"There is no such thing as a lasting business empire." This phrase is more fitting for the current state of China's top 100 supermarket chains over the past decade. Most are traditional retail enterprises that once had glorious pasts, but many are now heading toward contraction and losses, with few able to sustain profitability. Take Yonghui Superstores, ranked second in the "2021 China Supermarket TOP100" released by CCFA in July 2022, as an example. Its performance has seen a glimmer of turnaround. Recently, Yonghui announced its operating data for the first two months of 2023. Preliminary calculations show that the company achieved operating net profit of approximately 860 million yuan, a year-on-year increase of about 14%, and net profit attributable to shareholders of approximately 820 million yuan, up about 70% year-on-year. This result is surprising because during 2021-2022, Yonghui Superstores suffered significant losses, almost offsetting its net profits since 2017. After experiencing a sharp drop in stock price, shrinking valuation, failed attempts at multiple business formats, management changes, and bearing the heavy costs of transformation, Yonghui Superstores has seen a glimmer of hope, but whether it can sustain remains to be seen. In fact, over the past two years, the supermarket sector has been in a downturn and dark moment. Especially those companies that once ranked on the China Supermarket Top 100 list, many have gradually declined, due to changing times, complacency, and failed transformations. Regional Retailers "Falling Behind" Beijing Hualian, a well-known regional chain that once had a place in the Beijing market, ranked 17th and 14th in the 2019 and 2020 China Supermarket Top 100 lists, with sales of 11.993 billion yuan and 12.407 billion yuan, respectively. But by 2021, its sales dropped to 8.353 billion yuan, falling to 21st place, with sales declining 12.5% year-on-year. While other companies increased investment and expansion, seizing market share and consumers that originally belonged to Beijing Hualian. Additionally, due to its own management and strategic limitations, Beijing Hualian's operational efficiency and profitability were not high, failing to form a unique core competitiveness. Better Life, a retail giant in the Central South region, also faces a severe situation. In the 2021 China Supermarket TOP100, Better Life ranked 10th with sales of 19.365 billion yuan, but sales fell 20.8% year-on-year. In 2021, Better Life recorded its first loss since listing 13 years ago, with a net loss of 184 million yuan, a year-on-year decline of 265%, and had to close 52 stores within a year. On January 16, 2023, Better Life (002251.SZ) announced that Xiangtan Industry Investment, controlled by the Xiangtan State-owned Assets Supervision and Administration Commission, would acquire 10% of Better Life's shares from the controlling shareholder (Better Life Group), becoming the second largest shareholder, while Better Life Group would give up all voting rights represented by the remaining shares. This means Xiangtan Industry Investment will become the shareholder with the most voting shares in Better Life. For Better Life, known as the "first private supermarket stock," handing over to state-owned capital might be the most dignified ending. In addition, Sichuan Hongqi Chain is also a seemingly "alternative" retail enterprise. On April 7, Hongqi Chain released its 2022 annual report, achieving operating revenue of 10.02 billion yuan, a year-on-year increase of 7.15%; net profit attributable to shareholders was 486 million yuan, up 0.90% year-on-year. Compared to Yonghui's significant "recovery," Hongqi Chain's performance can only be described as slight growth. In this context, Hongqi Chain closed 79 stores last year. Although "closing stores to stop losses" is a common tactic to improve revenue, comparing with Hongqi Chain's previous data reveals the bottleneck of its business logic. In 2019 and 2020, Hongqi Chain ranked 15th and 13th in the CCFA "China Supermarket Top 100" list, but in the 2021 list, it was absent. However, in the "2021 China Chain Top 100," Hongqi Chain ranked 38th with tax-inclusive sales of 16.202 billion yuan. Especially, from January 1 to August 16, 2021, Hongqi Chain's stock fell 25.87%, while the Shenzhen Component Index rose 1.54% during the same period. As of August 16, 2021, Hongqi Chain's market value was 6.664 billion yuan. In the first half of 2021, Hongqi Chain opened 264 new stores and closed 10, with a net increase of 254 stores, but sales of daily necessities and food declined significantly. The number of store openings and closures is an important criterion for assessing corporate performance and business strategy. In the past, Hongqi Chain increased its net profit by continuously opening stores. By 2021, despite efforts to expand stores, it could not prevent a decline in net profit. This turning point means Hongqi Chain has lost its "scale effect." However, to stabilize or improve its "ranking," Hongqi Chain undoubtedly needs to continue expanding. But the path of expansion is not easy for Hongqi Chain. First, Hongqi Chain faces the problem of market saturation. The latest financial report shows that as of the end of 2022, revenue from Chengdu city accounted for 51.95% of Hongqi Chain's total. This figure is already very high, confirming Hongqi Chain's network layout advantage, but also implying limited room for future store openings and revenue growth. Even if it continues to open stores, it will impact each store's sales, with diminishing returns per store. Therefore, rapid store expansion within Chengdu is not feasible. Second, expansion within the province is also challenging. From years of data, the southern Sichuan market has not yet achieved a scale effect similar to Chengdu. Meanwhile, facing more intense competition within the province, the company's expansion speed in second-tier cities in Sichuan has been slower than in Chengdu, making it very difficult to expand scale through second-tier cities. Additionally, expansion outside the province remains to be seen. Hongqi Chain's out-of-province expansion has been tortuous. In the past two years, it has only opened stores in Gansu through brand and technology output. The financial report shows that Gansu Hongqi convenience stores have opened 98, with plans to accelerate store expansion in 2023. Hongqi Chain chose a low-investment approach, partly for stability and partly reflecting the difficulty of entering new markets. Therefore, the road to out-of-province expansion may not be smooth. Although Hongqi Chain's ranking in the supermarket top 100 has changed, it is one of the few companies that has remained profitable for five consecutive years, making it somewhat "alternative." From 2018 to 2022, its non-GAAP net profits were 308 million yuan, 494 million yuan, 457 million yuan, 439 million yuan, and 449 million yuan, respectively. Among China's top 100 supermarkets, few have maintained profitability for five consecutive years. This is because in recent years, the impact of emerging formats such as e-commerce and community group buying has made traditional large supermarket models lose competitive advantage, lacking timely transformation and innovation. After regional consumers developed the habit of online shopping, many daily necessities, such as rice, milk, and tissue, are often purchased online, which is cheaper and delivered to the door. Although many supermarkets have also developed online capabilities, competition has become increasingly fierce, with more purchasing channels, making business harder. Too Many Formats, Blurred Positioning In recent years, China Resources Vanguard, once a leader in China's retail market, has gradually lost its former glory. Looking back at its glorious past, in 2018, China Resources Vanguard achieved annual sales of 101.3 billion yuan, with 3,192 stores and nearly 220,000 employees, and was one of the highest-selling supermarket brands in China. However, within a few years, its market position changed dramatically. According to the "China Supermarket Top 100 List" released by the China Chain Store & Franchise Association, in 2019, China Resources Vanguard topped the list with 95.1 billion yuan in sales, but by 2021, sales fell to 78.168 billion yuan, dropping to fourth place. In the past few years, China Resources Vanguard has continuously shrunk its business footprint, withdrawing from markets in Beijing, Shandong, and other places. At the same time, its stores were acquired by Jiajiayue, Wumart, and Qinghai China Resources Vanguard in their respective regions. However, selling stores did not reverse the decline. From overall sales data, its performance is still declining. From 2015 to 2019, China Resources Vanguard's sales fell from 109.4 billion yuan to 95.1 billion yuan. In 2019, it declined 6.1% year-on-year. China Resources Vanguard is trapped in a dilemma of declining performance and profits, falling to its lowest point in a decade. The reasons include the impact of the pandemic, changes in consumer demand, intensified industry competition, channel diversion, and rising costs. When various retail formats were at the forefront, China Resources Vanguard, in an attempt to save itself, began to develop multiple formats simultaneously, involving supermarkets, shopping centers, convenience store chains, community stores, etc. Diversification naturally helps China Resources Vanguard seize more market opportunities, but it also faces challenges in efficiency, management, and supply chain. Despite this, multi-format development has not allowed China Resources Vanguard to regain the top position in retail. On the contrary, it has been labeled as lacking "control capability." In the process of rapidly developing new formats, China Resources Vanguard seems to have ignored how to reasonably plan, transform, and utilize traditional formats, leading to too many formats and blurred positioning. Moreover, in an environment where consumption upgrading has stalled, insisting on a "quality" positioning is undoubtedly a dead end. Instead, it should focus on consumers' real needs to adjust its quality positioning. The decline of China Resources Vanguard is just a microcosm of the industry. Similarly, Yonghui Superstores paid a huge price when blindly trying multiple formats, having to admit it is on a downward path. Even RT-Mart, which once topped the list, failed to successfully explore the true operational differences between large supermarkets and small formats. Facing diverse and changing consumer demands, regional retailers have inherent room for trial and adjustment due to geographical advantages. However, if they blindly pursue format diversification, it may lead to over-diversification of resources and management chaos, affecting overall operational effectiveness. In the pursuit of diversification, companies may lose their core competitiveness and fall into a dilemma of being unable to concentrate. Therefore, when trying multi-format operations, regional retailers should carefully assess market prospects and their own resource conditions to ensure they can maintain competitiveness and achieve sustainable development. Another reason for China Resources Vanguard's decline is its poor management and operation, plagued by the "big enterprise disease." As a subsidiary of China Resources Group, which is part of central state-owned enterprises, as business scale expands, management and operations gradually fail to keep up with development speed, leading to the emergence of the big enterprise disease. State-owned enterprises have advantages in certain aspects, such as being more suitable for operating products with stable and less variable demand, like water, electricity, oil, and steel, thereby leveraging their scale advantages. However, in retail industries like supermarkets and convenience stores, the variety of products is vast, and marketing strategies are diverse, requiring operators to have flexible response capabilities. In this regard, China Resources Vanguard, as a state-owned enterprise, appears rigid and lagging. Many consumers report that China Resources Vanguard's employees have low service levels, often indifferent to customers, and even shirk responsibility. Poor Macro Environment Even companies at the top of the list face significant challenges. According to data from the National Bureau of Statistics, since 2017, the number of domestic supermarket stores has continued to decline, from a peak of 38,554 to 24,082, a drop of 37.5%. Large chain supermarket stores have decreased even faster, from 11,947 in 2012 to 5,340 in 2020, a decline of over 55%. In fact, since the rapid rise of e-commerce, the supermarket industry has been on a downward trend. In the past two years, the outbreak of the pandemic has further accelerated the decline of the supermarket industry. For example, Jiajiayue has risen in the rankings, entering the top ten in the past three years. Despite expanding from regional to national, it still finds it difficult to escape difficulties. In its recent 2022 annual performance forecast, Jiajiayue expects net profit attributable to shareholders of listed companies to be between 35 million and 52 million yuan; net profit after deducting non-recurring gains and losses is expected to be between 12 million and 18 million yuan, achieving a turnaround from losses to profits. Regarding the reasons for performance improvement and profitability, Jiajiayue stated that in 2022, the company appropriately controlled the speed of store openings, improved the quality of store openings, closed inefficient stores, and maintained stable growth in operating revenue. At the same time, it improved operational efficiency, reduced expense ratios, and improved losses in new regions. Indeed, since 2022, Jiajiayue has closed multiple stores. Data shows that in 2021 alone, Jiajiayue closed 43 stores. In the first quarter of 2022, Jiajiayue closed another 17 stores. Among them, 16 were due to operations not meeting expectations, and 1 due to contract termination. It seems that "closing stores to stop losses" is becoming an important means of self-rescue for retail enterprises. Also, Hema, which briefly appeared on the list, reached 6th place in 2019, when it vigorously expanded channels and tried new formats. However, after 2019, Hema began to close stores on a large scale and shrink its formats, gradually drifting away from the top 20. This indicates that Hema faced market challenges and needed to adjust its positioning after rapid expansion. Facing fierce competition, Hema needs to review its development strategy and optimize its business layout. Although this process is difficult, timely adjustment and reflection are necessary for the long-term development of the enterprise. In the long history of Chinese retail, there are countless cases of "the winner takes all, the loser is nothing." Once a company stops moving forward and indulges in past glory, it may fall into a passive position. In the past, Yonghui subverted the industry with its "fresh food model" and rose rapidly, but in the new retail wave, it became the "front wave," and despite multiple attempts at new retail and achieving good results in online operations, it still faces difficulties and challenges, becoming the object of "subversion." Therefore, in retail, there is no eternal winner; only formats that closely follow consumer needs can continue to move forward. There is no such thing as a lasting business empire; only continuous tinkering, transformation, and evolution. 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