---
title: "Rooted in Local Communities, Millions of Mom-and-Pop Stores Are Entering the Fast Lane"
description: "Community commerce is on the rise, but how can mom-and-pop stores turn a tough business into a good one? Across China, from developed first- and second-tier cities to towns and rural areas with weaker purchasing power, wherever people live, you can always find a small grocery or general store—these are mom-and-pop shops. They are aptly described as \"small but complete,\" typically covering less than 50 square meters, yet selling high-frequency, essential products that match the income levels, consumption patterns, and lifestyles of nearby residents."
author: "博雅"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-12-30"
language: "en"
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# Rooted in Local Communities, Millions of Mom-and-Pop Stores Are Entering the Fast Lane

> Community commerce is on the rise, but how can mom-and-pop stores turn a tough business into a good one? Across China, from developed first- and second-tier cities to towns and rural areas with weaker purchasing power, wherever people live, you can always find a small grocery or general store—these are mom-and-pop shops. They are aptly described as "small but complete," typically covering less than 50 square meters, yet selling high-frequency, essential products that match the income levels, consumption patterns, and lifestyles of nearby residents.

## Community commerce is on the rise, but how can mom-and-pop stores turn a tough business into a good one?
Across the vast land of China, whether in commercially developed first- and second-tier cities or in towns and rural areas with weaker purchasing power, wherever people live, you can always find a small grocery or general store—these are mom-and-pop shops.
They are aptly described as "small but complete," typically covering less than 50 square meters, yet selling high-frequency, essential products that match the income levels, consumption patterns, and lifestyles of nearby residents, bringing small but real happiness to consumers day after day, year after year.
**In terms of channel power alone, mom-and-pop stores are small but have the highest density.**
Relevant data shows that China's 6.8 million mom-and-pop stores contributed 44% of FMCG shipments in 2019. Because they can reach consumers widely and directly, mom-and-pop stores are regarded as the "capillaries" of Chinese commerce and the "nerve endings" of the physical retail industry, playing an indispensable role in smoothing the "micro-circulation" of the urban economy.
**In the collision and integration of traditional retail and new retail, mom-and-pop stores across the country face unprecedented challenges in market reputation, sourcing channels, and marketing methods. How to transform and upgrade, and expand sales channels, has become the most important development issue for these stores.**
In this process, many community mom-and-pop stores that actively iterate their business models and operate across all time periods and channels have shown strong vitality:
A squirrel convenience store next to Hangzhou East Railway Station, operating for 10 years, has the most ordinary name and appearance found on streets and alleys, yet it sells over 600 orders daily on food delivery platforms, earning the title of monthly "10,000-order king."
Squirrel convenience store. Source: Zhejiang Video
A daily necessities store in a vegetable market in Haizhu, Guangzhou, after launching on an instant retail platform and integrating online and offline operations, achieved a leap from "can't even afford rent" to "income (profit) multiplied by 10."
A mom-and-pop store in Tongzhou, Beijing, saw online orders increase by about 3,000 in May, 1.5 times the usual amount, with total online and offline turnover approaching 1 million yuan...
Based on advantages such as convenience, flexibility, and a stable customer base, more and more community mom-and-pop stores are leveraging instant retail, forming unique operational methodologies tailored to local conditions, ultimately turning small businesses into big ones and becoming good neighbors that meet local instant needs. This further demonstrates the resilience, vitality, and potential of China's community economy.
**Small stores "break out" with instant retail**
Unlike chain retail formats such as convenience stores and supermarkets, mom-and-pop stores have weak risk resistance due to their small capital scale.
According to observations by Retail Business Finance, during the three years of repeated pandemic impacts, some mom-and-pop stores had shorter contact time with consumers, and coupled with the impact of traditional e-commerce platforms, their living space was continuously eroded.
**Crisis is also an opportunity. Many mom-and-pop stores have begun to try a new community business model—instant retail. The reason behind this is that the growth of consumers' instant needs drives small stores to adapt to market changes, and the improvement of local delivery infrastructure gives mom-and-pop stores confidence in rapid fulfillment.**
One of the most intuitive changes is that more and more consumers are using food delivery as express delivery, gradually shifting from delayed retail that "trades time for price" to instant retail where "what you think is what you get." The service scope of instant retail has also expanded from catering to FMCG and other fields, with more and more merchants joining instant retail platforms.
Figure: CCTV survey shows that instant retail categories are continuously expanding.
According to the "2022 China Instant Retail Development Report" by the China Chain Store & Franchise Association, the market size of instant retail has grown at a rate of 81% in the past five years, and by 2025, the scale of open platform models in instant retail will exceed the trillion-yuan threshold. Facing this trillion-yuan blue ocean market, it is not hard to understand why physical stores regard it as a new path to increase revenue.
**It is not difficult to find that some mom-and-pop stores that are good at capturing market changes and daring to break out of their comfort zones have already enjoyed the first-mover dividend.**
Zhou Yu, born in the 1990s, and his wife run a grocery store in Beijing. In less than a year, the small store has recouped its costs and is profitable every month. In the most recent month, online and offline revenue approached 1 million yuan, with Meituan platform turnover reaching as high as 550,000 yuan.
**When talking about the methodology for monthly sales of one million, Zhou Yu frankly said: Put the small store on the food delivery platform and operate all time periods and all categories.**
Even though offline foot traffic has decreased significantly, the store's business has surged online through food delivery. "After the optimization of epidemic prevention policies, online orders still account for a large proportion. In the backend, we can see that many consumers have repurchased dozens of times online."
In southern China, Yang Jialong and his wife, who run a daily necessities store in a corner of a vegetable market in Haizhu District, Guangzhou, also took the initiative to transform and upgrade their small store.
In February 2020, based on the advantages of having an offline scene, years of regional operation, and good trust relationships with users, the Yang couple targeted the consumption characteristics of instant retail, integrated online and offline operations, and expanded their business sources through both time and space dimensions. After a period of hard work, their store went from "can't even afford rent" to now "income (profit) multiplied by 10."
By changing their business thinking, both Zhou Yu's and Yang Jialong's stores have improved, and the radiation range of their stores has expanded from one nearby community to three to five communities.
In terms of business model transformation, the common point of the two stores is: in the face of an uncertain market environment, they no longer passively wait for consumers to come, but **actively connect to instant retail platforms to provide users with online aggregated product displays**, with a product structure that basically covers users' daily needs, enabling them to get everything delivered to their homes without leaving the house.
**Human touch as the foundation, digital services**
Most of the products sold by mom-and-pop stores are standard products, and there are various levels of agents upstream in the supply chain. The final gross profit margin averages only about 25%, and for some categories it is even less than 10%. Especially in the current context of rising costs, rent, utilities, consumables, etc., are all significant expenses, which makes the net profit margin of mom-and-pop stores only about 2%.
**In other words, even if they catch the express train of instant retail, mom-and-pop stores are still doing a tough business of small profits and quick turnover, like "bending down to pick up steel coins," which is determined by the model itself.**
Mom-and-pop stores certainly have advantages, especially in deploying instant retail services. They maximize human management capabilities, allowing consumers to enjoy very humanized services with just a few clicks from home.
**First, community mom-and-pop stores are familiar with the local environment and residents' habits, enabling them to provide differentiated products and services.**
In response to consumption differences across seasons, demographics, and time periods, small stores can flexibly adjust their purchase lists, including trendy products, seamlessly connecting with market demand. Brand chain stores may need multiple levels of approval for such adjustments. At the same time, small stores pay more attention to cost control, can maximize benefits to consumers, and attract local residents with the advantage of good quality and low prices.
**Second, mom-and-pop stores are mostly rooted in the community, have operated for many years, and have a certain popularity and reputation. Launching instant retail services can bring more meticulous and thoughtful services to surrounding residents, improving conversion and repurchase rates.**
Traditional store traffic mainly comes from offline foot traffic. Under the impact of the internet and the pandemic, foot traffic has become increasingly scarce. Instant retail not only brings incremental online traffic but also better activates existing stock through more efficient reach and service, extending store operating hours in time and expanding store coverage in space.
Figure: In July this year, Meituan's nighttime supermarket orders increased by 46% year-on-year. Compared with ordinary online stores, nearby mom-and-pop stores have good relationships with residents, and online consumers often return repeatedly, even going offline to find the physical store. Heartwarmingly, many mom-and-pop stores also post slogans in their online store bulletin boards like "If the store doesn't have the product you need, you can call us, and we will list it as soon as possible," proactively searching for products not in the store for customers.
**Third, mom-and-pop stores are more like Doraemon's pocket, providing a third space for nearby residents with "one store, multiple functions" convenience services.**
In the pursuit of "convenience," community mom-and-pop stores can flexibly provide complete pre-sale, in-sale, and after-sale services. Some small stores even offer value-added services such as pet boarding, parcel collection, and document printing, which are full of human touch.
Moreover, with the continuous evolution and widespread application of new technologies such as artificial intelligence, big data, cloud computing, and the Internet of Things, mom-and-pop stores have begun digital upgrades, using new methods such as contactless transactions, smart settlement, online ordering with store pickup (or delivery), live streaming sales, and self-service vending to improve service efficiency.
From the perspectives of saving time, effort, money, and worry, community mom-and-pop stores better understand the thoughts, ideas, and needs of local consumers. With "providing convenience for residents" as the core, launching on instant retail platforms is about finding increments in the existing market, activating and meeting those instant needs that originally existed but were not satisfied.
Only by serving local residents well and forming stable customer flow and orders can community mom-and-pop stores turn bitterness into sweetness and become a long-lasting good business.
#### **Finding the 1+1>2 business formula in the existing market**
Instant retail has brought new ways of omni-channel operation to 6.8 million mom-and-pop stores. Meituan's financial report shows that in the third quarter, orders for mom-and-pop stores on Meituan increased by as much as 125% year-on-year. For community mom-and-pop store owners, connecting to instant retail does not mean they can "lie flat" or even "lie down and win"; the business still requires refined management.
This also indirectly shows that the dividend of instant retail lies not in traffic but in tapping into unmet needs of offline and traditional e-commerce, which requires merchants to have keen insight, sufficient patience, and to find business opportunities from details. Therefore, **the problem facing community mom-and-pop stores is not "whether to enter the instant retail track," but how to build and implement a 1+1>2 business formula that suits their own development, that is, using new technologies, new models, and new plays to make store operations more efficient and refined.**
Figure: Tips for mom-and-pop store operations. "Meituan provides basic services such as store online presence and fulfillment, but running a store is a discipline," said Mr. Shi, owner of a community store in Xi'an, Shaanxi, who thought about online operations before contacting the food delivery platform. He told Retail Business Finance, "Customers mostly order through WeChat groups, but some consumers are unwilling to order in WeChat groups because the waiting time is too long." "Overall, community group orders are either quiet all day or come in a rush, making it hard to coordinate and resulting in poor experience for both sides," Mr. Shi believes the main reason is that mom-and-pop stores can only grasp the habits of residents within 1 kilometer, and they lack the ability to build their own delivery team, so they cannot guarantee "instant" fulfillment of needs. After a period of research, he figured out three major operational tips: **First, optimize staffing and improve picking efficiency.** Most of the time, there is only one employee for picking, handing over goods, and serving customers. During peak periods, additional staff can be added to handle picking and delivery separately, using assembly line operations to improve efficiency. "Consumers won't feel embarrassed to order just because it's late at night. White-collar workers' daily consumption is met around the company and on e-commerce platforms. After work, almost all their needs are instant needs. If these needs cannot be met, they will disappear," Mr. Shi said, adding that you should not miss opportunities to increase orders due to insufficient staff. **Second, coordinate delivery resources to ensure delivery efficiency.** Good neighborly and delivery relationships are the emotional foundation of trust and the key to doing community instant retail well.
Figure: Instant retail continues to inject vitality into physical stores. Photo by Wang Gong
Get along well with delivery riders, proactively bear losses during delivery, and give them more warmth and care. Every delivery person is not just a number or ID on the platform; mom-and-pop stores should treat everyone in the consumption chain with genuine emotion. **Third, control costs, try different product combinations, promotions, and other new plays, and improve the product capability of "selecting products by person and designing by location."** "Because the store operates 5-8 kinds of seasonal fruits, when an instant retail order exceeds 30 yuan, we prepare a portion of the day's featured fruit for customers to taste for free. Fruits have high loss rates, but this method improves sell-through rate, keeps the fruit fresh, and plants a seed in customers' minds: this store sells fruit, and the owner is a nice person," Mr. Shi shared his operational tip. Now, Mr. Shi's store radiation range has expanded from the initial community to covering three surrounding communities. "Instant retail supports half the sky, increasing daily sales by about 2,700 yuan, almost covering the store's water, electricity, and rent costs," Mr. Shi said frankly: "Instant retail is, after all, just a combination of sales channel and fulfillment method, but the essence of business is how to gain the trust of strangers, making them feel safe and happy. From the day we launched instant retail to today, store traffic has grown steadily, and we have achieved zero negative reviews."
**Conclusion:** Mom-and-pop stores launching instant retail is a trend in the O2O transformation of physical stores, and the pandemic has accelerated this trend. From the "last kilometer of life" to the "surrounding three kilometers," from mom-and-pop stores, vegetable markets, supermarkets, community fresh food stores to fresh food e-commerce, O2O, front warehouses, community group buying... Community commerce, full of the flavor of daily life and human touch, has become a hotbed of retail innovation in recent years. Relying on the instant retail model, mom-and-pop store owners with similar business thinking to Zhou Yu and Yang Jialong, together with the delivery riders shuttling through the streets, jointly weave an efficient retail and service network, bringing more convenience to surrounding consumers while painting the vibrant background of the local economy. Driven by consumption changes and favorable policies, community mom-and-pop stores that are rooted locally, have both online and offline experience, can meet the diverse needs of local consumers, and operate all time periods and all categories, are redefining "next-door neighbors" to target the young consumer market, making it possible for young people's "department store at their doorstep" to achieve "everything delivered to home."


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