Source | Sales and Market Recently, through market research, I found that the retail industry is undergoing structural changes. Provincial capitals, municipalities, and other high-tier cities have become the main battlegrounds for the "instant retail war" among internet giants like Meituan, JD.com, and Taobao. Meanwhile, lower-tier markets such as prefecture-level cities and counties are becoming the main arenas for traditional retail's "counterattack," with a predominance of large stores. Well-known discount snack chain brands like Mingming Henmang, Haoxianglai, and Lingship Youming are accelerating the expansion of "hard discount supermarket" formats. Same-city livestreaming and private domain operations for stores are becoming standard for physical retail, significantly diverting consumers from traditional supermarkets and hypermarkets. China's retail industry is upgrading from sales-oriented to demand-oriented, from selling products to selling solutions. It is expected that within the next 3 to 5 years, the retail industry will undergo a nationwide reshuffle, and supermarkets with "traditional thinking, inefficient operations, weak management, lack of talent reserves, and lack of innovation awareness" will be eliminated. The Way Forward for Traditional Retail: Meeting Rigid Demand, Leisure, and Instant Needs For physical retail, facing the "encirclement" from traditional e-commerce, community group buying, hard discount, and front-warehouse formats, it is essential to leverage their own location advantages and offline space advantages to strengthen categories with "low e-commerce penetration and high instant demand." These categories include fruits, bakery and pastry, marinated cooked food, fried goods, and by extension, community dining formats. A notable example of a physical retail enterprise excelling in this area is Hubei Yashi Supermarket. About 10 years ago, Yashi experienced a wave of store closures, shutting down nearly 90% of its stores. Founder Du Xiaoyi was at a loss. After leading a team to study Pangdonglai in Henan, he decided to undergo a comprehensive transformation, exploring the integration of supermarket and dining. During the same period, Carrefour and Metro were vigorously promoting supermarket-dining integration in Europe. Notably, in the United States, "deep processing of fresh food and supermarket-dining integration" are almost standard configurations for regional retail enterprises. Even Walmart, the world's largest chain retailer, struggles to gain an advantage when competing with these regional retailers. Walmart's global sourcing implies industrialization, standardization, and pre-processing, which cannot easily meet regional, non-standardized, and personalized demands. Especially in the processed gourmet food and dining sectors, many regional U.S. retailers outperform Walmart. In China, Yashi is one of the earlier chain supermarkets to implement supermarket-dining integration. In Du Xiaoyi's view, physical retail stores should leverage the "fireworks atmosphere," scene experience, and experiential feel of fresh processed food and dining to compete with e-commerce and new retail formats. They should focus on strong experiences to create "signature gourmet food, Instagram-worthy spots, and differentiated reputation." Yashi's supermarket-dining integration is not simply introducing famous restaurant chefs or snacks into the supermarket. Instead, it learns from one's own parents and daily life, discovering consumers' real needs in everyday life. In terms of implementation, Yashi has launched a combination of "central kitchen + cooked food processing area + community canteen." The "central kitchen" handles initial processing, achieving cost reduction and efficiency improvement, enhancing turnover of fresh meat products, and effectively reducing related category losses. The "cooked food processing area" adds value to fresh and meat products, creating immersive consumption scenes, internet-famous foods, and word-of-mouth signature items. The "community canteen" meets consumers' three-meal and leisure needs, becoming a key entry point for aggregating offline traffic. Notably, Yashi's dining and cooked food processing areas operate with independent accounting. Poorly performing ones are adjusted promptly, starting from consumers' real needs and continuously experimenting with new cooked food or dining categories. Yashi's dining segment is positioned as a "community canteen" for surrounding consumers, meeting high-frequency rigid demand consumption scenarios. Currently, many traditional supermarkets are entering the community canteen track in response to government initiatives for elderly care, which is a testament to traditional retail returning to "offline" and "nearby." Xiang Biao, a social anthropology professor at Oxford University, once said: "Nearby is a living space where different people meet unexpectedly. As new communities form, people create new circles and together form new living spaces. With frequent and deep interactions, people also develop close relationships and similar behaviors." Indeed, with the acceleration of urbanization, we are moving toward a "society of strangers." New communities and business districts reorganize people, and physical supermarkets are becoming connectors for "new population groups," from physical consumption, dining consumption, to local life services like car washing, health checkups, housekeeping, and cultural entertainment categories like movies and travel. Around the trend of community commercialization, building a "one-kilometer living circle" centered on physical stores is becoming a rigid demand for community consumers. For traditional supermarkets, there is an opportunity to become the connector of community life and the infrastructure for community services. This requires centering on community consumer needs, with daily rigid demand categories like fresh produce, cooked food, bakery, and milk as core categories, local life services like housekeeping, dining, and entertainment as extended categories, and durable goods like daily necessities, furniture, and appliances as upgrade categories, creating a one-stop community life solution. To upgrade toward such goals and escape the current passive situation, physical supermarkets need to focus on two core areas: traffic operation and supply chain deepening, gradually building their own moats in traffic and supply chain. Deepen Operations, Expand the Traffic Pool Aggregate Traffic to Promote Diversified Monetization For traditional supermarkets, it is essential to strengthen traffic acquisition and user operation capabilities, establishing their own private domain traffic pool to obtain "repeatable, low-cost" traffic. For stores with insufficient private domain traffic, they should reorganize offline traffic through activities like second grand openings and daily ground promotion. To fully acquire traffic, stores should initiate a market survey of surrounding communities. Thoroughly understand the latest retail format distribution in the surrounding area (including supermarkets, convenience stores, fresh food stores, capital group pickup points, local group pickup points, etc.). Additionally, investigate the "number of permanent households, family structure, age characteristics, income levels" of surrounding residential areas, conduct a comprehensive and detailed survey, and create a market research analysis table. When organizing ground promotion for new customer acquisition, the following three principles should be followed: First, continuously guide traffic and gather popularity. All staff involved in ground promotion should have specific division of labor down to the building level. Each person is responsible for several buildings. When people come out of the unit door, effective card distribution should be done, handing out opening event cards to potential consumers and guiding them to the event site. Additionally, at the ground promotion site, use Douyin short videos, Douyin livestreams, etc., for online viral dissemination. For stores, cherish every ground promotion opportunity, create a home-field momentum, and overwhelm surrounding competitors in promotional momentum. Second, do on-site cross-selling. Stores should plan the event site's traffic flow in advance, from guiding to member groups, tasting experiences, guiding into the store, to participating in new customer discount activities. Make it simple and clear for consumers, easy to participate, and genuinely beneficial, thereby accumulating customer word-of-mouth. For ground promotion, while acquiring new customers, also do on-site cross-selling to spread the cost of the activity and increase sales during the event. Third, maintain a sense of ownership. Stores conducting ground promotion often need many part-time staff or support from other stores. Therefore, pre-event ideological work is crucial. Through pre-event mobilization, motivate all participants' enthusiasm, responsibility, and sense of ownership. For example, use prize competitions like "new customer acquisition PK contest" and "on-site sales PK contest" to increase participation enthusiasm and combat effectiveness. At the same time, strengthen supervision and inspection, monitor staff execution, and implement both positive and negative incentives to ensure the activity details are executed properly. In today's context of declining offline traffic and high online traffic acquisition costs, traditional supermarkets should cherish every in-store consumer, cultivate their effective customers, and thereby consolidate their traffic foundation. Specifically, effective customers have three characteristics:
First, there is a strong trust relationship between the store and the customer, with good customer relations;
Second, customers frequently visit the store, continuously repurchase, and form a habit of buying daily necessities at the store;
Third, they actively participate in various activities initiated by the store, actively provide feedback on products they want, and also suggest ways to optimize the store experience. Taking a small community store of 50-80 square meters as an example, to maintain stable operations, the store needs 500-1000 effective customers. Traditional supermarkets should continuously cultivate effective customers, focusing on continuous traffic acquisition, screening, retention, and activation of "old and new effective customers." They should review and sort out the current "effective customer" situation, formulate "effective customer" acquisition and market development plans, and organically combine them with "ground promotion for new customers" projects. For stores, to deeply operate effective customers, they must tag effective customers, archive their information, conduct regular follow-ups, and continuously maintain customer relations. Core store personnel should master the entire set of methods: "effective customer acquisition - lock-in retention - user tagging - customer relationship maintenance - increase average order value - increase repurchase frequency - guide customers to bring new customers." The so-called "user tagging" refers to stores tagging users based on purchase records, daily observations by staff, and comprehensive information obtained from chatting with users. For example, "personal preferences, basic family situation (whether there are elderly or children, etc.), whether responsible for daily household purchases," etc. An example of user tagging: "Sister Liu, in her 50s, has a son and daughter-in-law, one grandson, a family of four, often buys vegetables, fruits, and milk." For stores conducting community group buying, it is essential to clarify their "target audience." For a typical family, daily consumption decisions are usually made by women, i.e., housewives. Therefore, stores should target the main group as women aged 30-60, focusing on the mass daily consumption market and concentrating on single-product market breakthroughs. Among them, the key target group is the "internet orphans" aged 50-60 (those who can use smartphones but are not proficient in online shopping). Provide them with simple and convenient new shopping methods, such as reporting numbers in the member group to pre-order, with delivery to home the next day, or in-store payment and pickup the next day. For stores, it is essential to build the personal IP (intellectual property) of the store manager or core staff. Through daily operations on Douyin, WeChat Moments, etc., show authentic life and shorten the psychological distance with consumers. Private domain traffic pools are becoming standard for physical stores. A chain fruit store in a prefecture-level city in Hubei accumulated a private domain of 180,000 people during the three-year special period, and now annual sales exceed 100 million yuan. Expanding the private domain traffic pool is becoming a required course for traditional supermarkets in this era. Optimize the Product Assortment, Deepen the Supply Chain Conduct Full-Chain Optimization to Improve Gross Margin To continuously serve consumers well, in addition to expanding the private domain traffic pool, it is essential to return to the core value of retail enterprises, namely "product strength." This requires traditional supermarkets to continuously optimize their product assortment and deepen supply chain operations. Specifically, traditional supermarkets should create their own ultimate single products, i.e., "signature products." Traditional supermarkets can leverage their resource advantages in fruits, vegetables, rice, flour, and oil, and use internal and external resources to expand cooperation with upstream partners such as distributors, source suppliers, manufacturers, and planting bases, to discover and create their own "signature products." The so-called "signature products" are those that, when users think of buying this product, they immediately associate with a specific store. For example, Pangdonglai's "big mooncake" and craft beer, and Sam's Club's Orleans-style roast chicken are typical "signature products." After creating "signature products," traditional supermarkets can further upgrade them to "exclusive products," making them regionally exclusive. "Signature products" generally have three characteristics: First, basic consumer goods with extreme "high frequency and rigid demand." For example, eggs, meat, vegetables, etc., ingredients for three meals or side dishes; Second, large packaging and large specifications. For example, 5-jin packs, pre-occupying a family's planned consumption demand for 5-7 days (or even longer); Third, hard currency with easily perceived value. For example, pure milk, benchmarked against mainstream supermarket prices, intuitively reflecting high cost-performance, "both affordable and high-quality," giving users an irresistible reason to buy. Creating "signature products" is only the first step in acquiring and retaining consumers. It is also necessary to create a dynamic product assortment based on seasonal, holiday, and regional demands, providing consumers with daily life proposals. This tests the physical store's product scheduling capability, with the core logic being solutions that meet typical consumption scenarios. For physical stores conducting group buying in private domains, they should plan group product combinations based on four dimensions, with a frequency of 2 group sessions per period, strengthening the relevance of products in each session. First, price dimension for product combination: combination of high and low average order values, "low-price traffic-driving items + regular customer-locking items + profit items," such as "traffic-driving vegetables + Russian bread + walnut kernels";
Second, scenario dimension for product combination: including breakfast scenarios, family BBQ scenarios, weekend leisure scenarios, etc., such as "lamb skewers + BBQ seasoning + lettuce";
Third, festival dimension for product combination: legal holidays like "May Day" Labor Day, "National Day" (October 1), Mid-Autumn Festival, Spring Festival, e-commerce consumption festivals like "6·18" and "Double 11," store member days, category days, brand days, and other festive hotspots. Plan activity product combinations based on the hotspot scenarios of the festival;
Fourth, category dimension for product combination: such as leisure food, frozen ingredients, daily chemicals and household cleaning, such as "hand soap + laundry detergent + explosive salt." For such stores, when planning product scheduling, do more research, including internal research (communication with colleagues) and external research (communication with consumers). For each group session, set at least 2 "hourly flash sales," such as 8 PM that evening and 10 AM the next day. For traditional supermarkets, the best counterattack against competitors is to serve their own users well, continuously accumulating and expanding their private domain traffic pool. Operating private domain traffic is essentially operating users. Through a series of online and offline activities, continuously activate users. Ultimately, activities must land on products; good products create good word-of-mouth. Continuously providing users with good products requires a strong supply chain system. Traffic and supply chain complement each other and are becoming the two major driving forces for traditional retail.