---
title: "The Popular Large Supermarkets in County Towns"
description: "Wang Ying marvels at the booming business of large supermarkets in county towns compared to first- and second-tier cities. During the Dragon Boat Festival, she noticed two new chain supermarkets in her hometown's new district, both owned by the same person, offering fresh produce at lower prices and better service, attracting many residents."
author: "晴山"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-06-24"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-popular-large-supermarkets-in-county-towns-c94f0275/"
markdown: "https://xinjignxiao.com/en/articles/the-popular-large-supermarkets-in-county-towns-c94f0275.md"
original_source: "https://mp.weixin.qq.com/s/i-p4QRgQJVxSy80agbro2A"
translation: "https://xinjignxiao.com/zh/articles/%E5%8E%BF%E5%9F%8E%E9%87%8C-%E7%81%AB%E7%88%86-%E7%9A%84%E5%A4%A7%E8%B6%85%E5%B8%82-c94f0275.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-popular-large-supermarkets-in-county-towns-c94f0275/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Popular Large Supermarkets in County Towns

> Wang Ying marvels at the booming business of large supermarkets in county towns compared to first- and second-tier cities. During the Dragon Boat Festival, she noticed two new chain supermarkets in her hometown's new district, both owned by the same person, offering fresh produce at lower prices and better service, attracting many residents.

The Popular Large Supermarkets in County Towns

"Compared to first- and second-tier cities, the business of large supermarkets in county towns is surprisingly good!" Wang Ying exclaimed. During the Dragon Boat Festival holiday a few days ago, Wang Ying discovered that two more chain supermarkets had opened in the new district of her hometown county town: one with an area of 3,000 square meters and another with 1,000 square meters, both owned by the same boss. Wang Ying's family said that both supermarkets are doing quite well, with many customers on a regular basis. Their fresh produce and fruits are cheaper than those in several older supermarkets in the old town. "The key is that they have a full range of products, fresh items, and better service, so we prefer to shop here. On weekends, we bring the kids; it's lively and bustling."

It is understood that even on non-holiday days, the 3,000-square-meter store is crowded in the evenings. "Their deli items, seafood, and fried snacks are distinctive and varied, all freshly made that day. They are tasty and affordable, so after work, I take a slight detour to buy some deli food for dinner, saving time on cooking," said a consumer purchasing deli items in the store. "Fruits are also cheap. For example, Red Fuji apples that cost 8-9 yuan per jin in Beijing are only 2 yuan per jin here. Of course, this is partly because Shandong is the origin, so prices are relatively lower. But other fruits also have a clear price advantage compared to supermarkets in the old town. Yet the gross margins of these two stores are not low, basically around 30% to 35%," Wang Ying said.

The other 1,000-square-meter store also does good business, but its location differs. The 3,000-square-meter store is in the northwest of the new district, while the 1,000-square-meter store is in the southeast. "Now the government, schools, and hospitals have mostly moved to the new district, and these two supermarkets have siphoned off most of the local residents," said a local resident. Community fresh food stores are almost nonexistent. "They are mostly specialty stores, such as cake shops, seafood shops, and clothing stores, which do not touch fresh categories. Mobile fresh produce vendors absolutely 'kill' these community fresh food stores, leaving them no room to survive," Wang Ying said.

Wang Ying noted that these two supermarkets run promotions every week and also engage in public welfare activities at the entrance, such as giving free rice, oil, and flour to people over 65. "Local residents have a good impression of these supermarkets, so they are willing to shop there."

In fact, Shandong has a huge consumer market and strong consumer demand, which has nurtured many local chain retail leaders. In the "2023 China Chain Top 100" list released by the China Chain Store & Franchise Association (CCFA), 11 Shandong enterprises were listed, the same as in 2022. And the straightforward Shandong people, when it comes to shopping at supermarkets, the premise is that "the boss does not cheat customers." Tasty, affordable, and cost-effective products further enhance locals' trust in the store, making it hard for business to be bad.

Traditional supermarkets in first- and second-tier cities struggle to survive

In stark contrast to the two large supermarkets in Wang Ying's hometown county town, traditional supermarkets in first- and second-tier cities have been struggling in recent years. Lao Zheng's store is located in the bottom of a residential complex on the South Fourth Ring Road in Beijing, covering about 700 square meters. "Compared with previous years, business has declined again this year." "When business is bad, the only option is to cut prices; only by offering lower prices than surrounding merchants can we attract customers," Lao Zheng said. In the first half of this year, he focused all his management efforts on how to reduce prices. "Coupled with changes in consumer spending patterns in recent years, traditional supermarkets are now facing many difficulties. My situation is a microcosm of the common plight of the traditional supermarket industry."

According to the "2023 China Consumer Insights and 2024 Outlook" report released by Nielsen China, the number of young consumers who are not price-sensitive has dropped from 30% in January last year to 15%. Facing this shift in consumer trends, merchants have to adapt to the new consumption era. Faced with such drastic changes in the industry and consumption patterns, Lao Zheng said, "Although I once enjoyed the dividends of the era, in this rapidly changing era, I eventually have to be marginalized by the times."

Apart from the difficulties of individual operators, the first-quarter data of listed supermarket chains this year is also not optimistic. Among the 12 listed companies that released their 2024 first-quarter reports, 9 saw year-on-year revenue declines, and only 3 achieved revenue growth. In terms of net profit, although 7 supermarkets were profitable, 8 saw a year-on-year decline in net profit. Among them, Zhongbai Group had the highest decline at 619.18%, directly turning from profit to loss. Renrenle also faced delisting again, being subject to "delisting risk warning." If Renrenle's net assets are still not positive by the end of 2024, it will be forced to delist, which is regrettable.

In addition, traditional supermarkets have been frequently closing stores in recent years. According to the China Supermarket Top 100 data released by the China Chain Store & Franchise Association (CCFA), the number of China Resources Vanguard stores has been decreasing year by year: 3,261 in 2020, 3,245 in 2021, and 3,130 in 2022, closing 131 stores in three years. In addition, at the beginning of this year, RT-Mart reported store closures in Jiangsu, Sichuan, Hunan, and other places. According to incomplete statistics, RT-Mart has closed more than a dozen stores since 2023. Furthermore, relevant media reports indicate that in the first quarter of 2024, at least 31 supermarket brands closed more than 140 stores nationwide, involving well-known brands such as Walmart, RT-Mart, Yonghui, Wumart, Rainbow, Hema Fresh, and CP Lotus. Among them, there are also some city or regional first stores, such as Walmart's first store in Nanjing (Xinjiekou), Yonghui's first store nationwide (Fuzhou Pingxi), and Zhuji's first Wumart supermarket.

In fact, the decline of traditional supermarkets is an indisputable fact. Over the past decade, traditional supermarkets such as Carrefour, Walmart, Jiajiayue, Renrenle, and RT-Mart have been hit hardest by the changes of the times. The operational difficulties faced by traditional supermarket giants have long been an obvious fact in the industry. Many listed old supermarkets pointed out in their financial reports that due to the severe impact of online retail on physical stores, coupled with the challenges posed by the pandemic to the development of the supermarket physical store format, performance has been mixed.

However, closing stores is not the only way out for supermarkets. Some traditional supermarkets and hypermarkets are actively exploring new tracks, accelerating transformation, optimizing stores, and continuing to open new ones.

**The Way Out for Supermarkets**

**Continue to go down-market and low-price?** The pursuit of cost-effectiveness has clearly become the most obvious change in consumer behavior.

Of course, the "discount" behavior of supermarkets should not be a vicious competition of bottomless low prices, but rather a strategic price adjustment. Specifically, behind this adjustment is a reform of the supply chain, including direct sourcing from origins, reducing transportation and storage losses, streamlining human resources, and developing private labels. These measures help reduce costs, thereby providing room for price reductions. Therefore, the degree of low prices also reflects, to some extent, the maturity of the supply chain. Similar to the logic of membership stores, discount retail stores need to rely on a strong supply chain and bargaining power to keep prices low while ensuring profits.

Industry insiders say that supermarkets should think about who they are selling to. The supply of goods can no longer be from distributors or suppliers with a certain credit period and markup; that era is clearly over. A true low-price strategy is to ensure no loss and sufficient gross profit even at lower selling prices. In this process, the key is to improve supply chain efficiency. A person in charge of an agricultural product base once revealed that after cooperating with supermarkets without intermediaries and delivering goods directly to warehouses and stores, logistics and storage losses can be reduced by about 35%, and the saved costs are partly used to benefit consumers.

In addition, many supermarkets are now adopting more flexible settlement methods to deepen cooperation with suppliers. This shift enables supermarkets to adapt quickly to market dynamics and effectively update and adjust their product mix. This not only reflects the enhanced bargaining power of supermarkets in the supply chain but also helps further reduce operating costs by negotiating more favorable settlement terms, thereby increasing profit margins.

Besides achieving truly long-term low prices, opening large supermarkets in fourth- and fifth-tier cities or even more down-market county towns is also a direction that many retailers are exploring and performing well in. Why open large stores in small county towns? Industry insiders say that there are several logics for opening large stores in down-market areas. First, small cities are structurally like communities; a county town is a community. For example, in big first-tier cities like Beijing and Shanghai, many residents complete their daily shopping, such as fruits and vegetables, within their residential complexes, but this is different in fourth- and fifth-tier cities. Second, large supermarkets entering county towns are a "dimensional reduction" attack, using a super-sized commercial entity to siphon off all the scattered traffic of local small vendors. For example, the strategy of the boss in Wang Ying's hometown, with one large supermarket and one medium supermarket, monopolizes local market traffic. Finally, it is essential to control operational efficiency, mainly reflected in turnover rate. For fresh products, turnover rate is particularly important.

"In a county town, if your store is large and you run promotions, with fresh and cheap products, you attract a large flow of people. Once the turnover rate increases, it means the merchant's bargaining power with upstream suppliers strengthens, and prices come down again, forming a virtuous cycle," said the above-mentioned insider.

How to seize the dividend period of large supermarket operations in county towns? One important point is whether the closed loop is completed. Of course, there is also a premise: the local competition is not fierce, and the competitive environment is not intense.

******August 20-22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Shrinkage Era" & "3rd China FMCG Hard Discount Conference" & "3rd China FMCG Distributor Conference" will be grandly held in Shanghai.******

**At this conference, all roles in the FMCG industry chain will gather, allowing you to grasp industry trends at a glance, understand hot track directions, penetrate industry resources, and precisely connect with leading brand owners, top retail platforms, and national excellent distributors with over 100 million in sales, providing you with precise decision-making, efficient cooperation opportunities, and on-site learning of exclusive methodologies from FMCG giants! Keynote speeches, roundtable dialogues, report interpretations, closed-door salons, and networking dinners—this thousand-person event has it all!

**🔺Scan the code for ticket inquiries🔺**

**Recommended Reading**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671