Source | Xiaozhenzi In early May, "Renrenle" was delisted. This old Shenzhen supermarket chain has been loss-making for four consecutive years. In the past year, Renrenle closed 45 stores and transferred 15 stores. Only one new store was opened. In contrast, Sam's Club's fifth store in Shenzhen is set to open this year, making Shenzhen the city with the second-highest number of Sam's Club stores in China. What many don't know is that since 2008, the Futian Sam's Club has been the global sales champion for single stores for 15 consecutive years. Is it really true that 'the monk from afar chants better scriptures'? In fact, Shenzhen was once a representative of Chinese supermarkets. This year marks the 45th anniversary of the Shenzhen Special Economic Zone. In Xiaozhenzi's view, the biggest regret of Shenzhen's retail industry is not that it produced a foreign Sam's Club sales champion, but that it once gave birth to a host of local supermarket giants, yet ultimately failed to produce a 'Pang Donglai.' Shenzhen's Supermarket 'Big Three' Shenzhen is the window of reform and opening-up. Through this 'window,' we came into contact with many new things from around the world, leaving many 'firsts.' In 1984, Li Ka-shing's ParknShop opened at Bitao Center on Taizi Road in Shekou, becoming the first self-service supermarket in mainland China and the first foreign retailer to enter the mainland. This open-shelf self-service shopping style was a revelation for Shenzheners, opening the door to supermarket shopping. But at that time, the Shekou Industrial Zone was just a pilot reform area. In 1992, China Resources Vanguard, also from Hong Kong, opened the first Sino-foreign joint venture chain supermarket in China on Aihua Road in Huaqiangbei. At that time, Vanguard's biggest 'rival' was Vanke, also in Huaqiangbei. △Wanjia Department Store In 1991, Vanke, a real estate company, started a 'side business' by founding Wanjia Department Store. In July 1994, the Wanjia Huaqiangbei store officially opened. This was the first warehouse-style discount supermarket in the country. On the plain cement floor and warehouse shelves, Shenzheners contributed 240,000 yuan in sales on the first day, setting a record for Shenzhen's retail industry. The success of Wanjia, a 'cash cow,' led Wang Shi, who wore suspenders at the time, to frequently inspect the site in person. As an investor in Wanjia, Li Binlan, a graduate of Sun Yat-sen University, sensed a business opportunity. In 1995, the 33-year-old Li Binlan left with some Wanjia employees and, after receiving investment from China Nuclear Power Group, opened her first supermarket in Bao'an—'Xinyijia.' Because of this connection, some people interpreted 'Xinyijia' as 'a new Wanjia supermarket,' but there was never an official response. In 1996, He Jinming, who was serving as general manager of the Shenzhen Financial Exchange, went to Europe for training and discovered that large supermarkets were everywhere in foreign countries, but in China, few people even knew what a 'supermarket' was. So after returning home, He Jinming resigned and went into business, using a loan of 1 million yuan to open his first large supermarket in Nanshan Nanyou, naming it 'Renrenle.' △Source: Shenzhen Weishiguang In 2001, Vanke, focused on real estate development, sold Wanjia Supermarket to China Resources, and after the merger, it became the well-known 'CR Vanguard.' Since then, CR Vanguard, Xinyijia, and Renrenle became the 'Three Giants of South China Supermarkets' that dominated China's retail market. Perhaps a more accurate term would be: the 'Three Giants of Shenzhen Supermarkets.' In addition, other local retailers familiar to Shenzheners were also born: Tianhong, founded in 1984, started with the Shennan Tianhong Shopping Mall and launched Tianhong Supermarket in 2006; Also, Supo Department Store, established in 1996, tried supermarket business after its Hong Kong listing in 2010; In 2004, when Shenzhen's landmark commercial complex MixC opened, CR Vanguard launched the new Ole' Premium Supermarket, becoming the first premium supermarket in China. At that time, Shenzhen's retail industry was flourishing and lively. Foreign Supermarkets Rush into Shenzhen In the 1990s, just as local Shenzhen supermarkets were springing up like bamboo shoots after rain, a policy allowing foreign retailers to enter the retail industry in mainland China brought foreign giants rushing in. In 1995, Walmart held a press conference in Shenzhen, announcing its entry into China. This later prompted the Shenzhen Retail Industry Association to organize some supermarket executives to petition the city government, opposing the government's approval of Walmart's entry into Shenzhen: 'How can we little guys compete with international giants?' In August 1996, in the square downstairs of Lake View Garden on Honghu Road, Luohu District, witnessed by then-Walmart President Bob Martin, the first Walmart supermarket in mainland China opened. △China's first Walmart (Honghu store) Source: Hot Business On the same day, China's first Sam's Club membership store opened in Futian District. As China's first warehouse membership store, Sam's Club's earliest membership fee was 150 yuan, and it was said that membership cards were given free to state-owned enterprise employees at that time. At that time, the average monthly income in China was only 518 yuan, and 150 yuan was a sky-high entry fee, but in the first three days of opening, Sam's Club sold more than 2.5 million yuan. A little-known fact is that the original site of the first Sam's Club is actually the current Walmart Jingtian store; it moved to Shenzhen International Plaza (now Inpower Center) in 2005. Also in 1996, Shenzhen's first and China's second Carrefour supermarket opened on Changxin Road in Nanshan District. △Source: Shenzhen Weishiguang With the opening of Shenzhen's first mall in 2002, City Plaza brought Shenzhen its first Jusco. Many Shenzheners may remember the value of Jusco's '10-yuan uniform' promotions. In 2013, Jusco was officially renamed 'Aeon.' Another international retail giant, Metro, entered Luohu in 2005 but never gained much attention. Then, in 2024, the first Costco in South China opened in Longhua. Despite the halo of setting a global record for new memberships, compared to its old rival Sam's Club, Longhua Costco has been somewhat struggling to adapt. We can see that international giants like Walmart, Sam's Club, and Carrefour all chose Shenzhen as their 'port' to enter the Chinese market, thus opening the prelude to foreign retail giants entering China. 'Walmart's things are too cheap! That's everyone's biggest headache.' This benefit that Shenzheners love was undoubtedly a disaster for Shenzhen's supermarkets. At that time, industry insiders predicted: Within three years, 'foreign stores' might sweep away Shenzhen's retail industry. The result was quite the opposite. Facing the advancing giants, Shenzhen's supermarkets were not beaten to a pulp; instead, they engaged in a fierce 'price war' with Walmart and Carrefour, and even prompted companies like Xinyijia, Renrenle, and CR Vanguard to expand nationwide. Giants Fall, Sam's Club Dominates No one expected that Sam's Club, with membership fees raised to a maximum of 680 yuan, has become the recognized ceiling of Shenzhen supermarkets, dominating alone, and even Costco is no match. Although Shenzhen is the city with the second-highest number of Sam's Club stores in China, it's worth noting that Shanghai, with an area of 6,340 square kilometers, has only 6 Sam's Club stores; while Shenzhen, with less than 2,000 square kilometers, already has 5 Sam's Club stores, and they are still in short supply. Now on holidays, Shenzheners are either at Sam's Club, on their way to Sam's Club, or ordering 'express delivery' to their homes, and there are even 'Sam's Club purchasing agents' and 'Sam's Club repackaging' services that earn over 10,000 yuan a month. In contrast, across the country and even in Shenzhen itself, we rarely see Shenzhen supermarkets anymore. Among the once-famous 'Three Giants of Guangdong Supermarkets,' the first to fall was Xinyijia. This supermarket giant, which at its peak had annual sales of 18 billion yuan and up to 116 stores, in 2016, due to blind expansion, poor management, and a broken capital chain, led to large-scale layoffs and the temporary closure of many stores. In 2017, an announcement declared 'Xinyijia' bankrupt, and 'Iron Lady' Li Binlan fled. It wasn't until 2023 that a store of the reorganized Xinyijia Supermarket reopened in Luohu, but it no longer had its former glory. Another giant, 'Renrenle,' which listed on the A-share market in 2010, had annual revenues exceeding 10 billion yuan for many years, and its market value once exceeded 13 billion yuan. But now, in 2024, its net assets are -404 million yuan. In early May this year, Renrenle received a 'Notice of Termination of Listing.' Now in Shenzhen, there are only a handful of 'Renrenle' stores. Their 'signature roast chicken' has become a memory for Shenzheners. The only one with industry competitiveness is CR Vanguard, which has the backing of central state-owned enterprises. Vanguard, which once expanded nationwide through acquisitions and mergers, has also frequently seen news of store closures in recent years. Although it started adjustment and upgrade last year, it still hasn't shown improvement. Now, the only local supermarket in CR Vanguard and even Shenzhen that can hold its own is Ole', which has been positioned as high-end from the start, still laying out premium supermarkets in core business districts of first-tier and new first-tier cities. Because of its high-end positioning, even CR Commercial's app, Yidian Wanxiang, jokes that Ole' is a 'luxury supermarket that even those earning 30,000 yuan a month dare not enter.' △Source: Yidian Wanxiang (CR Commercial) So, why have these Shenzhen supermarkets fallen behind? First, Shenzhen supermarkets' first-mover advantage is gone. Since the reform and opening-up, whether foreign or joint venture, the first batch of international giants almost all chose to land in Shenzhen, allowing Shenzhen supermarkets to learn closely at close range. As the head of Wanjia Supermarket once said: 'In 1994, if we wanted to go abroad to visit Carrefour and Walmart, we had to spend a lot of money. When they opened in Shenzhen, they provided us with a great opportunity, saving us even the airfare for visits.' So, Shenzhen enterprises were the first to learn advanced business models, supply chains, personnel, and other advanced management experience from international retail giants. For example, before Walmart came, it was hard for Shenzheners to imagine that freshly baked bread could be brought into a shopping mall, but after learning and localizing, we put more cooked food and snacks into supermarkets. Also, Walmart's corporate culture of 'the customer is God' became a benchmark for service in Shenzhen's retail industry. Especially in the price war with international giants, Shenzhen supermarkets learned how to achieve good quality and low prices through cost control and procurement optimization, and brought this to all parts of the country, creating a dimensionality reduction attack. Unfortunately, when the information gap, time gap, and cognitive gap were leveled, this first-mover advantage disappeared. △Bao'an Walmart Source: Shenzhen Weishiguang Second, due to Shenzhen's small market size and intense competition, Shenzhen's supermarket giants all chose rapid expansion to the broader national market. However, this approach of pursuing scale advantages can double market value during the dividend period, but once it reaches the stage of refined management and operation, it is prone to disconnect and collapse. An interesting comparison is that Pang Donglai, founded at the same time as the three Guangdong supermarket giants, chose a completely opposite path—over the years, it has not expanded beyond Henan, but instead chose to deepen its local presence and strengthen its supply chain. At least from the current results, Pang Donglai not only has no survival crisis but has achieved continuous profitability that the industry envies, and has won a trust and reputation that cannot be bought with gold and silver cups. Finally, it's not that Shenzhen supermarkets are bad, but that everyone is struggling. In Shenzhen, whether it's China's first Walmart or Shenzhen's first Carrefour or Jusco, they have all closed down, significantly reducing the scale of traditional stores. So, it's that the traditional supermarket model is no longer suitable for the times. As RT-Mart founder Huang Mingduan said: 'I defeated all my competitors, but lost to the times.' △Shenzhen's first Carrefour (Nanxin store) closed Source: Shenzhen Weishiguang Now, the surge in operating costs such as rent and labor, the rise of online shopping and fresh food e-commerce, and changes in consumer values undoubtedly mean the end of the era of extensive expansion in traditional retail, and the rapid rise of new retail with the internet as a channel and consumers at the center. Clearly, Shenzhen bosses, lacking internet genes, have formed a path dependency of 'channel merchants pay to enter the market and put on shelves,' and have not made rapid adjustments according to the new era, being abandoned by the times and the market. Shenzheners who love shopping at Sam's Club have supported its global sales championship. This is not a shameful thing; on the contrary, it shows the purchasing power of Shenzhen's consumer market. It's just that this consumption power has not cultivated its own consumer brands, which is regrettable. What's more worrying is that in this future new retail battle, we don't see Shenzhen's presence. For example, the most prominent supermarkets in China currently are Pang Donglai from Henan, Hema from Shanghai, and Yonghui Superstores acquired by Guangzhou's Miniso. △Shenzhen's first Yonghui learning from Pang Donglai What about Shenzhen? According to the '2023 China Supermarket TOP100' list released by the China Chain Store & Franchise Association (CCFA), only three Shenzhen supermarkets made the list: CR Vanguard (4th), Tianhong (16th), and Renrenle (43rd). In this list from two years ago, except for Renrenle, which is about to be delisted, the other Shenzhen supermarkets have central or state-owned enterprise backgrounds, which is undoubtedly a 'slap in the face' for Shenzhen, which prides itself on private enterprises. Getting up early but arriving late. The Shenzhen retail industry, which once led with high momentum, now somewhat has the feel of 'the tortoise and the hare race,' except we are more like the 'hare' that urgently needs to be awakened.