The new business path of 'fresh food retail + dining' is facing obstacles. Once aggressive new retail species have lost their glory in just one or two years. On April 16, Beijing Business Today learned that Xiaoxiang Fresh's stores in Changzhou and Wuxi are about to close. Since 2019, some new formats promoted by internet giants, such as fresh food + dining + instant delivery, have collectively stalled, either suspending operations for adjustment or encountering difficulties in opening new stores. Many giants' offline new retail attempts have paused before becoming well-known to the market. 01 The Retreat of 'New' Species On April 15, several Xiaoxiang Fresh stores in Changzhou, which had been open for less than half a year, announced they would soon cease operations. Meanwhile, Xiaoxiang Fresh's Wuxi store was also reported to be closing. According to its store closure notice, three stores in Changzhou's Zhonglou, Wujin, and Xinbei districts will fully cease operations from April 18. In response, a relevant person in charge confirmed to Beijing Business Today the rumors of store closures in Changzhou and Wuxi. The person directly stated that the Wuxi and Changzhou stores will close this week due to poor performance. Meanwhile, the two Beijing stores will be retained and are not affected by this adjustment. The person said that after this adjustment, Xiaoxiang Fresh's operations will be reduced to two stores in Beijing only. Xiaoxiang Fresh, which just began expanding outside Beijing last year, suddenly pulled back its 'battle lines', revealing the awkwardness of the new retail model. According to Beijing Business Today, starting in July last year, Xiaoxiang first expanded beyond Beijing, opening stores in Wuxi and Changzhou. The opening of stores in East China was considered a sign that Xiaoxiang Fresh had entered a phase of modular rapid replication. At that time, Xiaoxiang Fresh also leaked expansion targets of 'opening 20 stores in 2018 and 50 stores in 2019'. As of now, Xiaoxiang Fresh has opened a total of 7 stores nationwide, including 2 in Beijing, 2 in Wuxi, Jiangsu, and 3 in Changzhou, Jiangsu. The closure of the Changzhou and Wuxi stores means Xiaoxiang Fresh has to return to its 'origin'. However, Xiaoxiang Fresh is not the only one returning to the 'origin'; other new retail species are not necessarily better off. Besides Xiaoxiang Fresh closing stores to adjust its strategy, Suxiansheng's Beijing store has been closed for adjustments for a long time, 7FRESH has recently experienced executive changes and stalled store openings, and the 'leader' Hema, after being exposed to label incidents and expired product food safety issues, is also making adjustments, announcing earlier this year that it is testing various new small-format models. 02 Facing Multiple Obstacles New retail species incubated by e-commerce and internet giants come with a halo, attracting attention and drawing many consumers to try them out, gaining popularity. However, over time, the 'concept-driven' approach of e-commerce seems to have no obvious advantage compared to the meticulous operations of physical retail. Thus, although new retail species came on strong, they also exited early. After their glory, the many shortcomings of new retail species have been magnified. In the view of industry insiders, lack of offline operational genes, weak supply chains, high delivery costs, and shortage of management talent are all problems existing in new species. When new retail species first emerged, they basically focused on the fresh food retail + dining model. But on one hand, the relatively high cost of packaged food has not yet developed into a habit for most consumers; on the other hand, the eye-catching big seafood, due to high prices and low frequency, gradually becomes a decoration after the novelty wears off, making it difficult to bring sustained profits. Lai Yang, executive vice president of the Beijing Business Economics Association, believes that consumers' strong demand for fresh food and delivery mainly focuses on daily necessities, and the demand for relatively expensive and hard-to-cook seafood like Boston lobster may not be strong. For most ordinary consumers, the probability of buying live seafood online and having it delivered home for self-cooking is not high, and relying only on in-store dining services, limited by processing capacity and customer capacity, the number of orders will be relatively limited. There is a gap between some companies' promotional selling points and consumers' real needs. Previously, Hema CEO Hou Yi also bluntly spoke about the 'pitfalls' of the dining + retail model. The main problem with dining is that it is difficult to generate enough sales per square meter to support store rent, labor, and other costs. So even if a few stores perform well, promoting it to other business districts and markets will face great challenges. In addition, online operations are quite different from physical retail; the overall operation of offline stores is relatively more complex, and e-commerce and internet companies find it difficult to build advantages in the fresh food supply chain. Moreover, the instant delivery services that e-commerce companies focus on are costly, and in the early stages of expansion, it is difficult to spread store costs, which also restricts the development of new species. 03 Is There Still a Way Out? 2019 is not yet half over, and the businesses of new species such as Hema Fresh, 7FRESH, and Xiaoxiang Fresh have all 'changed tempo' in unison. Just half a year ago, 7FRESH's helmsman Wang Xiaosong set a goal of opening 1,000 stores in 3-5 years. The bold words are still ringing, but far from realized, and Wang Xiaosong was transferred from his position a week ago, which is seen by the outside world as a sign that 7FRESH's status has been 'marginalized'. Hema Fresh has also shifted from 'running desperately' to 'running to survive'. Hou Yi publicly stated not long ago that 2019 is Hema's year of 'filling pits', and issues such as market acceptance of packaged food, the vitality of big seafood categories, the necessity of retail plus dining, and the high cost of instant delivery are all problems that need to be rethought and reexamined. New retail analyst Yun Yangzi believes that the model of integrating fresh food retail + dining + home delivery services is generally valid, but it is difficult to do well. Because this integration may have problems such as rejection, failing to achieve the effect of one plus one greater than two. In addition, the large-store model of fresh food retail + dining experience has high investment costs, in the tens of millions of yuan, and it is not easy to find suitable locations, so both time and capital costs will restrict development. The sustainability of the fresh food retail + dining model is questionable, and new species need to find new ways out. According to the relevant person in charge who revealed to Beijing Business Today, Xiaoxiang Fresh also has new plans for this year. This year, the Xiaoxiang business unit will explore the 'Meituan Maicai' model. In the future, the 'large-store' model represented by Xiaoxiang Fresh will focus on further optimizing operational efficiency and consumer experience; the 'small-station' model represented by Meituan Maicai will focus on community-based fresh food retail services through community-oriented site selection and focusing on daily consumption categories such as 'three meals ingredients'. Hema also announced at the beginning of the year that it would develop new directions such as Hema Xiaozhan, Hema mini, and Hema Caishi. The trend has clearly shifted from the original 'fresh food retail + dining' to front warehouses, vegetable markets, and other formats, but it remains to be seen how long this battle can last. Source: Beijing Business Today -END-