In the past two years, the hottest tracks in the consumer goods sector have been: first, SHEIN's cross-border 'small-batch, fast-reorder' model, which is now said to have 'all garment enterprises in the Pearl River Delta making orders for SHEIN.' In 2023, SHEIN's revenue reportedly exceeded $30 billion, or over 200 billion yuan, making it firmly China's largest garment enterprise, surpassing ZARA, Uniqlo, and other international brands long regarded as benchmarks by Chinese garment companies. Domestically, the hottest track is undoubtedly the snack discount stores. Industry insiders say that in 2023, more than 10,000 new stores opened, with total numbers far exceeding 20,000. Among them, the leader, Snacks Are Busy (including Zhao Yiming), has reached an astonishing 7,500 stores, with claimed total revenue exceeding 20 billion yuan.

Other systems with hundreds or thousands of stores are also accelerating. Individual snack stores and small chains are emerging everywhere, from first-tier cities to township markets, with snack stores visible everywhere.

Rapid store openings, mergers, subsidies, capital, land grabbing, and prices that only go lower—this is like replaying the 'thousand-group war' from a few years ago, moving from online to offline. In 2023, the market size of snack discount stores reached 80.9 billion yuan, a 75% increase from 2022, and it will maintain a relatively high growth rate in the coming years. What does this mean? The leisure food market is said to be 'trillion-yuan' scale, dispersed across no fewer than twenty retail formats, including small shops, e-commerce, cake shops, supermarkets, snack stores, and street vendors. Among these, the supermarket format—all large and small stores and supermarkets combined—sells roughly 13% of the total snack market. In other words, at this pace, snack discount stores will catch up with supermarkets within three to five years and become one of the most dominant retail formats in the leisure food industry.

Any rapidly developing thing comes with controversy. Many say that hard discount snack stores will be a retail revolution, completely overturning the retail industry, and can 'harden' all consumer goods industries. Some think this is another concept-making, franchisee-cutting movement. Some believe it genuinely lets consumers enjoy more cost-effective snacks, which is progress. Others think it's just an old game of using big brands at ultra-low prices to attract traffic and making profits from white-label products. Some say discount retail stores will continue to surge, with 30,000, 50,000, or even 100,000 stores within reach. Others say snack discount stores are starting to close down, and soon they'll join the 'four big pitfalls' for small entrepreneurs, like milk tea shops, leaving a mess after the trend fades. If you think I, Old Miao, as a renowned江湖神棍, am also singing the praises or doom of snack discount stores like many others, you underestimate my analytical skills. Let's talk about something more advanced.

Why did 'hard discount' stores rise in the snack category? Can other categories do it? Is there a chance? Is it possible to have a comprehensive multi-category 'hard discount' retail format? The premise to answer these questions is to clarify concepts: what exactly is this so-called hard discount store? Is it an unprecedented new thing, or just a new name for a traditional concept? People who study retail know that in retail formats, there is a formidable player called the 'category killer.' It has three main characteristics: 1. Large sales area but few product categories; 2. More single-product choices within fewer categories; 3. Prices are relatively cheaper than comprehensive stores. The earliest category killers in China's retail market were home appliance chains, such as Gome, Suning, Sanlian, and Dazhong, all of which were once formidable players. Other influential category killers include home furnishings and building materials, like Red Star Macalline and Easyhome, and stationery, like M&G and Deli. Sports goods, maternal and infant products, cosmetics, and others have also seen similar 'category killer' retail formats rise. Once a category killer store establishes a foothold in a business district, it can kill the sales of the same category in comprehensive retail stores in the same district. That's why it's called a 'category killer.' A Wuling Rongguang van full of watermelons selling near a residential area is a category killer for the fruit store next to it. Department stores were once dismantled and declined because of home appliance category killers, home furnishing category killers, etc. Now, once a snack discount store's business takes off, the snack business of surrounding community supermarkets, convenience stores, and even large supermarkets will be greatly affected, even swept away. Snack discount stores are essentially snack category killer stores. As for whether the discount method is 'hard discount' with direct low prices or 'soft discount' with high prices then discounts, it's not that important. 'Hard discount' can raise prices, and 'soft discount' can be done hard long-term. There's not much difference in consumer perception. Don't treat customers as fools; don't be fooled by this formal difference.

For a category killer to be viable, it must have at least two characteristics. First, the volume must be large enough; otherwise, it can't even afford rent and staff. Second, the category's sales efficiency in comprehensive retail is low, with significant room for improvement. Retail currently has a trillion-yuan market size, so the first condition is undoubtedly met. Additionally, although the snack market is large, the number of varieties is exceptionally high. Traditional candies, biscuits, cakes, puffed foods, nuts, jellies, and others like meat, dried fruits, vegetables, seafood, and even mushrooms—anything edible can be made into snacks, and each category can have hundreds or thousands of varieties. Most snack manufacturers have thousands of SKUs. The total scale is large, but when divided among specific varieties, it's not much, and the number of suitable retail terminals is particularly high. From large supermarkets to chain convenience stores, grocery stores, rural supermarkets, etc., almost all small retail shops are suitable for selling snacks. There are at least 5 million such terminals nationwide (industry claims 6.8 million). This makes the traditional snack channel chain particularly long and complex, with most snack enterprises relying mainly on the circulation market. 'Mostly circulation market' means their products mainly reach terminals through second-tier or even third-tier distributors. The long channel chain, complex structure, huge number of terminals, and low sales per product have made snack channel management a persistent problem. The deep distribution that the FMCG industry prides itself on has never worked well in the snack category (successful deep distribution FMCG companies are mostly in industries with super single products like beverages and dairy). The most direct manifestation of low efficiency is the 3-5 times markup from production cost to final retail; every link must leave enough profit margin for operations, but none of these links have been very profitable in recent years. The snack industry meets both conditions: large scale and low channel efficiency. There's also an important factor easily overlooked. In recent years, offline snack sales have been greatly impacted by online sales. Currently, online snack sales account for nearly 30% and are expanding. More and more people, especially young people, buy snacks online. This brings a problem. We know snacks are not a necessity but elastic demand. Many purchases come from temporary, impulsive buying—consumers' momentary 'falling for looks.' Once offline purchase scenarios decrease, corresponding impulsive consumption decreases, and this part of the market disappears, affecting the overall snack market size. Now, snack discount stores perfectly solve this problem: big snack signs, bright lights, large transparent windows, and stimulating low-price labels make passing target customers generate impulsive consumption desires. Traditional supermarkets or grocery stores cannot make people desire consumption from outside the store. In other words, snack stores extend the purchase scenario from inside to outside the store, stimulating passersby's elastic demand, thus delivering a 'killer' blow to snacks in traditional comprehensive retail. According to Old Miao's 'saliva rule,' snack stores not only have overwhelming advantages over traditional offline sellers but also have advantages over online sales in terms of experience and meeting immediate needs. They become the most favorable position to resist online snacks continuing to erode offline. Knowing the retail essence of snack discount stores and why they rise makes it easy to judge their development stage. Let's look at the second key question.

Snack stores are opening more and more, with many already suffering losses and closures. Will snack stores continue to be this 'fierce'? The answer is yes, but the process will be bumpy. To answer this key question, we need to break it down into three sub-questions. First, how large will the total market size of snack stores develop? Where is the bottleneck? Currently, snacks sold through supermarket channels account for about 13% of the total, with a peak of over 20%. As supermarkets further decline, they will exit the main snack channel, leaving about 5%. The largest share will be eaten by snack discount stores, followed by e-commerce (including shelf e-commerce and live-stream e-commerce), community stores, etc. Convenience stores, small community stores, mom-and-pop shops, township supermarkets, and rural supermarkets—mainly terminals covered by the circulation market—have always been the largest force in snack sales, accounting for over 30%. They will also be impacted by snack stores, but the overall impact won't be too great. Because most small store business districts cannot sustain a snack store. Due to business district matching, the expansion limit for snack stores is county towns and developed townships; they cannot enter rural or remote communities on a large scale, nor can they easily establish a foothold in core business districts of first-tier cities. Second- and third-tier business districts in first- and second-tier cities, central and second-tier business districts in third- and fourth-tier cities, large communities with high population concentration, and business areas—that's roughly where snack discount stores can open. This overlaps highly with traditional supermarkets (large supermarkets plus standard supermarkets). Therefore, the future market size of snack stores will at least reach the current proportion of the supermarket format, likely reaching the peak state of supermarkets, i.e., 20% or more of total snack sales. Based on the current snack market size, that's about 200 billion yuan (at retail prices). With an average annual sales of 2 million yuan per store, some people's prediction of 100,000 snack stores in the future domestic market isn't entirely pie in the sky. As for when that future will arrive, it's hard to say; let's continue.

Second, when snack systems recruit franchisees, who are their competitors? This question can most directly answer 'with so many snack stores closing and losing money, can snack stores continue to expand?' If a snack franchise owner hadn't chosen to sell snacks, what would they most likely be doing? They'd more likely have opened another store, probably a clothing store, milk tea shop, mother-and-baby store, cosmetics store, stationery store, etc., and less likely a comprehensive small supermarket, small restaurant, or pharmacy. In other words, whether a snack system can recruit franchisees depends on how 'attractive' it is compared to franchise opportunities in other industries, not on its current loss rate of 20% or 30%. The lower the entry barrier, the harder the business. Most industry franchises have no real barriers; just invest money, from 200,000-300,000 to 800,000-1,000,000 yuan. This leads to very high loss rates across all franchise industries. The most typical is milk tea shops, often rated as the top of the 'four big pitfalls' for entrepreneurs, with tens of thousands opening and closing each year, even over 100,000. In the milk tea circle, it's said 'out of 10 milk tea shops, 9 will close.' Most other franchises are slightly better than milk tea but still not optimistic. Coffee shops, clothing stores, cosmetics stores—every industry is struggling. Even pharmacy franchises, once considered high-barrier and 'profitable,' have begun to see large-scale losses in recent years. So, to see if snack stores will continue to expand, we must not only look at how many current snack stores are profitable or failing but also compare them with franchises in other industries. As long as they can make more money, I can skip opening a milk tea shop or restaurant and sell snacks with you; if not, I'll switch to selling clothes, opening a small shop, or selling buns. At worst, I lose the decoration fee, goods cost, and franchise fee. If we're going to compete, let all store owners compete together. As long as we're not dead, we'll keep fighting to the death. According to data disclosed after the merger of Snacks Are Busy and Zhao Yiming, the number of stores is 7,500 (6,500 before the merger, with 1,000 added in half a year), with total revenue exceeding 20 billion yuan in 2023, averaging about 3 million yuan per store annually. If calculated at 120 square meters per store, that's about 68 yuan per square meter per day. Anyone in retail knows what this means. In a market environment where business is sluggish, franchise entry barriers are low, competition is fierce, and half of franchisees in most industries aren't making money, what franchise business can invest 500,000 yuan and return the investment in a year, earning a million annually? If there is, it's cutting leeks. Snack store business is already the chosen one, a 200-kilogram fat pig in the wind. Although its loss rate is not low and will further expand, from the perspective of recruiting franchisees, each snack system is conducting a 'mass movement,' integrating numerous scattered small shops and small entrepreneurs through systematic integration, leveraging industry development opportunities, and using vigorous organized movements to attack the 'declining regular army' (supermarkets) and 'guerrillas' (individual comprehensive small shops).

Then comes the third key question: what business format do these snack system operators actually belong to? Some think they belong to chain retail, conducting a snack revolution; some think they are platform enterprises, empowering retail stores; others think they have once again 'compressed' the supply chain, removing some intermediate links, and wherever they go, they deal a severe blow to local snack distributors. If we strip away those dazzling concepts like 'supply chain revolution,' 'empowerment,' and 'hard discount,' we'll find that these snack systems are essentially distributors, but they are very special distributors. The goods of snack systems are mainly sold through franchisees; they are not the retail entity; the stores are. Franchisees and snack systems are independent individuals in deep cooperation, so snack systems cannot be counted as retailers but as distributors that supply, select products, and serve retailers. Compared with traditional trading distributors, these distributors are 'special' in that: 1. Traditional distributors usually operate in specific regions and channels, while snack systems operate only within their own system, often across regions or even nationwide. 2. Traditional distributors often operate across categories; snack distributors overlap heavily with beverage, seasoning, dairy, and instant food distributors; while snack systems almost only do snacks, with beverages as traffic drivers; they attempt to become operators who truly understand 'snacks.' 3. This is the most essential difference: their business essence differs. Traditional distributors actually treat upstream manufacturers as customers; they are channel partners in the eyes of brand owners, operating the brand owner's products as their own. They are usually called 'trading companies' and externally call themselves 'distributors of a certain brand.' In contrast, snack systems treat their franchise stores as customers, having them hang the system's sign, selecting products for them, and serving them. Previously, we were accustomed to calling distributors, second-tier, third-tier, and retail terminals the 'channel chain,' a concept from the manufacturer's perspective, where all links exist as sales channels for the manufacturer. Now, retail systems speak from the retail store's perspective, where all upstream links exist as direct and indirect suppliers, so they call the entire circulation chain the 'supply chain.' Previously, brand owners had more say, so everyone used the brand owner's terminology: you're a distributor, you're second-tier, you're a retail terminal. Now, snack systems want more say, so they hope everyone uses the retailer's terminology: you're all suppliers at different levels; this is called 'supply chain revolution.' All concepts have positions. Depending on your position, you adopt the corresponding concept system. If you're a retailer, call it your 'supply chain'; if you're a platform, call it your 'new retail'; if you're a brand owner or manufacturer, continue calling it your distributors and retail terminals. There's no need to follow the crowd. Similarly, Japanese soldiers are called 'little devils' by the Eighth Route Army, but puppet soldiers must call them 'Taijun.' If you're clearly Eighth Route, calling the devils 'Imperial Army' or 'Taijun' is not only incongruous but also suspicious of being a traitor. 4. The fourth special point: where is the real advantage of snack systems over traditional distributors? Where is their core competitiveness? Open Kotler's 'marketing bible'—'Marketing Management'—in the 'Channel Value' section, there's a very important part called 'Channel Partners.'

Kotler believes that traditional upstream and downstream channel members are independent operators seeking their own profit maximization, inevitably leading to repeated games and internal friction, resulting in lack of competitiveness and inefficiency. Therefore, most channel systems will move toward vertical integration, becoming a vertical marketing system (or vertical marketing system). That is, one channel member becomes the channel leader, forming closer cooperation with upstream or downstream, such as partial ownership or franchising, thereby reducing channel friction, enhancing channel cohesion, and merging two or even three channel links into one, gaining greater power over other channel links. This vertical marketing system has become the dominant distribution model in the U.S. consumer market and is the fundamental reason for high distribution efficiency in U.S. consumer goods.

In China, similar vertical distribution systems have occasionally appeared and are increasing. Previously famous ones were Gree and Wahaha's distribution unions. Today, the most complete and efficient vertical marketing systems are HLA and SHEIN. HLA transformed from a men's clothing product brand to a men's clothing supply chain brand years ago, binding downstream franchisees and tightly controlling the upstream supply chain. Without opening stores or producing, it became the number one men's clothing brand in China for many years just by managing all links in the supply chain. Even more impressive, SHEIN not only became the supply chain leader in a few years but also integrated the internet platform, achieving explosive growth and over 200 billion yuan in revenue. Now, snack systems are doing exactly this vertical marketing. Through franchising, they bind retail stores, and through continuous expansion of retail stores, they gain greater channel bargaining power with large manufacturers or use retail brands to integrate small production factories, making them their brand OEMs. Once this system is perfected and mature, it will inevitably bring higher channel efficiency and a greater impact on traditional distribution systems.

Okay, once we remove the buzzwords like 'hard discount,' 'consumption downgrade,' and 'supply chain revolution,' and use common sense and professional methods from marketing and retail studies, we can easily derive some development trends and opportunities for snack stores: Is there a development opportunity for category killers in the snack category? Who are the real customers of snack systems? What position do snack systems occupy in the entire channel chain? What's the difference between the so-called 'channel chain' and 'supply chain'? Where does the franchise attraction come from? Does the Gartner curve hold? Can the vertical marketing system for snacks be systematically built? 1. From a market capacity perspective, the scale of snack stores has only developed to about one-third of what it should be, so there's definitely enough room for growth. 2. The increase in franchise store closures is just beginning; it will continue to grow, eventually reaching a level similar to milk tea shops (the industry average for franchises). 3. Each snack system is accelerating store expansion; the leaders, Snacks Are Busy and Haoxianglai, are on track to reach 10,000 stores soon. At the same time, regional brands are also accelerating expansion. The entry barrier for snack stores is getting lower, with various 'zero franchise fee,' '100,000 yuan to open,' '15-square-meter store,' 'headquarters coaching,' 'full support,' 'company subsidies,' 'guaranteed profit,' 'one-fold goods,' 'success cases,' etc. These 'attractive' conditions, which have been played out countless times in franchise industries, will be replayed in the snack franchise industry. In the land-grabbing era, if you don't follow the trend, potential customers will really be taken away. If you do follow, you'll really harm many entrepreneurial novices, and maybe even yourself. Whether you call it a bubble or 'cutting leeks,' it's unavoidable; this industry has to go through this. Eighty-one tribulations; without one, you can't get the true scriptures. 4. After the first phase of land grabbing ends, snack stores will quickly develop to a state where ten thousand stores look the same, like supermarkets in previous years: except for the sign, all stores feel similar: similar products, similar sales models, always using a few big brands at ultra-low prices to attract traffic, making customers pick up 80-100 yuan worth of items. The so-called membership models and private domain operations are also roughly the same. The snack industry will see unprecedented price wars, subsidy wars, and promotion wars. 5. At this point, most stores will be unprofitable, with astonishing closure rates. In the future, snack discount stores will definitely have a place among the 'four big pitfalls' for entrepreneurs. But the leading snack systems can still make continuous profits; milk tea shops keep closing, but Mixue Bingcheng keeps making money. 6. Don't worry; snack discount stores still have their basic traits as category killers and their scenario advantages. When the battlefield is littered with casualties and wailing, when entrepreneurs stop chasing fervently, and the media stops fanning the flames, that's when snack discount stores truly take off. There will definitely be snack systems starting differentiated product operations: my store is different when you enter; I can monopolize different supplier resources; I can always surprise customers. There will definitely be franchisees with strong operational capabilities standing out: understanding store management, product promotion, and customer management, becoming true professional retailers rather than completely relying on headquarters. There will definitely be more professional product suppliers emerging: developing products for specific systems and business districts, designing price systems and specifications, creating corresponding images, and creating product differentiation. Making stores more competitive while making themselves more competitive. There will definitely be more efficient manufacturer-store vertical marketing systems emerging: like HLA or SHEIN, using brand power to fully integrate upstream and downstream, forming a complete interest community, and operating efficiently with the entire supply chain. Becoming truly excellent channel leaders. Of course, it's also very possible that a production brand, platform, or other industry player (such as a garment enterprise with more retail management experience, a catering enterprise with better service capabilities, or an e-commerce enterprise better at C-end communication) will come in and cross-border disrupt, becoming a new type of channel leader. At that time, profitable snack discount stores reaching 70,000-80,000 or even over 100,000, with a market size of 200-300 billion yuan, won't just be a pie in the sky. Of course, whether it's upstream manufacturers, snack discount systems of all sizes, franchisees, or those intending to cross-border disrupt, staying sober amid the land-grabbing frenzy and starting targeted professional and differentiated operations from now on may seem like a difficult path, but it's the most likely way to get a piece of the pie, and a big 'pie' at that.

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