriented ones, such as Japan's Ito Yokado. Guo Juntao once said that Tao Xiaopang is currently a convenience-oriented supermarket, but hopes to become a lifestyle-proposal-oriented supermarket in the future. Not only will stores expand, but Tao Xiaopang's supply chain will also strengthen like a 'snowball'. According to public information, Tao Xiaopang's private-label commissioned production company, 'Henan Tao Xiaopang Commercial Management Co., Ltd.', has already invested in related companies in multiple cities in Henan, such as Shangqiu Tao Xiaopang Commercial Management Co., Ltd. and Anyang Tao Xiaopang Commercial Management Co., Ltd. In the future, the 'roots' of Tao Xiaopang's supply chain will grow deeper. Now, Tao Xiaopang is remembered by consumers for being a 'knockoff' of Pangdonglai. In the future, as Tao Xiaopang's store scale and supply chain continue to expand, and its brand marketing moves from 'borrowing' to independence, the entire channel will become a stronger retail brand symbol. Ambition is gradually being realized.