---
title: "Flash Warehouses: Amplifying the \"Incremental Value\" of Instant Retail"
description: "Since the beginning of this year, New Distribution has been visiting brands, retailers, and distributors to discuss business and market changes. The consensus is that business is tough this year, with most channels showing weak growth or even decline. However, instant retail channels, especially flash warehouses, have maintained stable growth, presenting a significant opportunity for incremental business."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-10-23"
language: "en"
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# Flash Warehouses: Amplifying the "Incremental Value" of Instant Retail

> Since the beginning of this year, New Distribution has been visiting brands, retailers, and distributors to discuss business and market changes. The consensus is that business is tough this year, with most channels showing weak growth or even decline. However, instant retail channels, especially flash warehouses, have maintained stable growth, presenting a significant opportunity for incremental business.

Since the beginning of this year, New Distribution has been continuously visiting brand owners, retailers, and distributors to exchange views on their business and market changes. The most discussed topic is how the current business is performing.
To be honest, the feedback we've received is that business is indeed very difficult this year, as can be seen from the financial reports of brand owners and retailers, as well as the distributor survey report released by New Distribution.
From a channel perspective, whether online or offline, most channels show weak growth, and some offline channels even experience negative growth.
But at the same time, we've also found that despite the overall poor performance, feedback indicates that **the growth in instant retail channels remains relatively stable.** Especially some merchants operating flash warehouses have seen good growth over the past two years. According to some industry research, the number, scale, and geographic coverage of warehouses have significantly increased.
Therefore, in a previous article by New Distribution, we proposed a viewpoint: **In the next five years, the channel that can sustain growth in a shrinking market is instant retail.**
**Flash Warehouses**
**Making Instant Retail's "Acceleration" Faster**
China's retail industry has gone through three stages.
The first stage was dominated by offline channels, from traditional to modern channels; the second stage saw the rise of e-commerce, with Taobao, JD.com, Pinduoduo, etc., occupying a place in channel share; the current third stage is represented by new models like instant retail, which blur the lines between online and offline, creating a more flexible and diverse consumption environment.
Against this backdrop, we see that instant retail brings significant increments to both brand owners and retailers.
Here are two sets of data:
Data from the National Bureau of Statistics of China shows that total retail sales of consumer goods increased by 3.4% year-on-year. Online retail sales of physical goods, calculated on a comparable basis, increased by 8.9% year-on-year.
According to public data from the National Bureau of Statistics, from January to August this year, the growth rate of instant retail scale reached 26.2%.
From these data, we can see **the resilience of instant retail growth, which also verifies that instant retail is not just for emergency needs; its certainty is strengthening.**
Consumers initially used instant retail to meet emergency needs, gradually transitioning to seeking full-category product supply and fulfillment efficiency. Today, consumers have developed relatively certain consumption habits on instant retail, which is the demand-side driver of instant retail growth.
On the supply side, the driver of industry growth is the continuous evolution of supply formats.
In the view of Wang Puzhong, CEO of Meituan's core local commerce, this supply format evolution is similar to species evolution. He believes that species evolution is mainly about air, temperature, and oxygen content, **while retail evolution is about our lifestyle, infrastructure, and technology level. The emergence and prosperity of the flash warehouse format is an important symbol of this evolution.**
The "flash warehouse" supply model was explored by Meituan starting in 2020. New Distribution understands that this retail front-warehouse project for merchants initially covered convenience store formats and has now extended to more retail vertical formats.
It is understood that the current number of Meituan flash warehouses has **exceeded 30,000**, covering all categories including digital appliances, mother and baby toys, daily necessities and clothing, beauty and personal care, pet supplies, convenience store formats, fruits, ingredients, alcoholic beverages, flowers, medical devices, adult products, etc.
In lower-tier markets, flash warehouses have also accelerated the expansion of instant retail to some extent. **In 2024, Meituan convenience store flash warehouses opened 1,866 stores in lower-tier markets, and flash warehouses in various vertical categories are also flourishing.**
After four years of development, flash warehouses have become a mainstream way for brand owners and retailers to "increase instant retail to gain increments." It is foreseeable that **with further evolution on the supply side, the opportunity window that flash warehouses bring to merchants will further expand.**
**Opportunities Come from "Scale" and "Category Expansion"**
Xiao Kun, Vice President of Meituan and Head of the Flash Purchase Business Unit, proposed at the 2024 Instant Retail Industry Conference: "Flash warehouses are the biggest opportunity in the instant retail industry. All towns with food delivery have the opportunity to use flash warehouses for instant retail."
Where do the opportunities and potential of flash warehouses come from?
The most direct manifestation is scale. From the initial attempt in 2020, in four years, the number of Meituan flash warehouses has exceeded 30,000. Wang Puzhong also mentioned that **by 2027, Meituan flash warehouses will exceed 100,000, covering all categories and regions, with an expected market size of 200 billion yuan.**
Of course, scale growth is just the result. In the view of New Distribution, flash warehouses have done three things right to achieve sustainable growth.
**First, supply satisfaction.** The background of the flash warehouse format is to solve the problem of incomplete matching between online consumer demand and offline product supply.
In the past, offline, many consumer needs could not be met in a timely manner. Through efficient fulfillment by flash warehouses, these previously unmet needs have been reactivated and met instantly.
With the increase in demand density, the supply of flash warehouses has also been further enriched. From food and beverages to medicines, daily necessities, electronic products, etc., it has almost full-category coverage, almost achieving "everything can be delivered."
**Second, scenario satisfaction.** Flash warehouses operate 24 hours, well catering to the characteristics of all-weather user needs. Whether at home, office, outdoors, or during travel, consumers' needs in different scenarios and time periods can be met.
Another key point is that in the entire instant retail channel, consumers' purchase scenarios and usage scenarios are seamlessly connected.
For merchants, through consumers' orders in flash warehouses, they can gain insights into when consumers buy, what their needs are, and what scenarios they prefer, which can be used to optimize the supply side and marketing side, better meeting consumer needs, thus achieving a virtuous cycle.
**Third, efficiency satisfaction.** In traditional offline stores, there is an important indicator - sales per square meter. The higher the sales per square meter, the higher the operational efficiency, and the better the sales growth it brings to the front end.
From a set of industry research data, **with the same area of 200 square meters, on average, the store's sales per square meter (yuan/square meter/day) is 59.2, while flash warehouses are 83.3**; moreover, from the perspectives of rent cost, SKU count, business hours, monthly sales, profit margin, etc., the flash warehouse format has more advantages.
In terms of fulfillment efficiency, flash warehouses also provide a better experience, usually completing delivery within 30 minutes to 2 hours, and even in some specific areas, delivery can be completed in a shorter time.
Driven by this underlying logic, flash warehouses can maintain sustained high growth. In this process, New Distribution has also observed that **flash warehouses have become a sustainable good business in the eyes of brand owners and retailers.**
Brand owners have gone from initially paying attention to what flash warehouses are, to evaluating whether they need them, to now many brand owners clearly making flash warehouses an important part of their omnichannel marketing strategy.
Retailers have also begun to try more "warehouse" formats. **In addition to independent warehouse formats like Meituan flash warehouses, there are also "warehouse is store" models like Lawson, and "store includes warehouse" attempts by Yonghui, RT-Mart, Sam's Club, etc.**
Another important trend is that large retailers are accelerating their layout of flash warehouse business. Taking MINISO and Watsons as examples, MINISO has already opened 500 warehouses on Meituan, and is expected to reach 800 within the year, becoming the retail brand with the most direct-operated flash warehouses in the industry; Watsons' flash warehouses on Meituan cover more than 10 first- and second-tier cities.
It is expected that more and more large retailers will accelerate their entry into "opening warehouses," and the evolution of the flash warehouse format is still ongoing, which also means that the incremental dividend will remain for a long time in the future.
**Not Grabbing Existing Stock, Only Creating Increments**
New Distribution has had in-depth discussions with some brand owners and retailers on a question: **Do flash warehouses and traditional offline physical retail formats grab existing stock or create increments?**
The answers are both positive and negative, but more believe that flash warehouses are doing incremental business.
A person in charge of instant retail at a certain FMCG brand told New Distribution that from an overall market perspective, it is indeed a stock market, but consumers' purchase touchpoints are shifting, and the trend of online-offline three-dimensional shopping is irreversible. For brand owners, every new shopping touchpoint complements each other, so flash warehouses are actually doing incremental business.
**From a retailer's perspective, the flash warehouse format and offline physical stores have the opportunity to achieve differentiated and complementary advantages.**
Taking the flash warehouse "24-hour Super Store" cooperated by MINISO and Meituan as an example, targeting the online consumption needs of instant retail users, MINISO uses **differentiated site selection, product assortment design**, etc., to make flash warehouses complement regular offline stores in terms of product categories, coverage, business hours, service experience, etc., especially in products, where the product difference rate is expected to reach 70%.
"Offline users tend to browse and make impulse purchases, while instant retail is a consumption behavior that pursues certainty and provides consumers with a strong sense of security. As a supplement to MINISO's regular stores, flash warehouses aim to cover more people and needs," said the person in charge of MINISO's instant retail.
The "Instant Retail Industry Development Report (2024)" released by the Research Institute of the Ministry of Commerce also mentioned that flash warehouses have become a typical format of instant retail and will play a positive role in promoting industry prosperity, helping merchants innovate local sales channels, and gaining new growth curves.
**In the entire retail format, instant retail is essentially an "incremental field," and the relationship between flash warehouses and offline stores tends to be complementary and mutually reinforcing, making the increment even bigger.**


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