The wave of hard discount has begun and won't stop. Over the past year, New Distribution has published a hard discount white paper, held the FMCG Hard Discount Conference, written in-depth industry insight articles, and shared discount retail cases. We have always stood from the perspective of the industry chain, attempting through three-dimensional, multi-faceted research, analysis, and reporting to help industry practitioners deeply understand the essence of the current industry transformation. Recently, I had an in-depth exchange with Zhang Haibo, co-founder of Lemeng. Mr. Zhang's sharing on the industry's development history and thoughts on future changes are highly valuable. For the FMCG industry, Lemeng may not be well-known, but in the discount retail field, especially the snack store industry, Lemeng is a household name. From Laopo Daren pioneering the bulk snack store format, to Snack Busy, Zhao Yiming Snacks, Hao Xiang Lai and other leading snack stores driving the industry's rapid growth, and then to Guanpai Ke, Wangpai Matou, Wang Ge Discount Supermarket and others leading the development of discount supermarkets, Lemeng, as a system software service provider, has witnessed, accompanied, and continues to promote the development of the entire industry. Today's article will take you to understand the current hot discount wave from a new dimension. Helping Laopo Daren develop a system was the beginning of Lemeng's entry into the community retail chain industry. In 2010, Zhang Haibo resigned from a state-owned enterprise and founded Lemeng with two classmates. Initially, they developed software for the catering industry but soon entered the retail sector. Those familiar with the industry know that the current hot snack stores can be traced back to 2010 when Laopo Daren separated the bulk snack section from supermarkets, lowered the markup rate, and combined it with the format of collection stores like Lai Yifen, creating the bulk snack retail format. At that time, there was no suitable system, so Laopo Daren's founder Yuan Zhenqin approached Lemeng to develop one, laying the groundwork for Lemeng's deeper involvement in discount retail later. Zhang Haibo said that developing a system is not just a technical matter; the key is to understand the logic of business and management. To do the system well, they even franchised a store at the time, which they later closed due to lack of energy. But going deep into the industry, accompanying customer growth, and providing in-depth service have become the value direction that Lemeng has always adhered to. Zhang Haibo has a clear understanding of the industry's development trajectory. From 2012 to 2015, there was a wave of snack store entrepreneurship. As Laopo Daren's store format matured, Snack Manwu, Dai Yonghong, Xiaozui Snacks, and various snack stores named "XX Snacks" appeared one after another. Lemeng's business quickly expanded from Zhejiang to the whole country. In 2017, Snack Busy was established, and when it grew to sixty or seventy stores, it also adopted the Lemeng system. From 2020 to 2023, another wave of entrepreneurs entered the snack store track. Since last year, many entrepreneurs have started to enter the multi-category discount supermarket track, and Lemeng has almost become the industry standard. During its development, Lemeng also expanded its business to chain industries such as fruit and fresh food stores. Over more than a decade of entrepreneurship, Lemeng has always focused on serving food and community retail. In Zhang Haibo's words, "Lemeng serves community and food retail, providing systematic services on their path to chain operation." Lemeng has witnessed the entire process of snack stores from scratch to continuous expansion. While accompanying the industry's development, Lemeng has also continuously absorbed nutrients from customers and built its unique business philosophy. Zhang Haibo is often on business trips, either visiting customers or leading the Customer Success Department to organize salons and private sharing sessions, providing customers with sharing and training on industry changes, business management, system applications, and opportunities for peer exchange. "All efforts must be given back to customers to maintain sustained competitiveness," said Zhang Haibo. This philosophy is deeply influenced by customers. He cited an example: Snack stores seem simple—just sourcing goods and recruiting franchisees—but doing it well is not easy. The earliest snack store entrepreneurs were not traditional retailers; they didn't know how to source goods or master retail techniques, but they had the basic business philosophy of making franchisees profitable. For instance, in the early development, Lemeng learned from Laopo Daren's founder Yuan Zhenqin's philosophy: Business should be long-term; if you make money at the start, it means the entry barrier is low, anyone can enter, and it won't last long. In an exchange with Zhao Yiming Snacks' founder Zhao Ding, Zhang Haibo was deeply impressed when the latter said that as scale grows, the headquarters' profit should remain constant; once it exceeds, it should be pulled down and passed on to franchisees and consumers. Lemeng has established a dedicated Customer Success Department to provide services beyond technology. Many believe that system service providers only need to solve technical problems, but Zhang Haibo thinks, "Poor software usage is just a symptom; the essence is that things aren't done right. We must help customers develop; only when customers open new stores can we grow." In the early days of snack store development, Lemeng established the "Province-Saving Federation" to build an industry exchange circle. The first "saving" helps customers save time and energy through store manager training, standardized management, warehouse and logistics management, etc., allowing mutual exchange. The second "saving" helps customers establish collaborative mechanisms in sourcing and collective procurement to save costs. Lemeng has done a lot to promote industry development and has won recognition from many customers. Of course, as a system service provider, the most fundamental is the software and technology itself. With industry development, Lemeng has become the system service provider that best understands discount retail. The Lemeng system can be said to be a product iterated over the past decade or more alongside the development of discount retail. Mr. Zhang gave me an example. The bulk snacks in snack stores, commonly known as "hand-grab packs," are sold by price band rather than by individual item, which creates a loophole in franchisee management. If a store sources near-expiry or low-quality goods externally for higher profit, the headquarters may not easily monitor it, affecting the system's overall sales volume and potentially seriously impacting consumer experience. To solve this problem, Lemeng and customers jointly launched a order combination, using distribution-sales ratio monitoring to prevent this situation, encouraging stores to actively report cost issues, ensuring the quality of system products, and maintaining consumer reputation. The introduction of high-quality, cost-effective bulk white-label products not only meets consumer needs but also provides profit support for snack chains. The vigorous development of bulk snack stores is closely related to their own innovation; hand-grab packs are one example, and Lemeng has contributed to the implementation of this innovation at the system level. Discount retail is different from traditional retail. The Lemeng system has always iterated with the goals of better product management and higher operational efficiency. For example, snack stores update and iterate very quickly, and the product lifecycle is difficult to grasp manually. Lemeng divides products into different stages within the system: low sales high margin, high sales high margin, high sales low margin, low sales low margin, and uses data to feedback which node a product has reached, providing timely operational guidance: should it be eliminated? If eliminated, how should the central warehouse, stores, and suppliers coordinate? Another example: Snack stores have numerous SKUs and new products constantly, but store staff are limited. To improve efficiency, Lemeng uses intelligent labels such as "hot selling" and "new" to facilitate checkout. Later, when customers proposed 24-hour operation, Lemeng developed AI image recognition so cashiers don't need to memorize barcodes, and even new or temporary workers can quickly get up to speed. Also, the intelligent replenishment system frees stores from reliance on manual experience, allowing work that previously required six or seven people to be done by one person, and so on. Not only store operations, but as volume increases, supply chain efficiency also becomes a problem. At the central warehouses of leading systems, dozens of trucks often pile up, severely affecting efficiency. Based on customer needs, Lemeng developed an intelligent supply chain system. The system can issue orders, and suppliers can decide whether to proactively replenish based on data, then schedule delivery times on the supply chain platform. Currently, Lemeng has established three R&D centers in Ningbo, Nanjing, and Wuhan, with a product R&D team of several hundred people. On average, Lemeng's standard products iterate a version every two weeks. Additionally, customized services are available based on customer-specific needs. With the development of hard discount, more and more people realize that low price is not the core of discount retail; it is actually a result—the outcome of focusing on the product itself and doing everything possible to improve efficiency. Discount retail essentially returns to the essence of retail—providing consumers with high-quality, low-priced goods. Philosophy, operations, and technology systems actually support and feed back into each other. In 2024, the development pattern of snack stores is relatively stable. Many entrepreneurs, including those from snack store systems, traditional retailers, and distributors, have started to enter the multi-category discount supermarket track. Compared with snack stores, discount supermarkets only add categories; the underlying hard discount logic is the same. Therefore, many entrepreneurs choose Lemeng as a partner, and Lemeng is also very optimistic about the industry's development. To date, Lemeng serves over 15,000 retail brands and has served over 200,000 stores cumulatively. Zhang Haibo has his own observations and judgments on industry development. Snack discount stores can open thousands of stores in a short time, developing beyond many people's imagination. "China's community retail chain rate is still very low, and retail efficiency is not high. Because it's not high, once retail technology is honed, it can quickly deliver a dimensionality reduction strike to mom-and-pop stores," said Zhang Haibo. Current discount supermarkets are actually a transformation of traditional community retail, such as mom-and-pop stores and non-close-knit convenience stores. Whether it's snack discount stores or the upcoming discount supermarkets, they are accelerating the chain process of China's community retail. This has had a huge impact on the current commercial distribution system. What should traditional distributors do? "Let's do a simple logical deduction: out of 10 community stores, 3 are transformed, 3 are eliminated, and the remaining 4—who will transform them? Actually, it's the distributors. But not traditional distributors; rather, distribution-sales distributors." The so-called distribution-sales distributor: 'distribution' refers to supply chain, 'sales' refers to sell-through. That is, distributors should do category management based on sell-through logic, rather than simply moving goods as in the past. Based on this industry judgment, Lemeng launched a system for the trading sector two years ago, providing system services for distributors transitioning to distribution-sales distributors. To date, it has served dozens of regional large distributors. Compared with trading, retail management is more detailed. Warehouse, picking, distribution, and inventory management are all interconnected, and with accumulated experience in discount retail, Lemeng has unique advantages in product management. Industry changes are accelerating. Whether in retail or trading, the direction of evolution is the same: better product management and higher operational efficiency. "What Lemeng wants to do is to continuously iterate our professional capabilities, serve our customers well, and help them seize opportunities in the transformation," said Zhang Haibo. **Final Thoughts Last year, while visiting snack discount stores, I often heard the word "Lemeng." I initially thought it was a standard module of snack store systems, but after deeper understanding, I learned the ins and outs of Lemeng. I have exchanged ideas with Mr. Zhang many times. Perhaps due to his industry role, he combines logical, data-driven rationality with sincere, business-like sensibility. He shared with me the past, present, and future of industry development with accumulation, cognition, and thinking that many lack. Due to space limitations, I cannot detail all the exchange content. On August 21, 2024, in Shanghai, at the 3rd China FMCG Hard Discount Conference, Lemeng co-founder Zhang Haibo will attend as co-host and deliver a keynote speech titled "Trends and Impacts of Community Retail Chainization." Friends interested in industry changes, whether manufacturers, distributors, or retailers, should not miss it! Concurrently, the "3rd China FMCG Distributor Conference" will be held, where the "FMCG Industry Distributor B2b Platform Strategy Guidance Report" and the "2024 FMCG Distributor Business Condition Survey Report" will be released. Interested friends are welcome to scan the QR code to inquire about the conference details!