---
title: "Supermarkets in Shopping Malls Are Really Struggling!"
description: "Supermarkets in shopping malls are really struggling! During a recent market visit, the author found three malls in a local business district, each with a supermarket in the basement. All three supermarkets had almost no customers. Even in the mall with the highest foot traffic, the supermarket saw few shoppers and low transaction values, while the other two faced even worse conditions, with one announcing closure."
author: "汪海"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-10-18"
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# Supermarkets in Shopping Malls Are Really Struggling!

> Supermarkets in shopping malls are really struggling! During a recent market visit, the author found three malls in a local business district, each with a supermarket in the basement. All three supermarkets had almost no customers. Even in the mall with the highest foot traffic, the supermarket saw few shoppers and low transaction values, while the other two faced even worse conditions, with one announcing closure.

Supermarkets in shopping malls are really struggling!

Recently, while visiting the market, I found three malls in a local business district, each with a supermarket. All three supermarkets are located on the basement floor, and the scene is almost identical: **no customers in the supermarket.**

**Mall A**
This is the mall with the highest foot traffic among the three. Outside the supermarket, there are restaurants and milk tea shops, which were almost full that day, with many customers waiting outside. The supermarket across from them, however, presented a completely different scene. A few young people were strolling around casually, without shopping baskets, seemingly just to kill time. I stood at the checkout counter for a long time and noticed that only a few customers came to pay, buying only some snacks, and there were almost no high-ticket customers.

**Mall B**
From the mall entrance, going down to the basement floor, there is only one supermarket. The escalator leads directly to the fresh food area. The display stacks and shelves in the supermarket are widely spaced, with more than a dozen stacks in the same area, making it look very empty. Mall B already had sparse foot traffic, and the supermarket had even fewer people.

**Mall C**
This is the mall with the least foot traffic among the three. From the first floor, you can see the sign for the supermarket on the basement floor, clearly intended to attract customers. When I went down, I saw that the supermarket had almost no customers, and a notice was posted at the entrance: "This store will cease operations from October 31. We apologize for any inconvenience caused..."

The situation of these three supermarkets is almost a microcosm of current Chinese supermarket enterprises—**high-traffic malls see few customers entering the store and low average transaction values; low-traffic malls struggle to operate, with dismal business, leading to closures.**

According to statistics from "Lianshang.com," in the first half of this year, at least 133 supermarket stores closed nationwide (some supermarkets closed almost all their stores due to operational difficulties, so the actual number is far more than 133). For example, Yonghui Superstores opened 12 new stores in 2023 but closed 45; in the first half of this year, it added only 5 new stores but closed as many as 62, far exceeding last year.

The difficulties in supermarket operations stem from three external reasons:

**1. Vertical categories "dividing the cake"**
In recent years, supermarkets have been gradually replaced by many near-field formats that are active in the public eye. Among these near-field formats, vertical category stores are particularly prominent. Discount stores like HotMaxx in malls, with lower prices, better decoration, and closer distance, open at the **entrance of supermarkets**, intercepting customers for snacks, beverages, and water. Guoquan on various streets divides the frozen food category of supermarkets; Qianfuma in some areas seizes the fresh food category, creating community fresh food stores. In previous supermarket planning, the fresh food area was considered a traffic driver, so it was often placed at the back of the store to better expose products along the shopping path. But now, the appeal of the fresh food area has greatly diminished, and community fresh food supermarkets and stores offer more convenience to surrounding consumers. Consumers no longer need to select vegetables and fruits in a 3,000-square-meter supermarket.

Therefore, these vertical players, known as "category killers," have achieved substitution of supermarket categories, **using richer products, better prices, and closer distances to strengthen consumer loyalty, becoming one of the powerful competitors of supermarkets today.**

**2. Instant retail "snatching the cake"**
The pandemic gave rise to instant retail, **and consumers' needs for "certainty," "immediacy," and "speed" have been greatly satisfied by instant retail.** According to the "'Instant+' 2023 Instant Retail Development Trend White Paper," it is estimated that by 2030, the average annual compound growth rate of the instant retail market will reach 25%, and the market size is expected to grow to 3.6 trillion yuan by 2030, accounting for 6% of the total retail sales of consumer goods in the same period.

Formats like Lightning Warehouse and Dingdong Maicai use lower prices and better services (home delivery) to harvest consumers. On the purchase interface, we often see promotional items like 0.5 yuan Oriental Leaf tea and 0.5 yuan small bags of Lay's potato chips to induce shopping. Instant retail has changed consumer habits, separating the actions of "buying" and "browsing," moving "browsing" online, and increasing the purposefulness of purchases. Consumers only need to enter the product they want to buy in the search bar and select from the store's offerings.

In terms of after-sales, online business provides consumers with more convenient and faster solutions, and with the involvement of third-party platforms, the consumer experience is also better. Although many supermarkets are also exploring instant retail, the results are poor. Delivery times are usually over an hour, and during peak times can exceed 1.5 hours, and delivery fees are only reduced by 6 yuan for orders over 69 yuan, which is often criticized.

**3. Discount retail**
The emergence of discount supermarkets has undoubtedly dealt a fatal blow to traditional retail. By optimizing supply chain management, fine cost control, and differentiated management, they achieve price reductions. According to data from the China Research Institute of Puhua, discount stores will be the fastest-growing format in the next 10 years, with a compound growth rate of 5.6%, far higher than hypermarkets' 2.5%, and even higher than convenience stores' 5.5%. Considering the domestic market economy and the shift in consumer concepts, as well as the development history of discount stores in developed countries, discount stores with bustling traffic are undoubtedly the new trend in the current retail format.

Facing so many competitors and a series of its own problems, what is the way out for supermarkets?

**"Moving further away from consumers is the fundamental reason for the decline of Chinese chain supermarkets."** Mr. Meng Fanzhong, chairman of Biyoute, shared this at the 6th China FMCG Conference. In my view, "far" contains two meanings.

**First, price is "far."** The price of goods purchased at convenience stores near customers' homes is the same as or even lower than that in supermarkets, and discount stores are almost 50% cheaper than supermarkets.

**Second, distance is "far."** To save rental costs, most supermarkets often choose the basement floor of malls, and traditional supermarkets are almost always thousands of square meters in area. If the layout is unreasonable, consumers will walk many "detours" in the supermarket.

The market is oversupplied, and Chinese retail has shifted from a seller's market to a buyer's market, with the voice returning to consumers. In the buyer's model, retailers are undoubtedly the agents closest to consumers. Therefore, changing perspectives and mindsets, and breaking traditional models, is undoubtedly the most important lesson for supermarket transformation.

Currently, there are two directions in the retail market that can serve as references for traditional supermarket transformation.

**First, product differentiation**
**The most prominent problem in China's retail enterprises is "thousands of stores with the same face and same products."** Therefore, companies that first realize this problem are also the first to stand out. Take Pangdonglai as an example: the real secret to its success is not extreme service, but product selection. Adhering to the concept of **"selection first,"** it strictly screens suppliers, eliminates low-quality products, and ensures that every product has high cost performance. It places more "refined and accurate" products in front of consumers, continuously attracting repeat purchases. From the case of Pangdonglai's adjustment of traditional supermarkets in the first half of this year, it is not difficult to see that the adjusted supermarkets eliminated 90% of their previous products, and among the products in short supply, Pangdonglai's own brands accounted for almost half.

Similarly, Sam's Club, which is also popular, has three key indicators for whether a product can be put on the shelf: **where is the differentiation advantage, whether it has extreme cost performance, and the assessment of product sales power.** Sam's SKU count is usually around 4,000, only 1/5 of traditional supermarkets. Wide SPU, narrow SKU, and selected products allow Sam's to maintain long-term leadership in the warehouse membership store track.

**Second, efficiency leadership**
**The practical meaning of efficiency leadership is to sell goods cheaply.** There are two paths to choose: one is soft discount, selling near-expiry and clearance stock; the other is hard discount, reducing costs by selecting products, building vertical supply chains, reducing logistics and warehousing losses, and improving labor efficiency, providing room for price reductions.

In the past two years, leading hard discount snack stores have reached a scale of 10,000 stores, regional snack stores have blossomed everywhere, and now discount supermarkets and wholesale supermarkets are emerging, which is exactly in line with the current industry trends.

It is difficult to change a solidified traditional model overnight. Whether it is a product differentiation strategy or an efficiency leadership strategy, it is a difficult exploration for traditional supermarket transformation.

**The law of market competition is survival of the fittest. In the future, the supermarket format will definitely exist, but it must be adjusted and reformed. China's retail is in a period of great change. How supermarkets in shopping malls will develop and evolve requires time to give the answer.**


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