---
title: "The Divided Community Stores"
description: "Community stores are being forced to split and share their spaces due to declining business. Owners like Wang Hua and Zhang Hong are renting out parts of their stores to reduce costs, while some like Wang Qi have chosen to close down entirely."
author: "晴山"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-05-27"
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# The Divided Community Stores

> Community stores are being forced to split and share their spaces due to declining business. Owners like Wang Hua and Zhang Hong are renting out parts of their stores to reduce costs, while some like Wang Qi have chosen to close down entirely.

**Forced to Split and Share**
"About 8 square meters, with a storefront, the annual rent for sharing the store is 80,000 yuan." Wang Hua (pseudonym) told the reporter that this year's business has not improved, so he had to split the store and rent out part of it to ease the operational pressure.
Wang Hua, 42, quit his job in 2015 and opened a tobacco and liquor store with his savings and family support. At that time, he saw friends making good money from community tobacco and liquor supermarkets, so he decided to open this store.
"At that time, I mainly wanted to be my own boss, do something on my own, not have to clock in from 9 to 5, and also earn more money to support my family," Wang Hua sighed. "Only after opening the store did I realize that business is not that easy, and after the pandemic, it has become harder year by year."
Wang Hua's store is located in a community commercial area on the South Fourth Ring Road in Beijing, with an area of about 60 square meters. From the location, it is a typical community store, surrounded by dense residential areas, about 700-800 meters from the subway, with a large flow of people.
Wang Hua said that at the time, he was optimistic about the location because of the constant flow of people, thinking business would be good, but after opening, he tasted the bitterness.
"After opening the store, I realized business was not that easy. Although business was decent at first, the profit margin in this industry is very low. Especially for cigarettes, the purchase price and selling price are very transparent, and the same for alcohol. Although the daily volume was considerable, after accounting for all costs, the profit was really minimal," Wang Hua said. In the first year, he hired an employee, but later had to manage the store himself to save costs, with occasional help from family members.
"In the first few years, business was passable, and we had some stable customers, but the pandemic brought a huge impact," Wang Hua said. During the lockdown, some stores selling daily necessities did quite well, seemingly better than before.
"For example, community supermarkets selling rice, oil, vegetables, etc., sold out within days and had no inventory. But for my store's tobacco and liquor categories, although there were more walk-in customers, the most fatal issue was that some low-priced cigarettes were often out of stock. Customers came a few times, saw no stock, and stopped coming," Wang Hua said with a sigh.
"After surviving the pandemic, I thought business would improve, but on bad days, the turnover was just over 1,000 yuan. I had to think of other ways, like joining food delivery platforms, but some items are not suitable for online sales. For example, the prices of some branded snacks and drinks are transparent; everyone knows the price. If I sell at the store price, after platform commissions, I lose money. If I increase the price, I get very few orders," Wang Hua said. "There's no other way; I just take whatever orders come and try to hold on."
"Now online shopping is too developed. Consumers can buy directly online and have it delivered to their door. They can buy from official stores online or membership stores offline without worrying about fakes. The impact of e-commerce is overwhelming," Wang Hua said. Even if his store's prices are lower, he cannot compete with online stores, and the proportion of young customers has decreased significantly.
According to the Ministry of Commerce website, the head of the E-commerce Department of the Ministry of Commerce talked about China's e-commerce development from January to April 2024: From January to April, national online retail sales reached 4.41 trillion yuan, a year-on-year increase of 11.5%, of which physical goods online retail sales were 3.74 trillion yuan, an increase of 11.1%, accounting for 23.9% of total retail sales of consumer goods. Cross-border e-commerce exports steadily increased as a share of total goods trade exports.
"Now I try every possible way to save costs. If this location were my own property, it would be fine to run a small business, but since I rent, the annual rent is nearly 300,000 yuan, which is a huge pressure," Wang Hua said. "Now that I've split the store, it has eased some of the pressure."
**"Handed the Split Store to the Landlord"**
"We also cut out about 7-8 square meters and sublet it to a bakery cake shop," Zhang Hong (pseudonym) told the reporter.
Zhang Hong's franchised fruit store is located in Daxing District, Beijing, near the subway, with an annual rent of 350,000 yuan.
"Business is indeed difficult this year. We've tried all possible methods. Everyone talks about reducing costs and increasing efficiency. Rent accounts for a large part of our costs. Splitting and subletting can reduce some cost pressure," Zhang Hong said. In her community commercial street, about half of the merchants are splitting their stores.
"The pharmacy next door originally had a store area of over 70 square meters. At the beginning of this year, they reduced it by half and rented out the split space to a braised meat deli. The yogurt specialty store that opened the year before last also split half of its area and rented it to a tea drink shop," Zhang Hong said. In the peer exchange group, there are daily posts about shared rentals or store transfers.
On the same street as Zhang Hong's fruit store, Zhang Bo (pseudonym) runs a barbershop. At the beginning of this month, he also re-planned his store, reducing the original 70 square meters by half.
"We handed the split store to the landlord, and the rent was reduced by about half," Zhang Bo said. Last year, he had just renovated the store, spending nearly 150,000 yuan, but unexpectedly, business this year is so poor. The membership card business is hard to do, making rent payment a huge pressure. He felt unwilling to close, so he had to split the store first to ease the pressure.
According to Zhang Bo, on the 600-meter-long commercial street, there are three barbershops. The other two are also struggling this year, but they haven't split their stores yet, just enduring for now.
"Business is hard now. The money earned from selling fruit, after deducting rent, leaves almost nothing," Zhang Hong said. The economic situation is bad, fewer customers come in, and even regular customers are not as generous as before when buying fruit.
She said that last month's average daily turnover was only 6,000 yuan. Although labor costs are relatively low, due to a significant drop in foot traffic and increased product loss, revenue has also declined sharply.
Compared to Zhang Hong's splitting and subletting, Wang Qi in Zhengzhou chose to close the store to stop losses. According to Wang Qi, he spent over 400,000 yuan to open a franchised store at the beginning of last year, but closed it in February this year to stop losses. "At that time, I thought opening a fruit store was very simple, but I didn't expect making a profit to be so difficult."
He said that without sufficient financial support, it's easy to go under.
"Before opening, I did a lot of research. The location was a community commercial area with a lot of foot traffic, and there was a large shopping mall nearby. But after opening, I realized that foot traffic doesn't mean customers. Plus, fruit prices were high this year, the economic environment was bad, and people cut spending. Business was really terrible, with daily turnover of only a few hundred yuan, no exaggeration," Wang Qi said. Although he lost a lot, he felt that continuing would only lose more, so he quickly closed to stop losses.
**Traditional Supermarkets Also Struggling**
Wang Hua said that although business is hard, new entrants are still coming in droves.
"Not to mention the difficulty, in the current environment, community stores are indeed easier for people looking for something to do compared to other businesses. There's almost no threshold, no technical content. As long as you have the funds, you can rent a store and start doing business," Wang Hua said. If it's a franchise store, it's even easier. With many brands opening franchises, as long as you have enough funds, everything is fine.
Wang Hua said that after the three years of the pandemic, walking on the streets, you often see signs like 'Shop for Rent' or 'Store for Transfer', and some stores change hands frequently.
Wang Hua's residential community has 12 buildings, with an occupancy rate of over 90%, about 1,000 households. However, only five or six shops are operating in the community's commercial area, including a convenience store, a beauty salon, a real estate agency, a pharmacy, and a hair salon. The supermarket that was still operating last year has now posted a transfer notice.
"Next to the closed fruit store downstairs is a real estate agency. That location has changed three businesses in two years. It was first a milk tea shop, then a phone repair shop, and within half a year, it became the current real estate agency. But with so few customers coming to inquire, I guess it won't last long either," Wang Hua sighed.
Currently, many community stores are struggling to survive, and traditional supermarkets are also in a difficult position.
Revenue is declining, performance is under pressure, and they are constantly seeking transformation. The retail market is changing, and many supermarkets are closing stores.
According to data from the China Chain Store & Franchise Association (CCFA) on the top 100 supermarkets in China, the number of China Resources Vanguard stores has been decreasing year by year: 3,261 stores in 2020, 3,245 in 2021, and 3,130 in 2022, closing 131 stores in three years.
According to data from the National Bureau of Statistics, since 2017, the number of domestic supermarket stores has been continuously declining, from a peak of 38,554 to 24,082, a drop of 37.5%. Among them, large chain supermarkets have declined faster, from 11,947 in 2012 to 5,340 in 2020, a drop of over 55%.
The operational difficulties faced by traditional supermarket giants have long been an industry-wide fact. According to industry research data, in 2019, the total net profit of 62 A-share retail companies was 24.463 billion yuan, but by 2023, it had shrunk to only 5.127 billion yuan, a decrease of nearly 80%.
"Whether it's a large supermarket or a small store, everyone is cutting costs and finding new sources of income. It all depends on who can hold on through this difficult period," Wang Hua said with emotion.
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