Recently, Yonghui Superstores released its 2025 semi-annual report. The report shows total operating revenue of 29.948 billion yuan, a year-on-year decrease of 20.73%; net profit attributable to shareholders of the listed company was -241 million yuan, a year-on-year decrease of 187.64%, compared to 275 million yuan in the same period last year; net profit attributable to shareholders after deducting non-recurring gains and losses was -802 million yuan, a decrease of approximately 2786.3% year-on-year, compared to 29.8625 million yuan in the same period last year. During the reporting period, the comprehensive gross margin was 20.80%, down 0.78 percentage points from the same period last year. Data source: Yonghui announcement Besides Yonghui, walking into any modern supermarket that has undergone 'renovation', consumers can hardly fail to be impressed: warm lighting replaces the past harsh white, exquisite shelf displays rival art installations, experience areas waft with the aroma of freshly ground coffee and freshly baked bread, and digital signage flashes personalized promotional information. This seems like a magnificent transformation of traditional retail, a perfect evolution for the new era. However, beneath this glossy surface, a cold industry reality is emerging: many supermarkets' huge renovation investments have not translated into expected profit growth, but instead have fallen into a 'profitless prosperity'. This high-profile industry upgrade movement is sliding into a collective involution trap. The Appearance of Prosperity: Renovation Wave Sweeps Retail The supermarket renovation trend is not without reason. Traditional hypermarkets have faced unprecedented pressure in recent years: e-commerce diversion, rising costs, and changing consumption habits have turned once bustling stores into empty ones. According to data from the China Chain Store & Franchise Association, supermarket sales declined by 2.7% year-on-year in 2022, and sales per square meter fell by 3.4%. To escape difficulties, the industry has unanimously chosen the 'renovation' path. Renovation content is all-encompassing: from redesigning customer flow lines and scenario-based displays, to adding dining experiences, digital transformation, and even introducing membership store models. The investment is substantial—renovating a 10,000-square-meter hypermarket often costs tens of millions. Leading companies have announced ambitious renovation plans, as if not renovating means being doomed to elimination. On the surface, the effects are immediate: after renovation, foot traffic typically increases by 20%-30% in the short term, and average transaction value also rises. Social media is filled with consumers sharing photos of 'high-aesthetic' new stores. Everything seems to prove the necessity and correctness of renovation. The Profit Dilemma Behind Prosperity However, when we look through the surface data and examine the true profitability of enterprises, the picture is less optimistic. First, the return on investment for renovations is generally poor. Huge capital expenditures, often several times or even dozens of times total profits, need to be amortized over many years, while sales growth often fails to cover these new fixed costs. A well-known chain supermarket's 2024 financial report showed that after renovation, store sales increased by 12%, but net profit fell by 15%, precisely because depreciation and amortization increased significantly. Second, renovation has not solved the core problem of homogeneous competition. When all supermarkets pursue similar 'scenario experiences', 'digitalization', and 'membership systems', differentiation disappears again. Consumers may praise Supermarket A's bakery experience area today, but tomorrow they may be attracted by Supermarket B's more upscale coffee shop. This causes the competitive advantage window from renovation to shrink dramatically, often disappearing within less than six months. Third, renovation has failed to effectively improve the essence of retail efficiency. Many renovations focus on the 'front-end' experience but neglect core efficiency indicators such as supply chain, inventory turnover, and loss control on the 'back-end'. The result is that the scene becomes more beautiful, but product turnover speed does not improve, and may even decline due to the introduction of unfamiliar new categories. Finally, renovation often falls into the 'premiumization trap'. To increase average transaction value, many supermarkets blindly introduce high-end imported goods, ignoring the price sensitivity of their core customer base. This leads to the loss of core customers, while new customers are not effectively attracted, leaving them in an awkward middle ground. Why Fall into Profitless Prosperity? Behind this profitless prosperity are multiple intertwined factors:

  1. Group imitation under strategic anxiety Facing an industry downturn, the 'herd effect' of mutual imitation among enterprises is significant. Seeing a few pioneers succeed with renovations, many enterprises blindly follow without deep thought, ignoring their own resource endowments and market positioning. Renovation has shifted from a strategic choice to a strategic necessity, leading the industry into an advanced stage of homogeneous competition.
  2. Ignoring the essence of retail The essence of retail is efficiency—matching people and goods with higher efficiency. Many renovations put the cart before the horse, overemphasizing form while ignoring efficiency improvements. Luxurious decoration cannot compensate for the efficiency loss of poor product selection, and scenario experiences cannot replace supply chain efficiency. When the cost structure deteriorates due to renovation, even beautiful stores cannot sustain.
  3. Misunderstanding digital transformation Many supermarkets simplistically interpret digitalization as installing digital signage, developing apps, and introducing self-checkout, but fail to achieve true data integration and utilization. As a result, digital tools become decorations, failing to improve decision-making efficiency or achieve precision marketing, while increasing maintenance costs and complexity.
  4. Misjudging consumption changes The supermarket industry overinterprets consumption upgrading and underestimates the impact of economic cycles on consumer behavior. Current consumers actually show 'polarized' characteristics: on one hand, they pursue quality and experience; on the other, they are extremely price-sensitive. Many supermarket renovation plans only target the former, ignoring the vast market of the latter. The Way Out: From Form Back to Essence To escape the trap of profitless prosperity, the supermarket industry needs to rethink the essence of renovation:
  5. Differentiated renovation based on precise positioning Renovation should not be an industry standard action, but should be based on the unique positioning of each enterprise. Community supermarkets do not need to imitate membership stores, and discount stores do not need to mimic high-end experiences. Pangdonglai's success lies in its precise employee management and customer service positioning, not in blindly imitating other models. Enterprises should ask themselves: What do my target customers really need? What unique value can I provide?
  6. Efficiency-oriented renovation priorities Renovation should prioritize links that improve operational efficiency: supply chain optimization, inventory management systems, scientific customer flow design, and measures to increase sales per square meter. Only after these basic efficiencies are improved should experience upgrades be considered. Yashi's renovation of Liansheng Supermarket has always focused on product strength and operational efficiency, rather than purely creating scenes, which is worth learning from.
  7. The core of digital transformation is data-driven The value of digitalization lies not in hardware investment, but in data acquisition and analysis capabilities. Effective digitalization should enable precise product selection, personalized marketing, inventory optimization, and demand forecasting. The reason Hema Fresh is successful is its data-driven operating model, not the surface hanging chains and electronic price tags.
  8. Cost-controllable gradual renovation Instead of investing huge sums in a one-time comprehensive renovation, it is better to adopt a cost-controllable gradual improvement strategy. Through small-scale testing, rapid validation, and iterative optimization, risks can be reduced, ensuring every investment generates corresponding returns.
  9. Return to the essence of product strength No matter how the scene changes, retail ultimately returns to the products themselves. Developing private labels, creating exclusive products, and building category expertise are sustainable competitive barriers. The success of Aldi and Yashi's new store formats proves that even without luxurious decoration, extreme product cost-effectiveness can win the market. Conclusion Supermarket renovation should be an important path for industry evolution, but now it faces the risk of degenerating into a collective involution movement. When renovation becomes profitless prosperity, and innovation stays at the surface level, the industry needs calmness and rationality. True retail innovation should not be a capital gamble, but a precise improvement in efficiency; it should not be blind imitation of form, but unique creation of value. Only by returning to the essence of retail—finding a balance between efficiency and experience, and achieving the optimal solution between cost and value—can the supermarket industry escape the dilemma of profitless prosperity and usher in true sustainable development. The ultimate judge of this renovation wave will be consumers and time. Those enterprises that can ride through cycles and continuously create real value will stand out in the baptism; those that merely chase surface prosperity will inevitably fade away when the tide recedes. The future of supermarket retail belongs to those who respect the rules and innovate without forgetting their roots.