According to the latest data from Qichacha, in 2023, over 180,000 new cigarette and alcohol stores were registered nationwide, bringing the total to 9.05 million. Among all provinces, Jiangsu, Guangdong, Hunan, Sichuan, Fujian, Shandong, Henan, Hebei, Anhui, and Hubei rank in the top ten, each with over 400,000 registered stores. Baijiu currently has a market size exceeding 700 billion yuan, and cigarettes exceed 2 trillion yuan. As the retail endpoints of these two major industries, cigarette and alcohol store operators are still in an absolutely large market with sufficient inclusiveness and sustainability. However, from market research, the author understands that most cigarette and alcohol stores are not doing well; many are at a critical juncture of survival or transfer. The main reasons are low-price competition brought by e-commerce, consumption diversion, and the failure of group buying. "Products that sell have no profit, and products that make money have no buyers," leaving more and more store owners feeling confused and helpless.
Who is forcing traditional cigarette and alcohol stores out? "Before last year, e-commerce platforms also had 'hundred-billion subsidies,' but they were less aggressive on famous liquors, with prices only slightly lower than store transaction prices. But since this year, the 'hundred-billion subsidy' for baijiu has changed dramatically," said Lao Zhang, who has run a store for over 10 years and feels this year is the hardest: at the beginning of the year, big single products from top famous liquor brands have been occupying the homepage of a certain platform's 'hundred-billion subsidy,' with prices far below store transaction prices. Lao Zhang's experience is not isolated. In the past, "earning the price difference" was the main profit model for many stores, but in recent years, due to the impact of e-commerce and direct sales by manufacturers, product prices have become increasingly transparent and competitive. Many liquor merchants openly say, "The era of relying on product price differences for profit is over." In the eyes of many store owners, 'hundred-billion subsidies' are 'price killers.' In fact, the logic of e-commerce 'hundred-billion subsidies' is to let consumers intuitively feel the platform's sincerity in price reduction. Among large consumer goods, baijiu, due to its few standardized products, strong brand influence, and obvious price changes, has become an important tool for platforms to show "price reduction sincerity." Especially since this year, major platforms have intensified price wars, which is undoubtedly fatal to cigarette and alcohol stores. On one hand, many consumers use the 'hundred-billion subsidy' price as a reference for purchasing from stores, thus losing some old customers; on the other hand, the group-buying resources that many stores rely on are also decreasing, with some customers directly showing the price of a product from the 'hundred-billion subsidy,' often 15% or more lower than the daily transaction price. This double squeeze makes it impossible for many stores to continue, because most famous liquor profits are 1%-10%, and unprofitable products are exchanged among stores. If sold at the 'hundred-billion subsidy' price, not only would stores fail, but even distributors would lose money and exit. In today's highly connected world, cigarette and alcohol stores seem to have no choice but to compete on price. If the liquor business is affected, they lose half their business, and the decline in cigarettes is undoubtedly "adding insult to injury." Tobacco products, as another pillar of survival for cigarette and alcohol stores, are often an important profit point, but since the beginning of this year, the situation seems different. One store owner said, "In the past, during the off-season for liquor, we could rely on tobacco to recover some losses, but this year, cigarette sales and profits are also worrying. Slightly more expensive cigarettes don't sell; in previous years, a product with a profit of 10-20 yuan per carton can only be sold at cost this year, and some even lose money." "Cigarettes are hard to sell!" said Lao Zhu, owner of a cigarette and alcohol supermarket in Yantai. This situation started last year; while baijiu prices are inverted, many high-end cigarette prices are also inverted. "High-end cigarettes above 600 yuan were initially sold at a premium, but now they are sold at a loss." Now, high-end cigarette prices are severely inverted, "basically losing money on every carton." For many stores, in the past, relying on the cigarette license could yield 100,000-200,000 yuan in annual profit, but now losing 10,000-20,000 yuan a year is common. "Now, the quota for mid- and low-priced cigarettes is insufficient, while the quota for high-priced cigarettes that don't sell well is excessive, causing store cash flow to be occupied by the cigarette license quota, and the payment difficulties in the liquor business also increase the pressure on stores to some extent," an expert mentioned.
How to break the deadlock in the prisoner's dilemma? In an era of shrinking volume, it's like sailing against the current: "If I don't lower prices, I'll give the market to others who do." In this typical prisoner's dilemma, no participant can achieve a better outcome by unilaterally changing strategy; choosing to lower prices is the only Nash equilibrium, even though it's not the best outcome. So, although everyone knows this, they can only continue to compete on price. "The consumer demand pie is this big, and there are too many terminal stores cutting it," said Xiao Liu, a liquor merchant in Henan. He mentioned that the ultimate problem with baijiu prices is at the terminal. "No store has the confidence to say, 'Go buy it cheaper elsewhere.' There is distrust among stores, and they quote prices randomly, which violates the laws of market competition; the market needs to eliminate some." The current situation of "can't compete, can't lie flat" is already in front of cigarette and alcohol stores. In this process, some leave quietly, some struggle hard, and of course, some actively transform. Live streaming has become a new direction for stores; many owners choose Douyin for live streaming, with a phone and a stand making a live room. What should operators do to avoid being eliminated? Opening a store, given "serious homogenization, online shopping impact, industry involution, and low consumption," means that this business must not be "sales-oriented with price competition as the main competitive means." It must return to the core of retail, which is "service." Product procurement is just a reward for customers' satisfaction with the store's service. The same bottle of wine is sold by everyone; why would customers choose you at a similar price? Because of service (including professionalism; they choose you because you know more about liquor). And with "sales" as the main competitiveness, currently in most stores, when a customer comes in and says what they want, the store gives it to them, then collects payment and the customer leaves. In this path, the "store manager and staff" are equivalent to "automatic vending machines," with no "sales" at all. Next will be the first year for all store managers and staff to comprehensively improve their sales capabilities. When a customer enters the store, how to maximize the probability of guiding consumption conversion, achieving the three goals of upselling, switching products, and adding purchases, and after adding the customer's WeChat, how to proactively guide consumption through WeChat when the customer is away (not by sending ads), and when the customer leaves a message on WeChat, achieve those three goals as when they are in the store... These all fall under refined operations! The direction for cigarette and alcohol stores in 2025: Experts predict that the era of refined operations, characterized by "less external seeking, more internal seeking," will officially begin, and the more "refined," the better; this is the core barrier that operators can continuously polish, optimize, and accumulate.