Source | Lingshou HotMaxx Expands Product Categories HotMaxx has also begun its "adjustment" (reform). The author observed at a HotMaxx store on Dawang Road in Beijing that, compared to its early image as a "soft discount" store focused on general merchandise and snacks, beauty products now occupy a larger share of the store. Upon entering, a Runbaiyan mask originally priced at 159 yuan is marked down to 35.9 yuan, a Kiss Me eyeliner is only 19.9 yuan (while the same product next door sells for 98 yuan), and L'Oreal eye cream has dropped from 280 yuan to 95 yuan. The data tells the same story. From 2020 to 2024, beauty and daily chemical products increased from 10% to 14% of HotMaxx's SKU mix, and their revenue share rose from 11% to 15%. On the surface, the beauty business seems to have become HotMaxx's new engine. But behind this, HotMaxx's product selection logic is intriguing. In the store, as with snacks, near-expiry beauty products do exist, but the vast majority of products have a shelf life of more than one year, and many are even new products from the current year. However, these low-priced beauty products are almost never the hot sellers in the market. For example, Kefumei masks available at HotMaxx are mostly cosmetic-grade (Zhuang字号), while the medical-grade (Xie字号) products that made the brand famous are nowhere to be seen. Similarly, for Winona, the popular special care cream, collagen freeze-dried masks, and other "star products" are all absent; instead, the shelves feature less popular items like peptide repair cream and multi-peptide repair freeze-dried masks. The reason is simple: best-selling products are already in short supply in mainstream sales channels, often requiring frantic purchasing during promotions, so they rarely flow into discount channels as "clearance stock." Thus, consumers at HotMaxx often see familiar brands but unfamiliar products—mostly "leftover" items that major brands cannot sell. In fact, HotMaxx has become a dumping ground for brands to clear "unpopular models" and "channel-exclusive products." "Some brands, as long as they change packaging, will sell the old packaging to HotMaxx," an industry insider revealed to the author. This partly explains the phenomenon of "familiar brands, unfamiliar products" on HotMaxx's shelves. As a result, more and more complaints on social media point out that HotMaxx's beauty products are "nice to look at but not useful"—either the shades are ugly, or they are near expiry, or the products themselves are not effective or provide a poor experience. Overall, HotMaxx has attracted a large number of value-conscious consumers with its ultra-low prices and brand gimmicks, but if the products remain stuck at the level of "clearing inventory" and "selling unpopular items," it will inevitably give users the impression of "picking up trash while looking for bargains." Beyond beauty, HotMaxx's expansion ambitions go further. From 5-yuan standees, 9-yuan badges, to 19-yuan figurines, the "anime goods" trend has also blown into its stores. In some stores in Beijing and Shanghai, popular anime and game IP merchandise occupies prominent positions, including "Haikyuu!!" and "Genshin Impact." It is reported that in January this year, three stores in Shanghai took the lead in piloting "anime goods" sales, and they are still in the testing phase. Moreover, according to Time Finance, in 2024, HotMaxx began exploring the clothing sector. In December of the same year, a 10,000-square-meter "HotMaxx Super Warehouse" opened in Nanjing, positioned as a city outlet store, claiming to sell brands such as Adidas, Nike, and even Chanel. In addition, HotMaxx's internationalization has not stopped. According to Securities Times, last September, "HotMaxx" entered Hong Kong and opened four stores within two months. Meanwhile, media reports also indicate that HotMaxx plans to enter Japan in spring 2025. In fact, whether it is beauty, anime goods, clothing, or going overseas, HotMaxx's core strategy remains "low prices," and its target audience remains those highly price-sensitive consumers. This "transformation" of HotMaxx is essentially an attempt to overlay "category diversification" and "channel regionalization" on its core advantage of "low prices" to seek new growth engines. A Change Is Necessary HotMaxx's "track change" is an inevitable choice driven by multiple internal and external factors. On one hand, the "ceiling effect" of the near-expiry sales model is the fundamental driver. Relying on the "soft discount" business logic, near-expiry sales once brought growth to HotMaxx, but it also exposed insurmountable bottlenecks. The core issue lies in the instability of supply and the "tightening curse" of scale bottlenecks. Near-expiry products are essentially "byproducts" of brand inventory management and market fluctuations, and their supply is highly uncertain in terms of quantity, category, and brand. High-quality near-expiry sources from major brands are especially scarce. Coupled with improved inventory management by brands and the rise of diversified clearance channels such as community group buying and live-streaming e-commerce, the high-quality supply flowing to single near-expiry discount stores is continuously diverted and diluted. This "weather-dependent" supply structure cannot support HotMaxx's continued expansion and standardized store operations. The more stores, the greater the demand for stable supply, and the more obvious the shortcomings of the near-expiry model. At the same time, category limitations and repeat purchase challenges cannot be ignored. Near-expiry products are mostly concentrated in fast-moving consumer goods like food and beverages, with a small amount of daily chemicals. The categories are single, and unit prices are low, making it difficult to meet consumers' one-stop shopping needs. Most consumers tend to "pick up bargains," have low brand loyalty, and find it hard to increase repeat purchase rates and average transaction values. Once the novelty fades, stores can only rely on limited near-expiry products, and consumers are easily lost. In essence, near-expiry sales are more like a "traffic business," using low prices to attract attention, but profit margins, sustainability, and risk resistance are relatively fragile. As the track dividend gradually fades, HotMaxx has to find new growth engines. On the other hand, intensifying external competition is also forcing HotMaxx to tell a new story. In recent years, the number of players in the discount retail track has surged, and the competitive landscape has escalated sharply. There are traditional discount channels like outlets and Vipshop, as well as community snack discount stores like Snacks Are Busy and Zhao Yiming, which are rapidly seizing market share with more down-market channels, more focused categories, and flexible franchise models. Large supermarkets have opened discount sections, and online platforms have pushed price wars to the extreme. In such an environment, HotMaxx's once-proud "near-expiry" label is rapidly losing its moat. On one hand, near-expiry products have low entry barriers and are easily imitated; on the other hand, the "discount" concept has already become a red ocean, and relying solely on near-expiry cannot establish differentiated advantages. Therefore, HotMaxx's proactive expansion of categories and upgrading of its model is an inevitable choice to seek differentiation and build new barriers in fierce market competition. By introducing new categories such as beauty and anime goods, and increasing regular-term discount products, HotMaxx is trying to break free from the "near-expiry" label. This transformation has three strategic considerations: first, to expand the target customer base, from single near-expiry enthusiasts to a broader group of young consumers seeking high cost-performance; second, to improve profitability, as some new categories have higher gross margins than traditional near-expiry food, helping to optimize the overall profit structure; and third, to reduce over-reliance on unstable near-expiry supply and establish a more sustainable supply chain and profit model. However, this transformation also means HotMaxx will enter the "deep water zone" of adjustment. Challenges This high-profile "adjustment" action is undoubtedly seeking a new growth curve. However, on the chessboard, every step of expansion carries potential risks and challenges. The first is supply chain risk. The supply chain logic for near-expiry FMCG is relatively simple, with the core being information capture and rapid turnover. But new categories like beauty, anime goods, and clothing have different supply chain systems, with exponentially higher complexity and professional requirements. For example, beauty involves brand authorization, channel levels, and shelf-life management; anime goods rely on IP cooperation, licensed authorization, and fan economy; and clothing has issues such as seasonality, inventory turnover, and size management. Can HotMaxx's supply chain experience accumulated in the near-expiry field be transferred to these new battlefields? Does its existing team have the ability to handle such diverse and professional supply chains? This is likely the most core and relatively fragile link in its expansion strategy. Once supply chain integration fails, and stability of supply, authenticity assurance, and cost advantages cannot be guaranteed, the "low price" trump card may fail, or even trigger greater operational risks. Second, unbounded category expansion poses a potential dilution risk to HotMaxx's brand positioning. HotMaxx, which has established a clear consumer perception with "near-expiry sales," now has an increasingly complex product mix in its stores. This "kaleidoscope" product combination, while broadening the customer base, may also blur its core brand value. When consumers find it difficult to clearly define HotMaxx's core positioning, its long-accumulated brand awareness and user stickiness may be affected. Negative feedback on social media about the experience of some new categories (such as beauty products) also indirectly confirms the importance and difficulty of maintaining product strength and user trust beyond pursuing low prices. Third, the complexity of operational management has increased sharply. The operational logic of different categories varies greatly, from product selection, display, and marketing to inventory management and personnel training, all requiring more specialized strategies and execution. Whether HotMaxx's existing management system, information systems, and store operation standards can efficiently support such a diversified business matrix, especially maintaining operational consistency and service quality under a large franchise system, is a major practical challenge. In addition, the inventory risk and capital pressure brought by rapid expansion cannot be underestimated. Introducing new categories inevitably comes with higher procurement costs and inventory holdings. If sales of new categories do not meet expectations, or turnover speed cannot keep up, it is easy to cause inventory backlog and occupy a large amount of cash flow. This is particularly fatal for a discount retail model characterized by "fast turnover." Does HotMaxx have sufficient financial strength to support this multi-category expansion campaign? Can its risk control system effectively respond to potential inventory risks? These are the Damocles swords hanging over its head. In summary, HotMaxx's path of "expanding categories" is by no means smooth. Every step forward means facing new supply chain challenges, brand perception problems, operational management pressures, and fierce market competition. This seemingly ambitious expansion is more like a high-risk gamble. In this process, whether HotMaxx can maintain its "low price" advantage while pursuing diversification and effectively resolve the accompanying risks will directly determine its future direction.