Reflecting on the First Half of the Year: Did Retail Enterprises Pass the Test?

While looking forward to a return to growth, retailers are also anxious about new entrants dividing the market. Between transformation and focus, how much resources and energy have retail enterprises lost in their struggles? As the first half of the year passes, what kind of report card have retail enterprises delivered? Sam's Club is accelerating store openings, Hema is deepening its agricultural product supply chain, and RT-Mart has opened its first warehouse club. Meanwhile, traditional hypermarket formats represented by Carrefour and Walmart continue to adjust and close stores. In the context of industry optimization and restructuring, traditional retail enterprises are shifting from scale-first strategies to efficiency and profitability. They must actively transform to adapt while also focusing on their core positioning. That is, on the basis of existing scale, they should decisively optimize and adjust, using cost reduction, efficiency improvement, and operational capability enhancement as levers to find new growth in a stagnant market. In the first half of the industry's recovery, let's see how retail enterprises have handled the seemingly contradictory tasks of 'transformation' and 'focus'.

Transformation Almost overnight, Yipin Fresh, a discount fresh food store that was once called a 'supermarket killer,' abandoned its fresh food business of many years and turned into a wholesale grocery department, revealing the lack of depth and fickleness of capital-driven retail enterprises. According to Longshang.com Supermarket Weekly, at its peak, Yipin Fresh had 1,800 stores, but within a few years, it underwent several transformations, with stores getting smaller, store numbers declining sharply, and product positioning changing repeatedly. Looking back at its rapid development, it seems more like a company assembled through a full-chain partnership model. This explains why Yipin Fresh could 'change its face' overnight, because from the fresh supply chain to channel networks and store operations, all were based on a partnership model, not its own assets, making it easy to change without attachment. From its original core of fresh food for 'daily living' to now focusing on wholesale-style sales of snacks, packaged standard goods, and fruits to meet young people's leisure consumption, the transformed Yipin wholesale department seems to be chasing industry trends, taking advantage of the current oversupply of upstream food production and abundant supply chain resources. But with such a development philosophy, how can the enterprise retain sustainable competitiveness amid changing trends? Last year, it opened 6 new stores; this year, it has already opened 2 new stores and plans to open 4 more before the end of the year, bringing the total to 48 stores. Walmart has handed the baton of transformation to Sam's Club, accelerating its harvest of high-quality domestic consumers. For its hypermarket business, Walmart has almost stopped expansion, focusing on upgrading existing stores and empowering them with online capabilities to maintain high-quality operations in existing stores and business districts, extending the effective lifecycle of the hypermarket business as much as possible. Apart from store closure news, the declining hypermarket business is rarely mentioned, but it remains Walmart China's main business, occupying most of its outlets in the Chinese market. Longshang.com Supermarket Weekly believes that Walmart's renovation of its hypermarket outlets should, on one hand, shrink its frontlines and abandon lower-tier cities; on the other hand, it should transform outlets with regional advantages into competitive local hypermarkets through upgrades and digital empowerment. Some stores with suitable business districts and properties could be developed into Sam's Club city center stores. In short, facing changes in the Chinese retail market, Walmart has basically completed its transformation from hypermarket-led to Sam's Club-led, but its target customer positioning of the middle class has not changed, still harvesting high-spending quality customers in the domestic market. The biggest lesson for Chinese retail enterprises is that no matter what format they operate, they must always lock onto their advantageous target customer positioning. Another transformation case in the first half is Carrefour. Recently, Carrefour finally publicly stated that it is promoting supply contract reform, aiming to completely change the contract model for Chinese hypermarkets and establish a new zero-fee operation relationship between retailers and suppliers. This is not only for Carrefour but also for most traditional retail enterprises in China, a self-revolution that affects the fundamental operating model. Such transformation takes time and requires enterprises to withstand the survival pressure and even risks it brings. Since the widespread out-of-stock situation in stores early this year, Carrefour has repeatedly announced favorable news such as introducing strategic investors and store renovations to temporarily alleviate operational risks like out-of-stock and shopping card runs. However, Carrefour's reforms have not reversed its decline. After recent reports of continued out-of-stock and restrictions on shopping card payments to 20% due to malicious redemption by scalpers, it was also reported that Carrefour has been subjected to asset preservation and freezing of properties worth a total of 500 million yuan. Its path to transformation and self-rescue remains difficult. As a periodic keyword in retail in recent years, transformation applies to every retail enterprise: capital-driven ones like Yipin Fresh, Dingdong Maicai, and various discount store brands, lacking retail infrastructure resources and depth, have to rely on following trends and adapting to survive; at the same time, even many enterprises with years of retail experience have no time to focus on scale expansion, and whether experimenting or returning to basics, transformation is entering deep waters. Either be reborn in transformation or perish in it; the difference between life and death is a matter of 'degree.'

Focus While lagging transformation leads to death, blind transformation accelerates death. Enterprises that maintain 'focus' during transformation are the wise ones in retail. Reviewing the first half of the year, it's not hard to see that online giants like JD.com, Meituan, Alibaba, and Pinduoduo, as well as traditional retail enterprises, have mostly slowed down expansion; at the same time, various discount store brands and warehouse clubs have accelerated development, but such niche markets always attract blind followers and speculators. For example, Douyin and Kuaishou, which announced high-profile entry into instant retail and food delivery at the beginning of the year, have had almost no public progress since, showing that cross-industry business models are not as simple as 'logical establishment.' The same applies to traditional retail enterprises entering niche formats like snack discount stores and warehouse clubs. Taking the rapid development of various retail discount stores in the first half as an example, let's analyze: first, their street-side locations and flexible selling methods cater to the buying habits of women, students, and young people; second, they successfully establish a low-price image, but overall, few items are truly low-priced; more often, they use popular low-price items to drive sales of related categories; third, retail discount stores are often capital-driven and expanded through franchising, allowing rapid scale with relatively low financial pressure; fourth, they have developed mature product structures and upstream direct sourcing resources for their target customers. These conditions are indispensable. If traditional retail enterprises plan to enter retail discount stores, they must first confirm whether they can meet these factors; otherwise, they should focus more on their core positioning and areas of expertise. On June 5, Hema announced the establishment of a Sustainable Development Department to further strengthen the accumulation of supply chain resources such as agricultural product planting bases and direct sourcing factories. Focusing on positioning and accumulating core advantages is, in the view of Longshang.com Supermarket Weekly, the correct posture for retail enterprises to transform and improve efficiency. Specifically, for most traditional retail enterprises, it means efficiently and maximally meeting the public's daily consumption needs in their respective regional markets. This positioning determines that in transforming our operational models, we must closely focus on the target consumer groups we can serve well, improve efficiency, and concentrate on building core capabilities to achieve these goals. For example, hypermarkets: on one hand, this format's operational model is outdated and in decline, but it remains the main format in most regional markets and the first choice for public consumption. This is the logic for traditional retail enterprises to both transform their operational models and focus on building core competitiveness in this format. For fresh food, most enterprises face problems such as lack of direct sourcing resources, insufficient self-operation capabilities, especially in deep processing and on-site processing, but it remains the 'foundation' of traditional retail enterprises. After being bombarded by capital-driven trends like fresh e-commerce, community group buying, and community fresh stores, it is still the core and foundation for traditional retail enterprises to hold onto. Taking fresh food as an example, in the first half, on one hand, pre-made dishes characterized by standardization, factory production, and cold chain brought an industrial wind to retail terminals; on the other hand, traditional retail enterprises offer on-site processing that fits the public's daily consumption. From the perspective of supermarket enterprises, whether to choose the 'high-end' industrial style that meets the fast pace of modern life, or the down-to-earth 'fireworks' style that suits mass consumption, or both, retail enterprises in different regions, cities, business districts, and with different positioning should provide answers that suit themselves.