---
title: "The Sprinting Suning Xiaodian: Myth or Joke?"
description: "Suning Xiaodian, which claims to have opened over 5,000 stores in just one year, is either a new species successfully incubated by new retail or a joke wrapped in the guise of mobile internet. This article examines the business logic behind its aggressive expansion and questions whether its strategy can overcome market realities."
author: "文石 / 澄韵"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2019-05-23"
language: "en"
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---

# The Sprinting Suning Xiaodian: Myth or Joke?

> Suning Xiaodian, which claims to have opened over 5,000 stores in just one year, is either a new species successfully incubated by new retail or a joke wrapped in the guise of mobile internet. This article examines the business logic behind its aggressive expansion and questions whether its strategy can overcome market realities.

**Born with extreme speed, claiming over 5,000 stores, is Suning Xiaodian a new species successfully incubated by new retail, or a joke wrapped in the guise of mobile internet?**
**The business logic behind the crazy expansion of Suning Xiaodian**
On March 19, Suning executive Bian Nong confirmed that Suning Xiaodian has opened 5,000 stores and plans to open 15,000 new stores in 2019.
**FamilyMart took 10 years to open 2,500 stores; Meiyijia took 20 years to reach 15,000 stores in 2018; Suning Xiaodian opened 5,000 stores in just one year.**
What does the frenzied Suning Xiaodian actually look like? Suning Xiaodian has designed four store formats.
> **CBD stores:** 100-250 square meters, targeting white-collar workers and middle class, featuring hot food, fresh produce, and convenient ready-to-eat meals.
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> **Community stores:** 100-200 square meters, focusing on basic food, vegetables, fruits, fresh produce, and non-food daily necessities.
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> **High-traffic stores:** 20-200 square meters, located in subways, hospitals, schools, etc., with different product categories.
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> **Unmanned stores:** In addition to regular standard products, they use robotic arms for fully automated operation and sales of ice cream, coffee, and oden.
Suning Xiaodian's positioning is omni-channel, omni-category, and omni-service, with at least the following functions:
**1. Offline traffic driver for Suning.com.** At checkout, cashiers can ask for customers' phone numbers to link to the Suning.com platform, integrating Suning's membership across all business formats. However, in New Distribution's field visits, no staff asked for phone numbers.
**2. Front warehouse and transfer station for Suning.com.** Suning Xiaodian can serve as a transfer point between the central warehouse and customers, handling the last 100 meters of delivery for all orders. **Suning also launched its own community group buying project, Su Xiaotuan**, which also relies on Suning Xiaodian for front-end traffic generation, group buying sales, and upstairs delivery.
**3. Collection point for community services.** Utility bill payments, parcel collection and delivery, lottery betting, and even housing agency services like Suning Youfang, Suning Bangke, and Suning Finance. Suning Xiaodian has joked about generating many billion-yuan stores selling dozens of houses a year.
**Suning Xiaodian's Great Leap Forward falls into the trap of scale**
Suning Xiaodian is Suning's strategy, but can such a leapfrog expansion overturn the market with strategic will?
**In China's retail industry, especially in FMCG retail, there has never been a precedent for rapid scaling success with a direct-operated system in the short term, and Suning Xiaodian is no exception.**
**1. Organizational mobilization and management capabilities face great challenges**
With 5,000 stores, assuming an average of 4 employees per store, that's a frontline team of 20,000 people. How to quickly train 5,000 store managers? How to unify the thinking of 20,000 people and standardize store operations? This is not a simple task.
**"Small stores should not be directly operated" is a default rule in the chain store field.** Why is managing small stores difficult? Too few people: one person daydreams, two chat, three make a show. **Therefore, only when the boss personally oversees the store is it effective; small stores are inherently better run by small bosses.**
Why do convenience store chains like Furong Xingsheng, Meiyijia, and other chain brands like Tanmuzhuang all choose franchise-based expansion models? This is worth pondering.
Based on reports so far, Suning Xiaodian has been lackluster, even poor, in store location management, store services, and staff management.
**2. Cross-category products cannot build advantages in the short term**
Suning Xiaodian's three store formats require extremely high supply chain flexibility. According to Suning's plan, it covers fresh produce, daily groceries, FMCG, fresh food, and small appliances, each with distinct supply chain requirements.
Suning's procurement advantage lies in home appliances. **Taking the FMCG products on Suning Xiaodian's shelves as an example, prices are generally much higher than other small stores.** JDB is 4.5 yuan per can, Fanta is 3.5 yuan per can, both about 1 yuan more expensive than other stores.
As for fresh and hot food, it extremely tests supply chain organization and management. Currently, only a few chain systems like 7-Eleven and FamilyMart can control it. With thousands of stores, it is not easy for Suning Xiaodian to break through.
**3. Most community services are wishful thinking, and home delivery may not be economical**
For community services, parcel collection is somewhat reliable. Home delivery is questionable unless the average order value is high enough. Few delivery orders are like chicken ribs; many orders require hiring a delivery person costing at least 150 yuan per day. Moreover, delivery times are often concentrated, not evenly distributed, making it difficult for stores to arrange.
As for acting as a housing agent, that's overthinking. When consumers have housing needs, who would they trust when they see a professional real estate agency next to a Suning Xiaodian?
Image: On May 22, a Suning Xiaodian store in Beijing that had been open for 10 months was deserted.
Other services like finance are not even on the horizon, so no need to mention them.
**4. Under rapid expansion, Suning Xiaodian's sales per square meter are worrying**
With rapid expansion, hasty site selection, forced openings, high rents, untrained and poorly managed staff, and lack of price advantage, Suning Xiaodian's sales per square meter are concerning.
To achieve store count targets, Suning Xiaodian completely abandoned the precise site selection steps used for Suning's appliance stores, opening many "money-losing stores" in poor locations. For example, in new communities with occupancy rates below 70%, which need at least one to two years to cultivate, Suning Xiaodian entered immediately, resulting in poor customer traffic and sales. Additionally, in competing for good community locations, Suning Xiaodian raised rents to grab resources, leading to very high costs.
Secondly, in terms of staff management, based on New Distribution's actual visits, Suning Xiaodian stores have very few employees, including those selling fresh food, resulting in poor service quality and experience. It's often hard to find staff when entering the store. Checkout experiences are also not smooth. Store operations are basically semi-out of control, with most stores performing poorly, and staff morale is low, even to the point of visiting neighboring stores out of boredom; you have to shout to get their attention.
According to industry media reports, mature Suning Xiaodian stores have daily sales of only around 1,700 yuan, and this figure is averaged with the performance of Dia Tian Tian, which Suning acquired. **According to the China Chain Store & Franchise Association, the average daily sales per convenience store nationwide is 4,500 yuan. Suning Xiaodian's sales per square meter are far below the industry average.**
Companies like Meiyijia, like Suning Appliance in its early days, took over a decade to build their chain empires, from supply chain to stores to teams, step by step. With countless predecessors having failed, Suning Xiaodian's Great Leap Forward plan won't work in the convenience store sector.
**Knowing it's a fire pit, why does Suning still jump?**
Why has Suning, which started with offline stores, completely abandoned its steady approach and opened stores so frantically, at a rate of 5,000 self-operated stores a year?
**1. From the results of online competition, going all-in on offline is Suning's inevitable choice**
A 2017 B2C online retail market share survey showed Suning.com only held 3.17%, down 0.13% from 3.3% in 2016. Moving from online to offline to find offline traffic entry points, Suning, with its offline store operation genes, naturally wants to turn the tide.
**2. From Suning's financial reports, it urgently needs new business growth points**
Since 2014, Suning.com's non-GAAP net profit has been loss-making year after year. In 2018, non-GAAP net loss was 359 million yuan. Over the past five years, the listed company's profits have mainly relied on investments and selling Alibaba stock and assets.
The main business's poor performance is also why Suning Xiaodian is eager for leapfrog breakthroughs. In Suning.com's 2018 annual business review, the first sentence about offline business is "Suning Xiaodian should rapidly expand based on strategic cooperation and regional expansion."
From January to July 2018 data, Suning Xiaodian's revenue was 143 million yuan, with a loss of 296 million yuan and debt of 653 million yuan.
**Bold prediction for Suning Xiaodian's outcome**
Suning Xiaodian's business story is not new; what's novel is that other internet companies just use it to brag, while Suning Xiaodian has invested real money to open 5,000 stores and plans to open another 15,000.
You can't eat a painted cake. Vague concepts like massive online traffic, big data, micro-commerce, and group buying cannot solve immediate operational difficulties. **The deteriorating actual operations of Hema Fresh are a slap in the face.**
Bold prediction: Suning Xiaodian will soon close stores on a large scale. Not respecting industry development laws will inevitably result in paying a heavy tuition fee.
The convenience store model will inevitably return to a tightly franchised model. The industry experience accumulated by retail companies like Japan's 7-Eleven and Meiyijia is not to be underestimated.
Operating a massive number of small stores in a direct-operated model is a mistake of thinking everyone else is stupid and you're the smartest.
In retail, scale is important, but not the core. If you don't return to products and services, don't truly settle down to operate well, and always try to arm yourself with internet concepts, taking big steps will inevitably lead to problems.
**Comment by new retail expert Wang Jun:**
The rapidly growing Suning Xiaodian has appeared on the latest China retail chain rankings with 5,000 stores.
This speed is faster than Luckin Coffee, which has gone public. What development path will the spun-off Suning Xiaodian take? New retail practitioners are watching with a wait-and-see attitude, and spectators never mind the fuss.
From my perspective, Suning is an old player that started with offline appliance chain stores. It must be expert-level in basic actions like site selection, evaluation, personnel training, and sales per square meter. But it must know better than others the drawbacks of such high-speed development of offline small retail formats. So why is it so aggressive?
**1. Needs of the group's development stage**
Suning is no longer the chain store of the past; it has successfully transformed into an internet e-commerce giant. How to combine online and offline and tell a new story is crucial. **The core is to acquire customers at low cost through offline channels.** Community small stores are undoubtedly the best channel.
By understanding the daily work schedule of Suning Xiaodian staff, it's clear that Suning Xiaodian promotes Suning's full range of products through two actions:
**1. Offline displays and advertisements to promote Suning's various apps.**
Actual effect: When I entered the store, I found staff rarely had time for promotion, so the effect is likely limited.
**2. WeChat community online promotion of Suning's platform products. After acquiring customers offline and pulling them into groups, product links are pushed regularly throughout the day, mainly featuring Suning e-commerce, offline Bangke, store products, and official posters, striving to achieve customer acquisition and transactions.**
Actual effect: As a customer, I proactively scanned the code to join nearby store groups (there were three group QR codes). After half a year, that group (Group 1) had 60 people. The actual effect is unknown.
**2. Independent spin-off and listing**
Why choose full direct operation? Simply for speed and strong management. It requires continuous capital infusion.
Given that the overall operation of domestic chain convenience stores is mediocre, Suning Xiaodian's breakthrough is even more difficult.
What will happen to 5,000 unprofitable stores?
1. It is said that Suning has decided to cut losses decisively. Stores that are losing money or not meeting benchmark sales targets will be firmly closed in the near future to stop losses.
Store closures are also expected to be strategically prioritized for contracting or transferring to Suning Xiaodian employees, achieving loss reduction without reducing store count.
2. At the same time, open new stores at a rate far exceeding closures.
3. Use the community group buying model as a breakthrough to increase the proportion of online sales in stores, satisfy the "new retail" concept, continue to inject capital to strengthen and expand, and strive for overseas listing.
Tips will be paid 400-2000 yuan once adopted.
**China FMCG + Internet Professional New Media**
**Committed to FMCG manufacturer transformation and channel digital solutions**


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