---
title: "Snack Food Category Operator Case: From Haoxianglai's 'Top Ten Strategic Suppliers' to Opening 20+ Direct Stores in One Year, with Annual Sales in the Hundreds of Millions"
description: "In the past, distributors could easily achieve growth by simply following a good brand, but today this model is increasingly difficult. The market environment has changed, consumer demands have shifted, and retail strategies are constantly upgrading. The role of traditional distributors is being redefined—no longer just movers of goods, but local operators who truly understand the market, grasp the terminal, and create demand. Against this backdrop, a group of innovative and breakthrough distributors has emerged, adapting to the new market environment and showing us new possibilities for the distributor community."
author: "张雨薇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-05-18"
language: "en"
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# Snack Food Category Operator Case: From Haoxianglai's 'Top Ten Strategic Suppliers' to Opening 20+ Direct Stores in One Year, with Annual Sales in the Hundreds of Millions

> In the past, distributors could easily achieve growth by simply following a good brand, but today this model is increasingly difficult. The market environment has changed, consumer demands have shifted, and retail strategies are constantly upgrading. The role of traditional distributors is being redefined—no longer just movers of goods, but local operators who truly understand the market, grasp the terminal, and create demand. Against this backdrop, a group of innovative and breakthrough distributors has emerged, adapting to the new market environment and showing us new possibilities for the distributor community.

In the past, distributors could easily achieve growth by simply following a good brand, but today this model is increasingly difficult. The market environment has changed, consumer demands have shifted, and retail strategies are constantly upgrading.
The role of traditional distributors is being redefined—no longer just movers of goods, but local operators who truly understand the market, grasp the terminal, and create demand.
Against this backdrop, a group of innovative and breakthrough distributors has emerged, adapting to the new market environment and showing us new possibilities for the distributor community.
Today, I want to share a case with you—Lu Peng, founder of Suzhou Dayu Jingxuan and general manager of Suzhou Dunhua Trading.
In 2013, Lu started his business as a snack food distributor and, through professional operations, became one of the "Top Ten Strategic Suppliers" for Haoxianglai. In 2019, he established a brand operation company, deeply serving chains like Haoxianglai and Zhao Yiming. In 2023, he founded Dayu Jingxuan Snacks and opened over 20 direct stores in one year. In 2024, he established Guozishu Food, becoming a custom expert for chain systems.
From distributor to entering discount retail, opening over 20 stores in one year, with annual sales in the hundreds of millions. How did he do it? What impact does chain discount retail have on local distributors' businesses? How should distributors respond?
After reading this article, I believe you will definitely gain insights.
**From Supplier to Entering Discount Retail**
In 2013, Lu Peng entered the snack food industry and founded Suzhou Dunhua Trading, officially starting his career as a distributor. At that time, the industry landscape was relatively fixed, leaving little room for newcomers.
Compared to local peers who started earlier and had stronger resources, he was clearly "a step behind"—the threshold for cooperating with major clients was high, and brand resources were in high demand, so he could only seek growth in the marginal markets of surrounding towns. His business scale hovered around 10 to 20 million yuan.
The real breakthrough came when he connected with the "Haoxianglai" system.
At that time, this chain had just entered Suzhou and urgently needed supplier partners who were market-savvy and could quickly iterate through trial and error—but most distributors were still stuck in the old mindset of "big clients ensure volume, small clients earn gross profit," making it difficult to meet the chain's need for rapid iteration.
Dunhua Trading, with its high level of cooperation and flexible pricing, was the first to break through, quickly growing from a regional category supplier to one of Haoxianglai's "Top Ten Strategic Suppliers."
During these years of "accompanying" Haoxianglai, he witnessed the growth of a chain brand from dozens to over 400 stores, deeply participated in the chain's standardized operations, and accumulated experience in product selection, warehousing, and operational systems. At its peak, his supply amount reached 40 to 50 million yuan.
But Lu Peng soon discovered that **while chains grow fast, they are also gradually "de-intermediating."**
Whenever a chain reaches a certain number of stores, to optimize costs and improve efficiency, the brand will make adjustments to the supply chain, and the first to be affected are suppliers like him. Even if past cooperation was good, a single adjustment notice could cut off business at any time, while heavy investments in manpower, warehousing, and logistics are hard to withdraw.
**"You accompany it from 10 stores to 400 stores, but when it reaches the 401st store, it may no longer need you."**
With this warning, Lu Peng began to examine his business model—**mechanically repeating the cycle of picking up goods → selling goods → being eliminated, which adds no value to the company**. He longed to do "things that truly add value to the enterprise," rather than continuing to set the stage for others.
It was under this realization that Lu Peng conceived the idea of "mastering the terminal." At that time, leading chain systems had already reached scale, but he firmly believed that opening stores at this moment was valuable, had space, and presented opportunities.
On one hand, his past experience of accompanying chains taught him that **opening a store is itself an iterative process centered on consumer needs**, where everyone gradually establishes standards through trial and error, from a few stores to a dozen or more.
He has already built his own factory upstream and laid out the brand side, and with years of distribution experience connecting the midstream, he can be said to possess full-chain capabilities from production to distribution. If he can establish a model, he can convert supply chain advantages into retail advantages.
Guozishu Food's custom dried fruit products for chain systems
On the other hand, **although national chains are densely distributed, there are still "cracks" to exploit in category depth, especially in certain sub-categories, and in regional services.**
"If you can't do national, go deep into the region; by differentiating, you can build a new moat."
Based on these insights, in 2023, he and several partners founded "Dayu Jingxuan" and entered the snack discount retail track. In one year, they densely opened over 20 direct stores in Suzhou, with annual sales in the hundreds of millions.
**How Can Regional Discount Stores Resist Discount Chains?**
When national discount chains spread across regional markets, for a single regional distributor, simply "following" the big chains is clearly unsustainable.
"You can't compete with them in scale or in burning money, so you have to find a different path where 'they can't run fast or can't reach,'" Lu Peng summarized.
**First, differentiate in store format and SKU configuration.**
National chains' standard stores are typically 120m² with about 2,000 SKUs; Dayu Jingxuan opts for medium-to-large store formats of 180–350m², expanding SKUs to 5,000–8,000. Larger space and more SKUs leave room for more sub-categories.
**In terms of pricing, align prices on standard products, and supplement profits with differentiated products.**
**National chains achieve low prices through** large-scale procurement, which regional discount stores obviously cannot match.
Lu Peng's approach is to sacrifice the gross margin on standard products to level the SKU gap, ensuring no loss or slight loss, and then use the remaining 3,000–5,000 SKUs to supplement profits. In the end, the overall gross margin is slightly higher than the system average, making them more competitive locally.
Differentiated products mainly fall into three categories:
The first is regional specialty products, which differentiate from the chains' "same products in a thousand stores" while being closer to local consumer needs.
The second is short-shelf-life and low-temperature products, which are difficult for chain large warehouses to deliver efficiently, making them a weakness of chain systems. Regional discount stores, using local small warehouses plus quick replenishment, can achieve "produced today, on shelves today," maintaining taste and freshness.
The third is **high-value-added sub-categories**, such as toys, daily chemicals, imported goods, proxy purchases, and custom products, targeting quality-conscious consumers.
Take pine nuts as an example: most chain stores sell pine nuts of 1050 grains per 500g at a price of over 40 yuan; Dayu Jingxuan's custom pine nuts use 850 grains per 500g and sell for over 60 yuan. The larger grains and better taste are sought after by quality consumers.
Lu Peng stated that simply pursuing low prices cannot compete with large chains. Dayu Jingxuan's strategy is not purely a "hard discount" approach, but rather through the strategy of "prices lower than the surrounding area, quality better than the surrounding area," finding its own "off-position runway" and building a new, sustainable competitive advantage.
**What Pitfalls Are There for Distributors Opening Stores?**
Although opening stores is a path for distributors, not all distributors are suitable.
Lu Peng summarized that for distributors, whether to open stores, or whether they can open stores, **the most core element is capability, followed by opportunity.**
If a distributor's management capabilities, product capabilities, operational capabilities, and team capabilities do not meet standards, it is not recommended to open stores. Otherwise, it will drag down the original main business. Opening a store cannot be a gamble; it is a systematic project.
At the same time, there are four major pitfalls to avoid.
1. Don't have a distributor mindset; "being good at selling goods" ≠ "being good at opening stores."
Traditional distributors are good at pushing inventory, moving volume, and meeting manufacturer targets, but opening stores is about display, sell-through, gross profit, and turnover, centered on "customers" rather than "manufacturers."
If distributors still hold the mindset of "my represented brands must be on the shelves" and "the more goods I stock, the better," it will lead to SKU stacking, poor sell-through, and heavy inventory; opening stores requires selecting products from the consumer's perspective, knowing how to filter, combine, and iterate.
2. Don't blindly follow chain systems.
If there are already many chain stores in the region, distributors adopting the same model as them will have no chance of winning. They can take a differentiated route based on local characteristics or surrounding conditions.
Mr. Lu mentioned that besides the above, there are many other entry points, such as chains almost never selling bulk or loose goods, so you can differentiate from this aspect.
3. If you want to open a chain, don't blindly pursue speed and expansion.
If stores are not profitable, opening more stores is meaningless.
Suppose you establish 10 or 20 warehouses to cover 10,000 stores. The next year, due to lack of profitability, franchisees have no loyalty, and half of the stores close, but the costs of personnel and premises do not decrease. At that point, it's not just about earning less from 5,000 franchise stores; losses are possible.
4. Entrust procurement authority to partners with retail experience.
In the past, distributors spent over a decade in agency business, focusing their vision and energy on serving 20 to 30 brands. But today, you need to serve consumers. If it's hard to change your mindset, it's better to entrust procurement authority to partners with retail experience to avoid unsold inventory and internal conflicts.
**Final Thoughts**
Sharing this case is not to tell everyone "opening stores now can make big money" and that everyone should open stores. Rather, it is to help more distributors broaden their horizons and clarify their direction.
In today's rapidly evolving landscape of chain retail and industry concentration, distributors must either continue as "middlemen," being squeezed on price and replaced, or shift to roles that create new value, such as retail, branding, or system service providers.
Of course, there is more than one path:
> You can open stores, anchor in the local market, and differentiate;
>
> You can do B2b, providing stable supply chains to more retail terminals;
>
> You can also move from the supply side to the operations side, becoming a "solution provider" between brands and chains;
>
> Even whole-store output, agency operations, and custom product development... are all becoming new possibilities for distributors.
But what remains unchanged is that you must re-understand retail, re-understand consumers, and find your own moat.


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Contact: zhaobo258@gmail.com · +86 158 5481 7671