FBIF Yonghui Superstores Co., Ltd. was founded in 2001 and is a private chain supermarket enterprise listed on the Shanghai Stock Exchange, headquartered in Fuzhou, Fujian Province. Yonghui once led the industry as the "first fresh food stock," leveraging its innovative "agriculture-to-supermarket" model and rapidly expanding store network to reach the industry's peak. However, amid intensifying market competition and rapidly changing consumption habits, this former retail giant is undergoing a test of transformation from glory. Behind its RMB 80 billion revenue lies narrowing losses and a difficult adjustment path. Today, Yonghui stands at a crossroads, exploring a new retail battlefield to break through bottlenecks. In 2024, Yonghui partnered with Pangdonglai, which assisted in store renovations. The first batch of stores remodeled under the Pangdonglai model, such as the Zhengzhou Xinwan Plaza store, saw significant performance improvements after optimizing services and product mix, with first-day sales reaching 13.9 times the pre-renovation daily average. This partnership became a key attempt in its retail transformation. In 2020, Yonghui reached its historical peak of RMB 93.2 billion in revenue, but has since declined. In 2023, Yonghui Superstores achieved revenue of RMB 78.642 billion, a year-on-year decrease of 12.71%, with a net loss of RMB 1.329 billion, though the loss narrowed. As of November 27, 2024, the company operates 797 stores across 29 provinces and 448 cities (districts, counties), with 90 more under construction.

Fresh Food Launch:

Yonghui's Entrepreneurial Journey

Zhang Xuansong In 1990, Zhang Xuansong voluntarily dropped out of school and, with his brother Zhang Xuanning, started a beer distribution business in Fuzhou. The brothers gained a foothold in the beer wholesale market through their innovative "door-to-door delivery, service to home" model, accumulating their first RMB 1 million in five years. With the rise of the supermarket format, in 1995, they opened their first supermarket, Gule Weili Supermarket, in Gulou District, Fuzhou, winning consumer favor with low prices. In 1998, after a brand upgrade, the brothers established the first supermarket named "Yonghui" near Fuzhou Railway Station. To avoid competition from foreign supermarkets, they chose fresh food as their breakthrough, abandoning traditional supermarket mainstays like apparel and electronics, forming a business model of "low-price fresh food to attract traffic + food and daily necessities for profit." In 2001, Yonghui Superstores Co., Ltd. was formally registered, opening its first fresh-food supermarket, Pingxi Store, pioneering the "agriculture-to-supermarket" format.

Chain Expansion:

Achieving National Layout

In 2004, Yonghui Superstores reached 50 stores with annual turnover of RMB 2 billion, entering the top 100 national supermarket retail enterprises. To achieve a national layout, Yonghui expanded rapidly, opening dozens of stores annually. That same year, Yonghui entered the Chongqing market, opening its first store in the Guanyinqiao business district. In 2009, Yonghui officially entered the Beijing market, further expanding its influence in the north. In April 2012, Yonghui opened its first Sichuan store in Wenjiang, Chengdu, starting its expansion in the southwest. By May 2018, Yonghui had opened 57 stores in Sichuan, covering cities including Chengdu, Mianyang, and Yibin. In December 2013, Yonghui opened a hypermarket at Hongtaiyang Commercial Plaza in Baoshan District, Shanghai, marking its official entry into the Shanghai market. By 2020, Yonghui's stores were spread across 29 provinces and cities, with 1,017 supermarket-format stores.

Capital Boost:

Listing and Financing Journey

In 2010, Yonghui Superstores successfully listed on the main board of the Shanghai Stock Exchange, becoming the "first fresh food stock," providing strong capital support for national expansion. After listing, Yonghui's market value climbed, reaching RMB 117.9 billion in 2018, ranking among China's top 500 private enterprises. To further strengthen its capabilities, Yonghui introduced several strategic investors. In 2014, Dairy Farm International's wholly-owned subsidiary, Dairy Farm Company Limited, subscribed to 813 million shares of Yonghui for RMB 5.692 billion, holding a 19.9% stake. In August 2015, JD.com invested in Yonghui at RMB 8.93 per share, holding 10% with a transaction value exceeding RMB 4.2 billion. In December 2017, Tencent acquired 5% of Yonghui Superstores' shares at RMB 8.81 per share, with a total transaction price of approximately RMB 4.215 billion. These capital injections not only brought financial support but also laid the foundation for cooperation with internet giants.

Strategic Divergence:

Separation of Founders' Paths

Amid the new retail wave, Yonghui's two founders diverged on the company's future direction. Zhang Xuanning focused on "Yonghui Cloud Creation," advocating for new retail and in-store dining, believing Yonghui's future lay in new business formats. Zhang Xuansong insisted on the traditional model, focusing on "Cloud Super" and developing "delivery to home" services. In December 2018, Yonghui Superstores signed an equity transfer agreement with Zhang Xuanning, transferring 20% of Yonghui Cloud Creation's equity to him for RMB 394 million. After the transfer, Zhang Xuanning held 29.6%, becoming the largest shareholder of Yonghui Cloud Creation; Yonghui Superstores held 26.6% and no longer consolidated Yonghui Cloud Creation. That same month, the brothers signed an "Agreement to Terminate Acting in Concert," exercising their rights independently in corporate governance. This strategic separation clarified Yonghui Superstores' operational direction.

New Business Format Exploration:

Diversification Attempts

To counter the impact of new retail, Yonghui Superstores actively explored diversified business formats. In 2017, Yonghui Cloud Creation launched "Super Species," integrating a hybrid model of "premium supermarket + fresh food dining + O2O," creating an experiential consumption scene of "retail + dining + APP." That year, Super Species opened its first store in Fuzhou, with 27 new stores opened throughout the year. At the end of 2018, Yonghui launched "Yonghui mini" stores, positioned as community fresh food stores with the slogan "Yonghui at your doorstep," opening 573 mini stores that year. However, these new formats failed to achieve expected results in the short term, and Super Species and mini stores were gradually closed. In 2021, Yonghui attempted the warehouse club model, benchmarking against Walmart's Sam's Club. By the end of June that year, 20 warehouse stores had opened nationwide, achieving sales of RMB 150 million, a year-on-year increase of 139%.

Consecutive Losses:

Yonghui's Predicament and Choices

Since 2021, Yonghui Superstores' performance has been declining. Financial reports show that from 2021 to the first three quarters of 2024, Yonghui's non-GAAP net losses were RMB 3.833 billion, RMB 2.565 billion, RMB 1.9276 billion, and RMB 662 million, respectively. Revenue decline: In the first three quarters of 2024, Yonghui Superstores achieved revenue of RMB 54.549 billion, a year-on-year decrease of 12.14%. Net loss: Non-GAAP net loss was RMB 662 million, a year-on-year decrease of over 70%. Behind these cold numbers is the stark reality Yonghui faces: sluggish growth in traditional supermarket business, declining online business, intensifying industry competition, and rapidly changing consumer demands. In China's retail industry, Pangdonglai is a legend. With only 13 stores in places like Xuchang, Henan, it achieved revenue of RMB 10.7 billion in 2023, with astonishing per-store performance. Pangdonglai is known for excellent service and high-quality products, with employee treatment among the best in the industry. From product display to shopping environment, every detail is pursued to perfection, making customers feel at home. Facing difficulties, Yonghui's management turned to Pangdonglai. In May 2023, Yonghui Superstores' Chairman Zhang Xuansong, CEO Li Songfeng, and others personally visited Pangdonglai's Chairman Yu Donglai in Xuchang, Henan, seeking assistance.

Joining Forces with Pangdonglai:

Strategic Cooperation for a Fresh Start

On May 5, 2024, Yonghui Superstores and Xuchang Pangdonglai reached a consensus for Pangdonglai to assist Yonghui in store renovations. On May 30, the Zhengzhou Xinwan Plaza store closed for renovation. On June 19, the renovated store reopened, achieving first-day sales of RMB 1.88 million, 13.9 times the pre-renovation average daily sales, with customer traffic increasing 5.3 times. Subsequently, other Yonghui stores in Zhengzhou underwent renovations, introducing Pangdonglai's product structure, supply chain capabilities, and service philosophy. In August, Yonghui launched the first batch of self-directed renovation stores learning from Pangdonglai, upgrading stores in 10 cities including Hefei, Hangzhou, Fuzhou, and Chengdu. The renovated stores saw significant improvements in products, services, and environment, attracting a large number of consumers. Partial store renovation results: Zhengzhou Xinwan Plaza store: In July after renovation, sales reached RMB 58.35 million, with daily average sales 13.9 times pre-renovation. Zhengzhou Hanhai Haishang store: Daily average sales reached RMB 1.08 million, 8.2 times pre-renovation, with customer traffic increasing nearly 10 times. Beijing Shijingshan Xilongduo store: After self-directed renovation, opening day saw approximately 14,000 paying customers, with total sales of RMB 1.7 million, exceeding 6 times the pre-renovation daily average. However, local successes have not completely reversed Yonghui's overall decline. In the third quarter of 2024, Yonghui Superstores' non-GAAP net loss attributable to shareholders was RMB 692 million, a decrease of RMB 217 million year-on-year. Although renovated stores have improved performance, for the vast Yonghui Superstores, the success of a dozen or so stores is not enough to impact overall performance. To fully replicate Pangdonglai's model across Yonghui Superstores will require time and larger-scale investment.

Private Brand Revolution:

New Retail Rules Learned from Pangdonglai

Image source: Interface News He Miao In learning from Pangdonglai, Yonghui simultaneously revolutionized its private brands. In renovated stores, Yonghui launched the new "Yonghui Preferred" series, partnering with brands like Leyuan, Sanquan, and Vinda to achieve a dual-brand model. By co-developing products with suppliers, they not only improve quality but also lower prices, attracting more consumers. The Pangdonglai model, proven successful, is also common in retail brands like ALDI. Yonghui had previously attempted multiple private sub-brands, such as "Chan Master" and "Tianqu," but the model of independent operation plus headquarters centralization led to insufficient product competitiveness and weak execution. Additionally, products were priced high in stores, lacking appeal. These issues prevented private brands from becoming market breakthroughs. In this transformation, Yonghui focuses on product strength, abandoning the profit model based on channel fees, and restructuring product mix. In renovated stores, product structure adjustments reached 70%, aiming to win the market with high cost-performance products and reduce reliance on channel fees. Through the dual-brand cooperation model, suppliers and Yonghui form a synergy. Taking Leyuan juice as an example, same-quality products at lower prices drove increased purchase and repurchase rates.

Supply Chain Upgrade:

Building an Omnichannel Retail Platform

Yonghui Superstores has 19 ambient temperature distribution logistics centers and 14 constant temperature distribution logistics centers, covering 29 provinces and cities nationwide, with a total operating area of 630,000 square meters. In 2021, Yonghui proposed the goal of building a "customer-centric, fresh food-based omnichannel digital retail platform," continuously increasing technology investment. In 2022 and 2023, Yonghui invested RMB 700 million and RMB 670 million, respectively, in technology construction. Through the "warehouse-store integration" model, Yonghui optimized supply chain management and improved operational efficiency. At the same time, it added "authentic discount stores" nationwide, offering high cost-performance products to meet diverse consumer needs. Yonghui also strengthened private brand development, enhancing product differentiation competitiveness and providing consumers with a better shopping experience. 【New Order · Symbiosis】 ****The 10th China FMCG Innovation Conference Time: March 17-19, 2025 Location: Chengdu, China