---
title: "On Survival and How to Thrive: A Conversation with Individual Retailers in Lower-Tier Cities"
description: "In China's third-, fourth-, and fifth-tier cities, individual retail seems to be gradually disappearing. Lao Wang (pseudonym), a regional distributor in Zunyi, Guizhou, notes that while large supermarkets in big cities are closing, small supermarkets are proliferating in lower-tier cities, squeezing out mom-and-pop shops. This article explores the current state and future of individual retail in these areas through interviews and analysis."
author: "新商业价值媒体"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-12-20"
language: "en"
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# On Survival and How to Thrive: A Conversation with Individual Retailers in Lower-Tier Cities

> In China's third-, fourth-, and fifth-tier cities, individual retail seems to be gradually disappearing. Lao Wang (pseudonym), a regional distributor in Zunyi, Guizhou, notes that while large supermarkets in big cities are closing, small supermarkets are proliferating in lower-tier cities, squeezing out mom-and-pop shops. This article explores the current state and future of individual retail in these areas through interviews and analysis.

In China's third-, fourth-, and fifth-tier cities, individual retail seems to be gradually disappearing.
Lao Wang (pseudonym) is a regional distributor in Zunyi, Guizhou. He started in maternal and infant retail and gradually expanded to become a distributor in the Zunyi area. Through his distribution channels, he has a good understanding of the local retail landscape. When asked about the state of individual retail in his area, Lao Wang sighed.
"There's this strange phenomenon now: some large, medium, and small supermarkets in big cities have closed down. But in our third-, fourth-, and fifth-tier cities, supermarkets are increasing. People go to nearby supermarkets for their needs, and many individual businesses and mom-and-pop shops can't survive anymore."
Image from the internet
Actually, this is a phenomenon worth paying close attention to. Through field visits and in-depth interviews with individual distributors, this article briefly discusses the current development status and prospects of individual retail in lower-tier cities.
**Supermarkets Seize the Market**
**Individual Businesses Face Increasing Pressure**
"In the past, every residential community in our county had one or two mom-and-pop retail stores, mainly responsible for meeting the daily needs of residents, such as food, vegetables, and daily necessities. In our distribution group, several people were responsible for supplying these mom-and-pop stores, with a frequency of about once a week."
According to the "2021 China Convenience Store Development Report" released by the China Chain Store & Franchise Association, convenience stores continue to maintain high growth compared to other retail formats, with mom-and-pop shops scattered across streets and alleys contributing nearly half of the retail shipment value to the market.
In 2017, total retail sales in the market were 26 trillion yuan, with mom-and-pop shops contributing 10 trillion yuan. By 2019, the shipment scale of mom-and-pop shops accounted for 44% of the entire market. In 2021, there were 6.8 million mom-and-pop shops in China, and their proportion in China's retail formats is increasing.
Lao Wang told the author: "Compared to big cities, mom-and-pop shops account for a larger proportion in our third-, fourth-, and fifth-tier cities, mainly because there are fewer job opportunities in small places, and the startup cost for mom-and-pop shops is low. If people can't find jobs, they often choose to open a small shop."
According to data, physical retail dominates retail in third- and fourth-tier cities and below, with mom-and-pop shops being the mainstream. A typical county retail market often consists of 1 large supermarket, 10 medium-sized supermarkets, and 300 mom-and-pop shops.
Wu Gang (pseudonym) runs a mom-and-pop shop in a fourth-tier county in Shanxi. His shop is located on the ground floor of a residential building, adjacent to his home, and has been operating for thirteen years. Now it is managed by his son and daughter-in-law.
"In the past two years, foot traffic in our shop has declined significantly, not because of online shopping, but mainly because a small supermarket opened in the community. Its product range is much richer than mine. People in the community just walk a few steps to get there, and residents from this and surrounding communities go there for their needs."
Lao Wang said: "From the distributors in our group who supply individual businesses, we can see that a small supermarket appears at the intersection of three or four communities. These supermarkets have a significant impact on individual businesses, which are now in a state of barely maintaining basic operations. The frequency of restocking has changed from once a week to once every two weeks. When distributors deliver fast-moving goods, they find that other products in these individual shops are covered in dust. Many customers, seeing this, reduce their visits, creating a vicious cycle."
Image from the internet
**Discount Stores and Convenience Stores Boom**
**The Survival Path for Individual Businesses**
**In the retail industry, there is a "time machine theory" that suggests successful business models in big cities, if replicated in small counties, can also achieve good performance.**
As supermarkets in first- and second-tier cities close one after another, the spending power of small-town youth is being noticed by capital. Many companies are targeting the lower-tier market as a "fat piece of meat," and retail is no exception.
Many large enterprises are entering with discount store formats at low cost. For example, Hema, after experimenting with mini and neighborhood formats, has locked onto Hema Outlets as an important strategy to attack the lower-tier market.
Walking into a Hema Outlet, you can see signs like "Fleece Treasure Zone," "Savvy Saver," and "Fresh Food Outlet" everywhere, and the store's broadcast constantly announces various "flash sale" notices.
Image from the internet
Under the large chain supermarket Wumart Group, its new discount store brand "Meitao" differs from Hema in product categories, focusing on daily groceries, rice, flour, and cooking oil. Meitao places "heavy" discounted items like laundry detergent and rice in prominent positions to attract customers.
"In our third-, fourth-, and fifth-tier cities, there are more and more similar discount stores. Many small and medium supermarkets are closely followed by a discount retail store, about 200 square meters, with a full range of groceries and daily necessities. Many people go there for the discounts."
In the past two years, Wu Gang's shop has undergone tremendous changes. These discount stores have taken away 60% of his business. To keep the shop going, Wu Gang added a new business: selling meat. He places fresh half-pork carcasses where customers can see them as soon as they enter. Many residents come in for the convenience of buying meat, which also drives sales of other products.
"Before, I could sell things without selling meat, but now it's different. There's a small supermarket in the community, and a discount store in the neighboring community, and more are opening. Now only some long-time regular customers come to buy meat and other items. Few young people enter the shop. In short, customers are fewer and fewer. It's not like the old days when you could make money just sitting there. But my son and daughter-in-law have ideas, thinking about introducing other businesses to maintain foot traffic."
Besides discount stores, convenience stores are also seeking new growth points in lower-tier cities.
The domestic convenience store market can be roughly divided into three factions: local, Japanese, and internet-based. Among them, Japanese convenience store brands have been particularly eager to expand into lower-tier cities in the past two years.
According to store data released by the China Chain Store & Franchise Association, the "Japanese Big Three"—Lawson, FamilyMart, and 7-ELEVEN—have collectively sounded the charge into lower-tier markets in the past two years, targeting fourth-tier cities like Huainan, Dezhou, and Jiangyin.
Lawson expects to have more than 10,000 stores in China by 2025, with new stores mostly in lower-tier markets. FamilyMart and 7-ELEVEN, like Lawson, have also begun to enter lower-tier markets one after another.
Image from the internet
"Nowadays, young people who want to open a shop tend to franchise discount stores or convenience store brands. In fact, these stores are also operated by couples. Although the startup cost is higher, the brand effect makes young customers visit more frequently. It's a kind of change."
**Embracing Change**
**Individual Businesses Begin to Upgrade**
According to data from 58 Tongzhen's "County Entrepreneurship Report," young people are the main force of entrepreneurship in small counties. Although family-based "father-son stores" and "mom-and-pop stores" remain the mainstream in county entrepreneurship, with the addition of young entrepreneurs, the stereotype of mom-and-pop shops being dirty, messy, and outdated will be broken, injecting more youthful vitality into these aging shops.
According to statistics from the well-known American research institution ComScore, China's consumer structure, dominated by the post-80s and post-90s generations, has taken shape. The 25-34 age group accounts for 32.1% of China's total population, 4.5 percentage points higher than the global and Asia-Pacific averages. Among them, more than half are small-town youth.
Traditional mom-and-pop shop operators are older and may have outdated ideas. Although they stock cheap goods, they don't match the tastes of small-town youth, failing to drive sales. In contrast, mom-and-pop shops opened by young entrepreneurs are more likely to appeal to these small-town youth.
Xiao Chen (pseudonym) is a post-90s. After getting married the year before last, he and his wife opened a small shop on a street-facing storefront in a residential area with financial support from their parents. The shop opened just in time for the pandemic, when many residents were stuck at home and couldn't get fresh vegetables and fruits. Xiao Chen and his wife took the opportunity to provide vegetables and fruits to residents, quickly adding most residents to their WeChat, channeling customers into private domain traffic, and successfully building a familiar consumer circle.
Currently, the retail format in lower-tier cities has entered the 3.0 social commerce era, with more transactions occurring in online private domains. Many mom-and-pop shops are beginning to learn online operations.
Xiao Chen proactively learned the latest mom-and-pop shop operation models online. After the pandemic ended, he took the initiative to become the Meituan group-buying station manager for several nearby communities. When daily group-buying goods arrived, he would notify customers in the community group to pick them up, and customers would often buy other items while in the store.
From a product and service perspective, mom-and-pop shops are more "down-to-earth" than convenience stores and supermarkets. They better understand what small-town customers want to eat and what they need.
Today Convenience Store experienced large-scale store closures shortly after entering lower-tier cities in Hunan, mainly because the local market has many specialty snack shops with long histories and strong competitiveness. It's difficult for standardized convenience stores to localize quickly in the short term; the turnover of four or five convenience stores can't match that of one specialty snack shop.
In lower-tier markets, mom-and-pop shops not only sell goods but also provide local social services, such as restrooms, printing, paying utility bills, and sending express deliveries. In this regard, convenience stores also lack competitive advantages.
Image from the internet
Xiao Chen said: "Now online shopping and supermarkets have squeezed the living space of many individual businesses, but mom-and-pop shops still have many unique features that the internet and supermarkets can't replace. Although it's not as easy to make money as the previous generation, I'm optimistic about the future of small shops. We need to seek change while maintaining stability; nothing stays the same."
**Summary**
**For individual businesses, the real competitor is not other retail formats, but the ever-changing customer needs.**
As times evolve and consumer behavior changes, the mom-and-pop shop retail model will inevitably be impacted. But from an emotional perspective, these shops, full of the warmth of everyday life and human touch, will continue to stand on street corners, welcoming customers. Even if you forget your phone or wallet, the owner won't mind.
Come again next time. Take care.


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