The retail industry is buzzing recently, with platforms and capital accelerating their entry with real money, aiming to become winners in the next cycle.
The starting point of the change is the instant retail war. Beyond food delivery subsidies, internet platforms are again extending their reach offline, accelerating store openings, warehouse construction, and supply chain investment, betting on a super consumption entry point that integrates online and offline.
One result of the war: just after the 2026 Spring Festival, Meituan acquired Dingdong Maicai for $717 million, taking away 1,000 front warehouses, 7 million monthly active users, and a supply chain with 85% direct sourcing. The industry defines this as a defensive acquisition by Meituan—Dingdong cannot be given to competitors.
The second sign of change is the full-scale heating up of the community hard discount track.
Hema's Chaohe Suan NB has surpassed 400 stores nationwide, opening over 200 new stores in 2025 alone, becoming the core growth engine within the Hema system. Since the start of 2026, Chaohe Suan NB has accelerated its expansion south and west, with first stores in Guangzhou, Foshan, and Hefei. After the Chengdu first store opened, rumors suggest 30-50 more will open there this year.
ALDI held its first China Partner Conference in Suzhou, announcing the achievement of 100 stores and a plan to add over 50 new stores in 2026—since 2023, store numbers have grown at an average annual rate of 40%.
Meituan's Kuailehou also opened three stores in one day in March, entering Ningbo and Beijing markets, covering 6 cities, entering the accelerated expansion phase of replication.
Community small stores, seen as Walmart's second growth engine, are also entering an accelerated scaling phase, boosted by the private brand 'Wojixian'.
As of March 2026, at least 12 community stores have opened in Shenzhen alone; in April, they entered Suzhou with an initial plan of 10-15 stores. The core supply for community small stores, 'Wojixian', has grown from dozens of SKUs in 2019 to nearly a thousand, covering high-repurchase categories like grain, oil, fresh produce, and food, occupying prime shelf positions.
While hard discount stores expand densely, old formats like hypermarkets are accelerating contraction and adjustment. In February, Yonghui's new CEO Wang Shoucheng sent an open letter to employees, admitting 'desire exceeds capability.' March financial data showed: Yonghui lost 2.55 billion yuan in 2025, its fifth consecutive year of losses, with cumulative losses exceeding 11.6 billion yuan. Yonghui is not an isolated case. RT-Mart and China Resources Vanguard are also shrinking and closing stores on a large scale.
Together, these events paint a clear picture: old forces are struggling, new forces are accelerating, formats are diverging, and the preferences of capital and consumers re-entering the market have shifted rapidly.
The retail transformation can be summed up in one sentence: the industry no longer divides into online and offline, but only into 'those who understand consumers' and 'those who don't.'
The restructuring of the landscape and the resulting industry consolidation are not unique to China. Throughout 2025, the number of large M&A deals in the global retail consumer goods sector exceeding $5 billion increased by about 76% compared to 2023—typically occurring at nodes of industry restructuring.
The most significant capital signal in the global retail market is Walmart, which many Chinese people think is 'about to go bankrupt,' recently surpassing a market value of $1 trillion, equivalent to twice the combined value of Alibaba, JD.com, and Pinduoduo.
In 2026, domestic retail divergence will intensify.
Scalable players that survive may only be of three types: either like Walmart (Sam's Club) achieving extreme efficiency, or like Chaohe Suan NB and ALDI, betting on the right format and going deep into communities, or like Meituan and Alibaba, weaving a large instant-gratification retail network to become super retail entry points.
Yang Dehong, an IT expert in China's commodity circulation industry, believes that overall, the retail trend is 'integrated retail,' and retailers will shift from competing for marketing share to competing for life share.
Standing at a node where retail has been shouting for ten years and finally seeing substantive changes, we have sorted out several key signals and key issues in the recent retail industry, attempting to record and clarify the complex retail transformation.
The 'Pangdonglai Fever': Traditional Supermarkets' Contraction-style Self-Rescue and Regional Antidote
Over the past two years, the 'Pangdonglai transformation' wave in China's supermarket industry has been seen as a 'collective self-rescue' for traditional supermarkets. Since last year, with the failure and retreat of many Pangdonglai-transformed stores and Pangdonglai's own active cooling down, a new round of review has begun.
Yonghui is the most aggressive and eye-catching sample in this movement. As of the end of 2025, Yonghui deeply adjusted 315 stores and closed 381 inefficient stores. Wumart started adjustments in March 2025, and by the end of the year, it had renovated 55 'AI new quality retail' stores and 8 hard discount stores.
The adjustments have indeed brought partial results.
For the 47 Yonghui stores that completed adjustments for 6 months, monthly sales per square meter reached 3,295 yuan, above the baseline of 2,800 yuan; average customer traffic increased by 80% year-on-year; over 60 stores in a stable period had profitability exceeding the highest level of the past 5 years; the latest quarterly report shows it is repairing while contracting, with net profit up 94.4% year-on-year.
After Wumart's adjustments, daily offline sales increased by more than 2.5 times, and daily transaction frequency increased by nearly 1.5 times. Bubugao was even more impressive: net profit after deducting non-recurring items reduced losses by over 80%, daily customer traffic quadrupled, and average daily sales per store soared from over 90,000 yuan to 710,000 yuan.
But the cost is equally alarming.
In a full year of Pangdonglai transformation, Yonghui invested 910 million yuan in asset write-offs and one-time opening costs alone, with the direct cost of the 'Pangdonglai transformation' exceeding 1.2 billion yuan. In the first half of 2025, it had a net loss of 241 million yuan, turning from profit to loss year-on-year. Bubugao's impressive results came at the cost of shrinking from 96 stores to 21, with business scope reduced to Hunan Province only.
Contraction is necessary for results—this detail is important.
A Yonghui store in Jinshan, Shanghai, that 'learned from Pangdonglai' hung a slogan saying 'Product structure reaches over 80% of Pangdonglai.'
Yang Dehong believes that the essence of 'Pangdonglai transformation' is a belated catch-up lesson, making up for product capability, service capability, process optimization, and team capability.
But this system capability is not cheap: high employee salaries, refined management, private brand development—all require significant costs and need scale effects and regional deep cultivation for support.
Whether the series of product standards, team standards, and operational standards output by Pangdonglai can be sustained long-term and optimized for local consumption are all questions.
Bubugao succeeded precisely because it shrank scale and focused on the region. Yonghui, as a national chain, faces geometrically increasing replication difficulty.
Many failure cases have been hidden under the noise of the 'Pangdonglai fever.' A supermarket owner in a third- or fourth-tier city in the northwest saw sales triple in the first month after adjustment, but customer traffic plummeted after six months, ultimately losing over 4 million yuan—product selection didn't match local tastes, and the bakery section had a daily loss rate as high as 30%.
Pangdonglai's model is too unique. Another retail expert reminds us that its success is layered with two 'accidental dividends': the online daigou craze and the supply chain output dividend from the 'Pangdonglai transformation.' Other companies trying to learn from Pangdonglai will find it hard to enjoy these.
The bigger paradox is that hypermarkets themselves are declining. Walmart's traditional hypermarkets have shrunk from over 400 at their peak to over 270 by the end of 2025, and it has further clarified a hybrid model of large stores + community small stores + online home delivery.
'Investing huge costs to adjust a declining format is itself a strategic risk,' said one retail practitioner more bluntly: Yonghui chose the path least suitable for itself. Pangdonglai's model is low-efficiency, high-experience, high-cost, and heavy on the front end, light on the back end; it is essentially an unreplicable single-store model. For a national chain like Yonghui, the meaning of scale effects lies precisely in efficiency first. Learning from Pangdonglai is going in the opposite direction.
Even Pangdonglai itself is actively 'cooling down.' In February 2026, Yu Donglai announced his retirement, becoming a consultant, while continuing to raise employee salaries. To some extent, this model overlays the founder's personal aura and regional dividends, and Yu Donglai is trying to bring the 'deified' company back to normal.
Even if the adjustment succeeds, it only makes up for basic skills.
The product power and digitalization that retail companies will compete on next—Hema and Walmart are already far ahead, while regional small and medium retailers are weakest in large-scale low-cost procurement, online operations, and traffic acquisition. Especially the digitalization they've been shouting about for years; what they do best is still 'issuing coupons,' which consumers are tired of.
The above retail practitioner reminds us that in the past, people believed regional retail had a natural moat of local consumption, with low online penetration in third- and fourth-tier cities and strong localization, so consumers mainly shopped offline in stores.
But today, barriers to product circulation are getting smaller, young consumers are mobile and receptive, and they are happy to see fresh supply appear in their cities. 'Look at Hema going to Luoyang, it has a big impact on Dazhang Supermarket. Young people still like Hema.'
The window for large supermarket adjustments is rapidly narrowing. 'Pangdonglai transformation' is a belated self-rescue, but only a temporary antidote. The real life-and-death battle is in the next battlefield where new competitors gather.
Community Store Explosion: Validated Format Innovation
While Yonghui, RT-Mart, and China Resources Vanguard shrink and close stores on a large scale, the market gap left behind is being rapidly occupied by a new format: community hard discount supermarkets with integrated store and warehouse. This is not just format innovation; it's the correct answer that combines digital capabilities and differentiated supply chains.
Hema's Chaohe Suan NB is the leader of this explosion. After its brand upgrade in August 2025, it has been opening stores at a rate of over 20 per month, and now has over 400 stores nationwide. Yun Chou, the national head of site selection development for Chaohe Suan NB, once told us that this year it will open stores at 'twice last year's speed.'
A standard 600-square-meter store requires an initial fixed investment of 2.65 million yuan, yet franchisees still flock in. Why? Because 'store-warehouse integration' has been validated as an effective retail model—the store is both a 'store' for consumers to browse and experience, and a 'warehouse' for delivery riders to ship quickly; offline has natural foot traffic, online has fulfillment efficiency.
Chaohe Suan NB targets 'pragmatic consumers,' offering over 1,500 high-frequency, essential SKUs covering four scenarios: cooking meals, ready-to-eat and ready-to-cook, leisure and self-care, and home daily use. Private brands account for nearly 60%. Its operational strategy is summarized as 'three highs and three lows': high sales per square meter, high labor efficiency, high product efficiency; low selling price, low loss rate, low gross margin. In the current price-sensitive trend and community consumption scenarios, it has clear competitive advantages.
Not just Hema. ALDI announced in September 2025 a price cut on over 50 high-frequency daily necessities, with a maximum reduction of 30%, and private brands account for up to 90%. In March 2026, ALDI's store count in China officially exceeded 100. Its latest expansion plan is 50 stores.
Wumart launched 'Wumart Chaozhi' hard discount stores, with SKUs reduced by over 90% compared to traditional supermarkets, planning to open 25 in Beijing by year-end. Meituan's 'Kuailehou' has also opened at least 16 stores nationwide, covering 6 cities including Hangzhou, Beijing, Langfang, Shaoxing, Ningbo, and Huzhou. Regional supermarkets are also following suit.
The advantages of the community hard discount small store model are clear: differentiated private brand capabilities, proximity to consumers, strong digital capabilities, high efficiency from store-warehouse integration, and fast replication. It builds a defensive wall against instant retail through 'proximity,' scenario experience, and product differentiation.
From financial models to replication potential, community stores with store-warehouse integration show strong competitiveness. The enthusiasm of franchisees is driving industry survival of the fittest—but franchising tests the headquarters' supply chain and management empowerment capabilities.
The above retail practitioner believes that compared to snack discount stores with a narrower category, or convenience stores with only convenience advantages, community hard discount small stores will be more competitive against instant retail and are more likely to become a dominant format in the offline market.
Therefore, we can see that Mingming Henmang and Sichuan-based Lingshi Youming are both vigorously transforming into full-category community discount stores.
Yang Dehong offers another perspective on the value of community stores. First, of course, is proximity to consumers. Second, when consumers' demand for physical stores is no longer limited to shopping functions, how to provide social, innovative, and emotional value—these social functions—is also a question physical stores need to answer—the essence of retail needs to be reshaped.
Dingdong Maicai: A Victim of the Instant Retail War
Also a Signal of Meituan Repairing Its Moat
The sale of Dingdong is seen by the industry as the most direct footnote to the instant retail war.
In February 2026, Meituan acquired all of Dingdong Maicai's China business for $717 million—19 cities, over 1,000 front warehouses, 7 million monthly active users, a supply chain with over 85% direct sourcing, 12 self-operated factories, and 2 self-operated farms.
Surviving independently is too difficult.
Dingdong's situation is a microcosm of all vertical platforms under siege by giants. In 2024, it achieved its first full-year profit; in Q3 2025, revenue hit a record high of 6.66 billion yuan, but net margin was only 1.01%, and the debt-to-asset ratio was as high as 84%. The high loss rate of fresh produce and dependence on wholesale markets kept gross margins low.
Profitable, but not thick enough—this fragility may be the core reason founder Liang Changlin sold the company. Because pure front warehouse is essentially e-commerce, and e-commerce naturally pursues scale effects and full market coverage; big companies entering will do it better.
The front warehouse model itself has two hurdles: high online traffic costs and heavy offline fulfillment costs. Dingdong survived this long by shrinking scale, increasing regional density, and using supply chain capabilities to create product differentiation.
But the ceiling of scale is within reach. When giants upgrade instant retail to a strategic main battlefield, price wars and traffic squeezing work in tandem, compressing the survival space of independent players to the extreme.
For Meituan, this is a defensive acquisition—Dingdong cannot be given to competitors. Meituan's Xiaoxiang Supermarket had already deployed over 1,000 front warehouses, but couldn't crack Dingdong's deep-rooted East China hinterland. Dingdong's front warehouse market share in Jiangsu, Zhejiang, and Shanghai exceeds 30%.
After the merger, Meituan's market share in the front warehouse track jumped from about 40% to over 65%, nearly doubling the scale of the second-place player.
Acquiring Dingdong is not just buying warehouses; it's repairing the moat. For most platforms that started with traffic, shifting from a traffic moat to a supply chain moat may be the only solution in a stock market.
The front warehouse model, once underestimated, has been redefined as the core infrastructure of instant retail. Major platforms are accelerating their moves: Hema reopened front warehouses to ensure supply for NB franchisees; Pinduoduo's 'Duoduo Maicai' is encroaching on East China; at the end of 2025, Taobao Flash Purchase began building front warehouses for Tmall Supermarket.
A more noteworthy signal is: Big companies are not just absorbing front warehouses; they are also investing in offline stores and building their own supply chains.
JD.com has restarted offline store expansion for 7Fresh, and also opened 5 discount supermarkets in Suqian and Zhuozhou; Meituan will continue to open offline stores for Xiaoxiang Supermarket in core business districts of first- and second-tier cities, while Kuailehou hard discount stores serving community consumption also function as front warehouses offline.
Store-warehouse integration, self-built supply chains, high private brand ratio—Sam's Club and Hema have proven this model profitable. In the context of poor profitability in China's instant retail, it is not just the current optimal solution, but also an efficiency sample of online-offline integration and restructuring catalyzed by instant retail.
There's a small footnote to efficiency improvement: on Xiaoxiang Supermarket's product pages, some short-shelf-life yogurts now show the production date—this is only possible with highly digitalized supply chains.
In essence, instant retail is not a traffic war, but a supply chain transformation movement disguised as 'instant.' Online and offline are integrated; consumers don't distinguish between online and offline; touchpoints, supply chains, and delivery methods must be integrated and optimized around this logic.
This explains why 2025-2026 will see a wave of M&A and closures in retail. Companies that can't keep up with digitalization don't even have value for acquisition—many small and medium regional supermarkets, and even some traditional supermarkets that completed 'Pangdonglai transformation,' will be forced to catch up on digital capabilities.
Pei Liang, chief researcher at CCFA Research Institute, is more direct: Will these platforms become the dominant force in the future retail market? If they deploy offline, ordinary companies won't be able to withstand it.
Internal survival of the fittest and M&A integration in retail—Dingdong's sale may just be the beginning.
But Pei Liang emphasizes that internet platforms should also admit that entering offline retail is not easy; fresh-made, human touch, personnel management, and service capabilities are all challenges. Hema has accumulated over a decade and still can't be called excellent; Meituan is said to have spent a lot of effort researching companies known for offline service like Pangdonglai and Starbucks.
Walmart's Trillion-Dollar Market Cap: Lessons from the Endgame
In February 2026, Walmart's stock closed at an all-time high, with a market value exceeding $1 trillion, becoming the first retailer globally to achieve this and the only traditional retailer to join the trillion-dollar club dominated by tech giants like Nvidia, Apple, Microsoft, and Amazon.
This moment is highly symbolic. Over the past decade, Walmart's stock has soared 468%. While Chinese peers are busy closing stores, adjusting, and selling themselves, this sunset company, which many have written off, has quietly completed its restructuring.
Yang Dehong says the trillion-dollar market cap is just a surface; Walmart's revenue hasn't changed much, but it seized the opportunity of technological change to strengthen its core capabilities.
For example, leading data processing capabilities, customer insight capabilities, and product sourcing capabilities—especially the latter two, which have always been the essence of retail, indicate that Walmart may have more room for growth in the future. For instance, previously Amazon was eating into me, but in the future, maybe I'll eat into Amazon.
Speaking of Walmart's reform, one must mention Doug McMillon, who became CEO in 2014.
At that time, he faced a poor report card: US same-store sales had declined for five consecutive quarters, customer traffic had shrunk for six consecutive quarters, and return on investment had fallen from 20% seven years earlier to 17%. More fatally, Amazon was coming.
Soon after taking office, McMillon asked executives to read Amazon founder Jeff Bezos's new book 'The Everything Store.' Then he began a series of radical reforms.
First, he changed Walmart's capital allocation logic.
'We will change the structure of capital expenditure, reduce investment in traditional areas, and put money into new growth opportunities. Specifically, we will slow the growth of store investment and increase investment in e-commerce.' In other words, Walmart admitted: the era of opening more and bigger stores is over.
In 2016, Walmart spent $3 billion to acquire Jet.com and let founder Marc Lore lead e-commerce. This acquisition later proved not entirely successful—Jet.com closed in 2020, and Lore left in 2021.
But McMillon believes that working with digital-native teams taught Walmart to dare to try and accelerated technology iteration. More importantly, it helped Walmart realize what its biggest asset was—not e-commerce technology, but 4,600 stores.
90% of the US population lives within 10 miles of a Walmart store. This data became Walmart's core weapon for counterattack. Stores serve as both experience venues and front warehouses.
As Walmart's website scale grew, it quickly narrowed the gap with Amazon in speed and price. In 2023, Walmart US e-commerce sales reached $65.4 billion, more than four times that of 2019.
Over the past few years, Walmart has invested tens of billions of dollars to restructure its supply chain, using AI to optimize inventory forecasting, improve fresh produce quality, and speed up delivery. Currently, about 60% of Walmart stores receive goods from automated distribution centers, and about half of e-commerce fulfillment center processing is fully automated.
During this period, what was controversial in the capital market was Walmart's repeated significant wage increases for store-level employees. This company, once known for cost-cutting, began to view store employees as part of the fulfillment network, essentially 'buying stability and execution' for the e-commerce fulfillment network.
Second, a dual-track strategy for customer segments, manifested in private brands and new community store formats.
In the US, facing high-income consumers' uncompromising downgrade under inflation, Walmart didn't blindly introduce low-price goods for a price war, but launched a new private brand, Bettergoods, targeting high-end supermarkets, offering quality at extreme value. This attracted a large number of affluent families with annual incomes over $100,000 into Walmart. Financial reports show that up to 75% of Walmart's new market share came from these high-income groups.
Finally, a shift in mindset: Walmart now repositions itself as a technology company, which is also the reason for its significant market cap increase.
Through Walmart Connect, Walmart began turning its massive consumer traffic into advertising space sold to suppliers like P&G and Coca-Cola. This digital advertising business has already generated over $4 billion in revenue.
On the eve of the stock breaking $1 trillion (January 20, 2026), Walmart moved its stock from the NYSE to the Nasdaq-100 index, which is full of tech stocks. Then on February 1, new CEO John Furner officially took over, which Wall Street sees as a signal that Walmart has completely completed its 'tech transformation.'
In China, the instant retail war and traditional supermarkets' self-rescue are now working in two directions. Some industry experts have begun to discuss Meituan and Walmart together. Both have the same underlying logic, just different paths.