Source丨Lingshou After a period of silence, the community store track is bustling again. First, Walmart has been active with its community stores in Shenzhen. In January this year, Walmart opened its first community store in Longhua Yicheng Center, followed by a second one in Nanshan Xinde Jiayuan last month. So far, Walmart's new community stores differ from previous ones in two main ways: The first change is that the stores have become more refined. In the past, Walmart's community store exploration might have been a simple downsized hypermarket, with a wide variety of products but cramped space. Now, Walmart has "adjusted and optimized" its store design and product structure. With an area of 500 square meters, flexible site selection, and significantly reduced rent and labor costs, inventory pressure has also been alleviated. For the retail industry, this is a key move to achieve cost reduction and efficiency improvement. The second change is the synergy between online and offline. Walmart community stores combine front warehouses and cloud stores to achieve real-time inventory synchronization. For example, when a store finds a product out of stock, the system automatically transfers inventory from a nearby Walmart supercenter or Sam's Club warehouse. It is reported that Walmart community stores have listed over 2,000 products on e-commerce platforms, supporting delivery to home in as fast as one hour. Notably, many consumers have commented that Walmart community stores "feel like Sam's Club." This is not unrelated to the background of the current head of community store business, Wen Yubin, who was previously in charge of Sam's Club. Wen Yubin also clearly stated that community stores will be a key development format for Walmart in China, with Guangzhou and Shenzhen as core layout areas. Besides Walmart, German discount supermarket giant ALDI is also expanding aggressively. It has already opened 65 stores in Shanghai and recently achieved the "three-store opening in Suzhou, Wuxi, and Kunshan" in a short period. Hema has also elevated community stores to a strategic level. At the end of last year, Hema CEO Yan Xiaolei set a new direction in an internal letter: the company will focus only on two core formats: Hema Fresh and Hema NB. In the internal letter, Hema clarified its 2025 strategic direction: focus on Hema Fresh and Hema NB, with the former replicating successful models and the latter refining the optimal model. According to 36Kr, Hema has set a target of opening nearly 100 new stores in 2025, with a three-year performance goal of GMV exceeding 100 billion yuan. Shortly after Hema's bold statement, Meituan began to re-strategize. Although Meituan launched "Xiaoxiang Fresh" as early as 2018, due to high costs and slow returns, it closed many stores in 2019 and shifted to a front-warehouse model. However, the market environment has changed—the community store model has been proven effective. Meituan plans to bring "Xiaoxiang Supermarket" back to the market in 2025, focusing on "offline stores + online instant retail," directly benchmarking Hema NB, intending to make a comeback. Why has the small community format become a trend? The resurgence of the small community format as a trend inevitably reminds us of the community store expansion craze sparked by Yonghui Life and Suning Xiaodian a few years ago. At that time, the industry was booming, with giants and capital piling in, as if small stores were the new blue ocean of retail. But after the excitement, reality quickly hit hard, leading to store closures and retreats. Why did the previous small format trend quickly "fail"? The root cause was a misdirection, with a collective belief in "traffic is king" while ignoring the essence of retail. First, the core driver of the previous small format expansion was the scramble for offline traffic entrances and anxiety about the O2O ecosystem. Mini stores were seen as supplements to hypermarkets, increasing store density and capturing consumer mindshare on one hand, and fulfilling online fulfillment and home delivery scenarios on the other. For giants, the number of stores and coverage radius were far more important than single-store profitability. KPIs pointed to "laying out stores and grabbing traffic," while fundamental issues such as whether the single-store model was sustainable, whether the supply chain matched, and how to control backend costs were intentionally or unintentionally ignored. The result of blind expansion was structural imbalance. First, the unit rent and labor costs of mini stores were not lower than those of large stores; instead, due to higher requirements for sales per square meter and limited SKUs, the profit pressure was greater. The supply chain system accumulated by hypermarkets could not be "transferred" to small stores, leading to supply chain mismatches, insufficient small-order fast-response capabilities, and high wastage. Moreover, many small formats were merely "miniature versions of hypermarkets," with almost no difference in product structure, pricing strategy, or user experience, lacking community characteristics and differentiated competitiveness. In operations, they overly relied on online subsidies and platform traffic, with extremely weak self-sustaining capabilities. Losses became the norm, store closures became a tide, and the previous small format exploration collapsed. Large stores focus more on the front end, while mini stores emphasize the backend. Moreover, the site selection, product selection logic, store positioning, and supply chain of large and small stores are different, and there are significant differences in scale and management. A deeper understanding is that the front end of mini stores does not have much difference; only the product selection, presentation, and display methods differ. The categories, display methods, user experience, and prices are similar. The mid-to-backend is the key to winning in mini stores. Hidden behind the store is a comprehensive test of scale, team, management, resources, and supply chain. Of course, in essence, this failure was due to the strategic over-reliance on "traffic entrances" and the operational neglect of efficiency, cost, and supply chain adaptation. Participants thought that as long as they grabbed the entrance and laid out the network, economies of scale would naturally bring profits. But community retail requires fine operations and extreme cost control, especially in high-frequency, price-sensitive scenarios. Without solid backend support, the more you expand, the more you lose. So, knowing the operational challenges of small formats, why are giants still choosing to re-enter this "500-square-meter battle"? First, there has been a structural shift on the consumer side: the trend of smaller families and an aging population is evident, and consumer shopping habits have shifted from stockpiling to more frequent, smaller-quantity, and convenient purchases. Compared to e-commerce services like "3 kilometers, 30 minutes to home," community small formats with "300 meters, 5 minutes to store" better meet immediate and high-frequency life needs. Second, small formats have natural advantages in category adjustment and service flexibility. Through smaller product structures, refined packaging, and dynamic SKU management, they can more accurately match the segmented needs of different community customer groups. Some products can also be sourced and distributed directly through supply chain downscaling or third-party platforms, complementing hypermarkets and membership stores. Differences Although the community store track is stirring again, this time the industry's enthusiasm is noticeably more restrained. After the previous round of large-scale expansion, relying solely on the number of stores has become difficult to achieve sustainable profitability, instead triggering losses and store closures. As capital recedes, companies have to return to their fundamentals and re-examine the profitability of the single-store model. In this context, the core logic of the community retail industry has shifted: single-store self-sufficiency has become the bottom line for survival, and the story of "traffic for growth" no longer works. The market pays more attention to the store's own cash generation ability, long-term cash flow, and operational efficiency. As a result, retail companies are seeking new breakthroughs and exploring business models that balance low prices and high efficiency. At this point, "hard discount" has become an industry consensus. The so-called hard discount is not simply price cuts and promotions, but achieving low prices on a regular basis through extreme cost control and efficiency improvement. The logic behind it is to gain cost advantages by compressing SKUs, increasing the share of private brands, and simplifying store location and decoration. But all these measures ultimately point to the same core: the reshaping and enhancement of supply chain capabilities. It can be said that the hard discount model is an inevitable product driven by the supply chain. Low prices are not achieved by sacrificing profits, but by relying on an efficient supply chain to minimize costs in procurement, logistics, inventory, and stores. Centralized procurement brings bargaining power, precise inventory reduces waste, and rapid circulation ensures product freshness and supply stability. Without a solid supply chain foundation, the hard discount model is impossible. Therefore, industry giants have adjusted their strategies to strengthen their supply chain foundations. Walmart community stores focus on high-frequency, essential items and pre-packaged fresh produce, improving sales per square meter and turnover; Hema NB reduces store area and streamlines SKUs, focusing on core fresh categories. The underlying logic of all changes is to drive store profitability with supply chain efficiency as the core. Furthermore, the competitive focus of community stores has shifted from the number of stores to the supply chain system. Traditional chain retail relies on standardized large supply chains, while community stores require stronger localization, flexibility, and refined management. Take ALDI as an example: it minimizes procurement costs through global centralized procurement and private brand development, while strictly controlling product selection and inventory management to compress operating costs. Hema NB, on the other hand, optimizes its fresh supply chain for localization and small-scale operations to meet the high wastage and fast turnover needs of fresh products. Only in this way can community stores achieve high-frequency replenishment, ensure freshness, and increase customer repurchase rates. At the same time, cost control has penetrated every detail of store operations. Site selection avoids high rents, decoration is minimalist, labor and processes are highly streamlined and standardized, and fresh produce procurement and display pursue extreme efficiency. Key indicators such as sales per square meter, gross margin, inventory turnover, and wastage rate have become daily tests for refined management in community stores. It is thus clear that competition in community stores has completely returned to the essence of retail. Hard discounting is not just a price war, but a comprehensive contest of supply chain capability, cost control, and refined operations. With the bubble of capital and stories squeezed out, those who survive will inevitably be the players who optimize their supply chains to the extreme, achieve single-store profitability, and let efficiency overcome costs. The golden age of community stores may still come, but this feast belongs only to those enterprises that truly face costs, hone their skills, and understand the essence of retail. Others are just the backdrop after the tide recedes.