---
title: "Mass Store Closures and Vicious Price Wars Haven't Occurred; Snack Stores Still Have 80-90% Market Space to Unlock"
description: "Last Monday, I had a live-streamed conversation with Mr. Tan. Tan Zhiwang, a seasoned consumer investor with over 10 years of experience, witnessed the development of the tea beverage industry from 2016 to 2021, participated in fresh food chain investments in 2017, and entered the snack discount store track in 2021. He has invested in projects such as Guming, Yipin, Snack Cabin, and Aotle. Why invite him? Recently, New Distribution has published numerous articles on hard discount snacks and held multiple live streams. We hope to help everyone understand hard discount snacks more deeply and comprehensively from different perspectives."
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-09-28"
language: "en"
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---

# Mass Store Closures and Vicious Price Wars Haven't Occurred; Snack Stores Still Have 80-90% Market Space to Unlock

> Last Monday, I had a live-streamed conversation with Mr. Tan. Tan Zhiwang, a seasoned consumer investor with over 10 years of experience, witnessed the development of the tea beverage industry from 2016 to 2021, participated in fresh food chain investments in 2017, and entered the snack discount store track in 2021. He has invested in projects such as Guming, Yipin, Snack Cabin, and Aotle. Why invite him? Recently, New Distribution has published numerous articles on hard discount snacks and held multiple live streams. We hope to help everyone understand hard discount snacks more deeply and comprehensively from different perspectives.

Last Monday, I had a live-streamed conversation with Mr. Tan.
Who is Mr. Tan?
Tan Zhiwang, a seasoned consumer investor with over 10 years of investment experience. From 2016 to 2021, he fully witnessed the development of the tea beverage industry. In 2017, he participated in the investment of fresh food chain projects in China, and in 2021, he entered the snack discount store track. He has invested in projects such as Guming, Yipin, Snack Cabin, and Aotle.
Why invite him to the live stream?
Recently, New Distribution has written a large number of articles related to hard discount snacks and has also conducted multiple live streams. **We hope to help everyone understand hard discount snacks more deeply and comprehensively from different perspectives.**
Mr. Tan noticed snack discount stores in 2021 and immediately conducted extensive research and investigation. Soon after, he personally became a partner in a well-known snack store. He has a complete understanding of the industry cycle, deep thinking, and practical experience.
In our conversation, Mr. Tan explained his methods and logic for judging that snack discounting was a major track when many people were not optimistic about it. He also provided his unique understanding and insights into the current and future development of the industry.
Discount retail will become a core force in China's future retail formats, and this process has just started. What does this mean for different roles in the industry chain, especially brand owners and distributors?
The core content of this exchange is well worth your understanding.
**Ren Wenqing:** In 2021, bulk snack stores were not yet established, and many brands had only opened dozens of stores. At that time, you believed this was a retail format that could potentially surpass convenience stores in the future. What was your logic for this judgment?
**Tan Zhiwang:** I have been engaged in investment-related work for about 11-12 years, basically around the upstream and downstream industry chains related to food and beverages. For example, from 2016 to 2021, I relatively fully witnessed the development of the tea beverage industry, and in 2017, I participated in the investment of fresh food chain projects.
In 2016, we invested in Jinzai Food, and I also began to pay attention to the downstream channels of the snack category. In 2021, bulk snack stores as a channel began to become a topic of discussion for some brands. I have always been in consumer investment and have a habit: when a new thing develops very quickly, I want to understand it deeply.
At that time, I did several things:
> **First, I conducted field research, visiting various places across the country.** I wanted to see if there were similar formats elsewhere besides Hunan's Snack Busy. At that time, I visited more than ten provinces and nearly 100 cities, and I found that similar snack stores appeared in many places, and their performance was very good. **Second, I visited the founders of almost all well-known snack stores at that time** and had in-depth exchanges with them, asking what they were actually doing to understand the ins and outs of this format. **Third, I communicated with customers.** At that time, I asked a customer in a store why they came here to consume. She said there were many products, cheap prices, and frequent new arrivals. These three points were very well stated; they are actually the reasons why snack stores attract consumers.
In addition, I also communicated with the upstream of snack stores. Interestingly, **at that time, many brand owners did not understand this format; they thought it was just a small channel and not significant.**
This is a huge market. **Consumer demand exists, does not need to be educated, but is not well satisfied. After figuring out what bulk snack stores did right, I judged that this format would definitely explode.** I have investment experience and know the cycle of industry development, so I have this certainty.
**Ren Wenqing:** In the past two years, snack discount stores have completely exploded. Which aspects have developed according to your judgment, and which aspects differ from your previous expectations?
**Tan Zhiwang:** Basically, it is similar to what I expected.
For example, we thought it would develop on a large scale nationwide. Some people thought that due to north-south differences, it might not be suitable for the north. From the actual situation, there is no need to question it anymore. Although differences in consumption habits and population density will lead to differences in store formats, product structures, and store density.
Also, at that time, we deduced who would enter this industry. Brands affected significantly, such as Bestore and Three Squirrels, would enter. Convenience stores and supermarkets would participate. However, internet platforms would not enter because it does not match their organizational capabilities.
**If there is a difference from expectations, it is that the development speed was too fast. I originally thought it would take 3-5 years to reach the current state, but it only took 2 years.**
**Ren Wenqing:** This is looking from the present to the past. Now, looking from the present to the future, what predictions do you have?
**Tan Zhiwang:** Next, there will be some new practices in this format, such as online-offline integration, combination with instant retail, and the addition of group buying, live streaming, and other means.
At this stage, whether it is marketing methods or management granularity, it is still relatively rough, and everyone is still in the stage of expanding territory.
This is correct because **now everywhere is a blue ocean market.**
**Ren Wenqing:** If we make a stage division, what stage is the snack store track in now?
**Tan Zhiwang:** From the perspective of store density and penetration rate, it is still in the early stage, with 80%-90% of the market not yet opened.
Why do I say this?
**From a static dimension.** Many people say that stores are opening everywhere now and it is saturated. Let's take the most mature Hunan market as an example. There are nearly 5,000-6,000 stores here. Has there been a large-scale store closure phenomenon? Has there been a vicious price war? No.
**In industries that are truly rolled to the extreme, the number one is losing money. But snack stores are not; from the 1st to the 15th, they are all opening stores and making money.**
Hunan has not reached the ceiling yet. How much market is there nationwide?
**From a dynamic dimension. The size of the market space is the result of competitive squeeze.**
In the early 1990s in the United States, some people were saying that Costco had reached its ceiling. But it should be known that the boundary of retail scale is determined by efficiency.
In the Chinese market, when there are still a large number of inefficient retail formats, such as supermarkets, and when discount retail has not yet produced 5-6 companies with 10 billion in sales, the future imagination space is huge.
**Ren Wenqing:** Looking back from the current pattern of snack chain systems, what determines the speed of a brand's development? And what factors are crucial for future development?
**Tan Zhiwang:** The first-mover scale advantage certainly exists, but as I just said, the industry is still in the early stage, so it is not yet time to make a judgment. As for the future pattern, who wins and who loses, **not making mistakes in strategy is very important.**
Another thing is certain: **Offline retail is a long-distance race, testing endurance, not explosive power.**
Looking at the history of global retail enterprises, they all persistently do the basics well: product selection, supply chain, logistics, decoration, service, etc.
**The entry barrier for the retail industry is very low. It is about doing what others do at 80 points, but you can do it at 90 points, and maintain 90 points in the long term. This requires the entrepreneurial team to set high standards for themselves, not to think of a one-time solution. Once you relax, you will be surpassed.**
**Ren Wenqing:** After in-depth research on an industry, you will find that many past views are simple and arbitrary. Based on your observations, what misunderstandings do people currently have about hard discount snacks?
**Tan Zhiwang:** There are indeed many, and I think they will persist for many years.
Let me give a few simple examples.
Many people say that snack stores have no technical barriers; anyone can do it. In fact, **in the consumer industry, technical barriers are not outside the door, but inside the door.**
What does that mean?
Opening a store indeed has no threshold; you can find a location, decorate, and stock goods. But being able to open a store does not mean being able to run it well. There are many links, and each link must achieve 90 points. You need to have strengths, but you cannot have weaknesses.
Especially when you have hundreds or thousands of stores.
Also, regarding price wars. There is a lot of information about price wars now, as if vicious competition is imminent and everything will be a mess.
Let's look at Hunan again. Shouldn't this mature market have the most intense price war? But Hunan has not had a vicious price war. On the contrary, if you compare carefully, its price level is relatively high.
When entering a market, we have opened dozens of stores, and then we think about hitting opponents through price wars. But everyone's scale is relatively large, and we find that we cannot kill each other, so everyone naturally stops.
**There are indeed situations where store opening and competition are not rational, and some are eliminated. But overall, price wars are sporadic and local. I think we should focus our efforts and energy on service optimization; that is fundamental.**
**Ren Wenqing:** We have always emphasized that the core of bulk snack stores is the hard discount business model. Only by understanding this can we see its true impact. Snack discount stores are just one form of discount retail. From this perspective, what transformation is the current retail industry undergoing?
**Tan Zhiwang:** This is a highly elevated topic and worth explaining well.
**Innovative retail forms always appear in the form of price killers.** Snack discount stores, Pinduoduo, Douyin, etc., are all like this.
**Without subversion of basic technology, discount retail is the top retail form.**
This is not unique to China; other countries are the same. Walmart, Costco, and ALDI are actually discount stores, which benefit consumers through efficiency improvements.
Let's look at the global top 250 retailers. The US has 75, China has 15, and excluding Hong Kong, Macao, and Taiwan, only 12. If we approach the US level in the future, we need at least 60-70 more retail companies.
There are several points worth noting in the Chinese market.
**E-commerce is very efficient, but it has limitations.** Geographically, it is developed in first- and second-tier cities, but penetration in the vast lower-tier markets is insufficient. In terms of categories, it has no advantage in many categories of instant consumption.
This is a huge opportunity for discount retail, and it will definitely flourish.
> **First,** China has a vast territory and a large population, and market demand is sufficient to support differentiated retail formats.
>
> **Second,** consumption is stratified, with different category needs and consumption capabilities. From the perspective of population positioning and category structure, a batch of discount retail formats will emerge—bulk snack stores are just one of them.
Another point is that **competition in the Chinese market is very fierce. Discount retail created in this environment will definitely be the most efficient and competitive.**
**Ren Wenqing:** The trend of discount retail affects not only the retail industry but also different roles in the industry chain, such as brand owners and distributors. In your opinion, where is the main impact, and how should they respond?
**Tan Zhiwang:** First of all, **trends cannot be stopped by individuals. The best way is to understand the trend and go with it.**
There is an important change here: **the chain previously dominated by brands will become dominated by retailers.** What impact will this have?
Some bosses of listed companies told me that they adopt a one-size-fits-all policy for all snack chain systems, giving the same price.
I think this is a wise approach. **In the future, the downstream will dominate. The more concentrated they are, the more unfavorable it is for the upstream.**
**Because in the future, except for a few super-strong brands with premiums, the vast majority of brands will find it difficult to have premiums.**
In the future, there will be a batch of vertical discount chain enterprises with 10 billion in sales. Super-strong brands can do business with all terminals, but for the vast majority of brands, they can only do business with a portion of discount chain channels.
**For distributors, it is relatively difficult. The distributor group will not disappear, but indeed some will be forced to leave because efficiency improvements mean fewer distributors are needed.** So distributors need to think about whether there is a way to participate in the new chain.
What I see is that some distributors have joined snack stores to do retail. In the rapid expansion of snack stores, there are many traditional distributors among them.
Some are also thinking about whether to start their own snack store brand. This is not recommended. The actual situation I see is that the casualty rate is too high, and the time window is not good now. Of course, some distributors extend upstream to create product brands, which is not impossible, but it is indeed a long and arduous task.
**Final Thoughts** Since 2022, hard discount snacks have accelerated rapidly. Some see low-price sales, some see franchisees losing money, but from an industry perspective, its true impact lies in the impact on the upstream and downstream of the industry chain—China's modern food processing industry is undergoing a supply-side reform. From October 9 to 11, 2023, the [5th China FMCG Conference] will be held in Shenzhen. On the morning of the 10th, we have specially set up a parallel forum session on [Snacks and Discount Stores]. At that time, **Mr. Tan Zhiwang, consumer investor and partner of Snack Cabin, will be present** and give a keynote speech: **"Bulk Snack Stores: Localized Innovation and Opportunities of Discount Retail in China"**.
At this conference, New Distribution will release the industry-exclusive **"2023 China FMCG Snack Hard Discount Development White Paper"**. Through systematic investigation and research, New Distribution will deeply interpret the development background, model, current pattern, and evolution of hard discount snacks, systematically analyze the challenges and opportunities for brand owners and distributors, and provide trend insights under the industry chain transformation.


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