Recently, visits to frontline markets, especially stores, give the overall impression that mom-and-pop stores are having a very hard time. On one hand, the overall market itself is shrinking, reducing the business traditional small stores can do; on the other, the impact from snack stores and discount stores is very obvious, with many mom-and-pop stores experiencing cliff-like declines in turnover. Now many snack stores are beginning to transform into full-category discount supermarkets, meaning they can basically cover the categories of traditional small stores. Whether full-category discount supermarkets can replace mom-and-pop stores is an excellent proposition right now, and a question I have been pondering recently. This is because it concerns not only the fate of a large number of mom-and-pop stores and many families, but also the fate of many brand owners and the foundation of their distribution channels. If traditional terminals are completely disrupted by chain discount retail channels, does that mean the deep distribution channel will come to an end? Therefore, we must think about this issue. This article will think through and break down the proposition of "whether full-category discount supermarkets can replace mom-and-pop stores," presenting some of my views for your reference. Why are snack stores transforming into full-category discount supermarkets? First, we need to understand why snack stores are transforming into full-category discount supermarkets. Here we need to clarify the definition of "full-category discount supermarket." "Full-category discount supermarket" refers to the original snack bulk retail business, expanding beyond the single category of snacks into a comprehensive discount operation format. It does not refer to other hard discount formats, such as ALDI, Hema NB, or Aotle. (ALDI, Hema NB, Aotle, etc., are characterized by having fully adopted the basic operating philosophy of hard discount from birth, i.e., wide categories with narrow SKUs, full-category coverage. The difference is that ALDI and Hema NB are community hard discount models, while Aotle is a shopping mall hard discount model, and these differ somewhat from the snack bulk retail business.) Why do snack bulk retail stores transform into full-category discount supermarkets? What is the logic? Before explaining this, let me lay some groundwork. In recent years, I have been communicating in the market, and many people come to discuss and consult with me. I believe there are two common misconceptions in market perception. Misconception 1: Hard discount equals snack bulk retail; Misconception 2: Hard discount equals "snacks plus." The term "hard discount" has actually been "conceptually diluted" in China today. "Hard discount" is actually a special retail format, also referring to a type of store model. But today, the phenomenon of "everything can be hard discount" is somewhat baffling. Hard discount is definitely not a philosophy; it is a format. Snack bulk retail is a variant of discount format that emerged based on China's national conditions. It is different from both European and American hard discount and Japanese discount formats, with distinct Chinese characteristics. The emergence of the snack bulk retail format is actually a product of China's deep distribution. We know that China's retail market is characterized by vast territory and significant urban-rural consumption differences. Due to logistics costs and density, large supermarkets and chain retail are difficult to cover in rural towns and other lower-tier areas. Therefore, in the past, scattered mom-and-pop stores, with their low cost, flexibility, and local advantages, became the capillaries for products to reach grassroots consumers. The core goal of deep distribution is to achieve full market coverage through dense terminal penetration, making mom-and-pop stores key nodes. Thus, in China's traditional distribution system, a multi-level structure of "manufacturer → first-level wholesaler → second-level wholesaler → terminal retail" formed. Mom-and-pop stores are at the very end of the distribution system; in fact, their function is the dual role of the end of wholesale (third-level) plus retail. However, in today's market environment, due to structural changes in supply and demand, the survival environment for distributors has deteriorated, and some wholesalers have begun to break industry conventions and start retail themselves. This has formed a pattern of "manufacturer → first-level wholesaler → terminal retail," and even with scale expansion, "manufacturer → terminal retail." The essence is a new integration of wholesale and retail. Snack bulk retail is also a product of this grand wave of the era, first breaking through in snacks. But over time, it will inevitably expand to other categories. Theoretically, all FMCG categories operated by mom-and-pop stores can be migrated to the "snack bulk retail" format. This format has great similarity to hard discount formats, but there are still some differences. Many people think the snack discount format is a new "snack store" type, a replacement for traditional snack specialty stores, a discounting of snack specialty stores. This is just one way of thinking. From another dimension, the essence of the snack discount format is a new type of community convenience supermarket, a replacement for traditional community convenience supermarkets, a discounting of community convenience supermarkets, and a discounting of traditional small shops, mom-and-pop stores, and small convenience stores. So understanding this, everyone will understand why snack bulk retail stores will definitely transform into full-category discount supermarkets. And snack bulk retail stores will definitely replace some mom-and-pop stores. Will such a transformation replace mom-and-pop stores? Note that I just said snack bulk retail stores and wholesale supermarkets will definitely replace some mom-and-pop stores. So my view is: they will further compress the living space of mom-and-pop stores, but it is difficult to completely replace them. In fact, before the emergence of the snack bulk retail format, the "supply chain empowerment" convenience system represented by Meiyijia had already begun to try to replace the original mom-and-pop store terminals. I believe this was the first attempt by a chain retail format to replace mom-and-pop stores. But as we have discussed before, although Meiyijia and others achieved supply chain standardization and whole-store output for the convenience retail format through franchise chain models, helping mom-and-pop stores improve certain supply chain capabilities and retail technology, in essence, they did not completely replace the existing space of mom-and-pop stores. The reason is that although Meiyijia improved efficiency through unified procurement, store operating costs are still higher than mom-and-pop stores. Mom-and-pop stores are rooted in more grassroots towns and urban-rural fringes, surviving through extremely low operating costs such as family labor, no franchise fees, and flexible business hours. At the same time, Meiyijia's price advantage is not significant, while mom-and-pop stores can further lower gross margins by reducing store operating costs and flexible bargaining/pricing. Today, snack bulk retail and wholesale supermarkets were born in the context of changes in the FMCG supply chain system, creating a greater impact on small circulation terminals. Unlike convenience systems, snack bulk retail and wholesale supermarkets have truly compressed the markup rate of traditional FMCG in circulation links, achieving prices 20%-30% lower than traditional retail channels, while also replacing some traditional terminals. So, the core reason Meiyijia failed to replace mom-and-pop stores is that its supply chain scale output model did not shake the foundation of mom-and-pop store survival. Today, snack bulk retail and wholesale supermarkets have achieved a deeper shake-up of mom-and-pop stores through supply chain efficiency changes. Therefore, wholesale supermarkets will inevitably further compress the living space of mom-and-pop stores. But will mom-and-pop stores be completely replaced? Certainly not. Because today's wholesale supermarkets still have some inherent problems, such as high store construction costs and a heavier model. What corresponds to this is the natural advantage of mom-and-pop stores, such as a lighter model, more flexibility, and better customer relationships. When the return on investment for snack discount stores returns to the average level of the retail industry, higher store construction costs will become an obstacle to further downward impact on mom-and-pop stores. How should mom-and-pop stores respond? Mom-and-pop stores have actually withstood two impacts from chain retail formats. The first impact was the convenience chain represented by Meiyijia, which made breakthroughs in local markets through franchise models and supply chain integration, but due to the stratification of the Chinese market, coexisted with mom-and-pop stores long-term. The second impact is represented by snack bulk retail/wholesale supermarkets, which, through supply chain innovation, compressed circulation links, achieved price advantages, and further squeezed the space of mom-and-pop stores in a systematic change. Both have exerted pressure on mom-and-pop stores at the supply chain level, but the survival logic of mom-and-pop stores in China is not only at the product distribution level, but also has value as an employment reservoir and community customer relationships. In China's social environment, they carry a large amount of family employment needs and community human relations. Compared to the previous impact, the second impact is more ferocious because it achieves revolutionary change through supply chain innovation. So the replacement of mom-and-pop stores by wholesale supermarkets will go further than convenience chains. But given China's national conditions, I do not think mom-and-pop stores will be completely replaced; instead, a new balance will form. This balance means that on one hand, large retail chains are replacing mom-and-pop stores, and on the other hand, some supply chain platforms are empowering mom-and-pop stores. That is, in the future, I believe large supply chain platform companies do not necessarily have to "replace" mom-and-pop stores, but will return to the logic of "empowerment." For example, in the context of shortened circulation links across the industry, regional B2b platforms can completely cooperate directly with manufacturers to supply lower-priced goods to mom-and-pop stores, forming a pattern of "manufacturer → B2b → terminal retail" to counter snack bulk retail stores and wholesale supermarkets. Or in some regions, Meituan Flash Purchase and Ele.me can be integrated into mom-and-pop stores, using the instant retail model to maximize "speed" as a counter to snack bulk retail stores and wholesale supermarkets. Overall, the two main lines of "replacing" mom-and-pop stores and "empowering" mom-and-pop stores will, I believe, form a new dynamic balance in the future. "Replacing" mom-and-pop stores is represented by snack bulk retail/wholesale supermarkets, while "empowering" mom-and-pop stores will be represented by regional B2b platforms. So for brand manufacturers, there is no need to worry too much in the future. Snack bulk retail/wholesale supermarkets can replace part of the original deep distribution system, but in the future, a new balance will also be achieved. However, within the original deep distribution system, the logic will be partially reshaped, meaning the value of supply chain platforms that "empower" mom-and-pop stores will re-emerge. Regional B2b platforms are likely to become new channel growth opportunities in the next stage. The logic of many brand companies that have succeeded in the snack bulk retail system can be completely replicated within B2b platforms, and whoever seizes this opportunity will enjoy the new dividend. Qi Te, Chief Research Consultant at New Distribution Research Institute. He has worked at several listed FMCG and retail companies, responsible for strategy and investment, and also at several well-known domestic and overseas funds and investment banks, responsible for consumer goods investment. He now focuses on strategic consulting for FMCG and retail enterprises, helping companies think deeply.