Source | Innovation Retail Club
"Right now, whether you're running convenience stores or hypermarkets, the old logic of making money effortlessly is completely dead."
When discussing recent developments, Ming, a veteran with over 20 years in retail who manages multiple supermarket systems in Sichuan, hit the nail on the head about the industry's anxiety. He spends most of his time on the front lines, witnessing too many collapsing traffic entrances.
This "fall" is more brutal than we imagine.
The Twilight of Old Formats Who Stole the Lifeline of Traditional Retail?
Traditional retail faces multiple challenges: convenience stores' core advantage of convenience is being diluted, while hypermarkets' one-stop shopping is being dismantled.
In the past, convenience stores thrived on "convenience," but now that word is being shattered by instant retail.
2025 is widely recognized as the breakout year for instant retail, with the market size approaching 1 trillion yuan (approximately 971.4 billion yuan).
"Look at delivery apps now: a cup of milk tea or coffee costs only five or six yuan and is delivered to your door. A bottled Starbucks coffee in a convenience store still sells for 9.9 yuan. Why would consumers bother going downstairs?"
In the first half of 2025, tea beverage delivery revenue on some instant retail platforms grew 105% year-on-year. On these platforms, through heavy subsidies, a freshly made milk tea or coffee is priced at 5.9 or 6.9 yuan year-round.
In contrast, a bottled Starbucks coffee in a convenience store typically retails for 9.9 yuan. The price gap, plus the convenience of no need to go downstairs, is a dimensionality reduction attack that has directly caused a sharp decline in sales of the most profitable beverage category in convenience stores.
The 2025 China Convenience Store Development Report shows that the industry's overall gross margin increased by 1.9 percentage points, but this improvement was mainly due to lower labor and rent costs.
This means that owners are struggling with the hardest-to-negotiate rent and labor costs, squeezing out this profit on paper through extreme layoffs, pay cuts, or property negotiations, not because of increased foot traffic.
Beyond the loss of timeliness, the more fatal issue is the loss of traffic-driving functions. For example, Chengdu-based Hongqi Chain used to have long queues outside its stores because people needed to top up transit cards or pay utility bills—a steady stream of essential demand.
"Who queues now? Everything is done on your phone." This digital transformation is gradually severing the last bond between convenience stores and consumers.
If convenience stores are suffering from dimensionality reduction, traditional hypermarkets are experiencing a chronic collapse from hollowing out.
In the past, hypermarkets relied on "one-stop shopping," but now the non-food categories (daily chemicals, general merchandise, small appliances) that supported their profits have been completely hollowed out by e-commerce.
According to the latest monitoring by NielsenIQ (NIQ), in 2024 alone, about 8% of hypermarkets were forced to reduce categories and transform into standard supermarkets due to unsustainable long-term productivity per square meter, and 12% of stores even cut their former profit pillars—apparel and large appliances.
Data from the China Chain Store & Franchise Association (CCFA) shows that the average sales per square meter of hypermarkets nationwide has been negative for three consecutive years. Output efficiency cannot keep up with rising rents and labor costs.
Convenience stores are no longer convenient, hypermarkets are no longer all-around, and the traditional retail defense line has completely collapsed. Since the old paths are blocked, where should the remaining retail veterans retreat?
The "Interception" of 500-800 Square Meters Finding a Defense Line That the Internet Can't Cut Through
Ming Cong: The 500-meter diameter closest to consumers, with an area between 500 and 800 square meters.
Why is this?
This is not just an adjustment in business area, but a reorganization of survival logic.
- The First Line of Defense Created by Distance
Retail ultimately comes down to competition over distance.
An 800-square-meter community store essentially intercepts consumers physically before they go to a hypermarket or open a delivery app.
Because the area is moderate, it can support a full range of fresh produce SKUs, making consumers feel "no need to go further to the supermarket" and no need to wait half an hour for delivery.
Within a 500-meter radius, this type of store builds a moat that is difficult for the internet and distant hypermarkets to easily dismantle.
- Extreme Expansion Efficiency
Compared to hypermarkets that span thousands of square meters and take months to renovate, community stores' biggest weapon is speed.
"With an area of 500 to 800 square meters, the investment is within the company's control and is easy to replicate quickly."
Ming Cong shared data: his team once opened and renovated more than 7 such stores in just two months.
This speed allows companies to quickly penetrate community blind spots that large stores cannot cover, completing the enclosure of surrounding residents before competitors react.
- A Civilized Replacement for Traditional Wet Markets
Medium-sized community stores can, to some extent, replace the disappearing, dirty, and chaotic traditional wet markets.
"Today's post-90s and post-00s generations basically no longer go to traditional markets."
This break in consumption habits leaves a huge ecological niche for standardized community fresh food stores of around 800 square meters. These stores are cleaner and more standardized than wet markets, and offer a wider range of fresh produce than convenience stores—a civilized replacement.
As long as they can meet the one-stop fresh needs at the doorstep, this business is the most stable traffic preserve.
In summary, 500-800 square meters avoids the heaviness of hypermarkets and the thinness of convenience stores.
Internal Skills Rooted in the Soil Digging Out Profits in the Narrow Door of 800 Square Meters
Opening a store is just getting a ticket; what truly determines survival is whether you can squeeze out profits bit by bit through product selection and supply chain, in the small change that internet giants overlook.
- Private Labels: Not About Low Prices, But About Building a "Trust Label"
Community stores have limited space; if they only sell common goods, they will quickly fall into a price war. Ming Cong believes that private labels are one of the lifelines for community stores.
But this kind of private label is not simple OEM; it's an extreme "labeling" transformation.
He shared a case: his team collaborated with a small bakery that supplied schools to make custom bread. As an OEM product, they didn't simply price it low; they introduced healthy elements like "Anchor cream" and "buckwheat," and labeled the product with clean labels like "no additives."
"Without large-scale marketing, sales of this single product tripled during a trial in four stores in Leshan."
Community consumers are willing to pay for "trust at the doorstep," as long as you can solidify that trust through transparent ingredients.
- Respect Local Tastes: Don't Blindly Copy the Pangdonglai Myth
Many supermarket owners now have a renovation anxiety, thinking that learning from Pangdonglai means copying everything, including the products on the shelves.
"This is the biggest misconception," Ming Cong reflected. Pangdonglai's "braised noodles" are a bestseller in Henan, but if you move them to Sichuan unchanged, they will likely fail. Sichuan consumers prefer local noodles like Yibin burning noodles, beef noodles, and small noodles.
This regional game is precisely the core competitiveness of 800-square-meter community stores. Because they are small enough, they can achieve precise matching with a "one store, one policy" approach. You have to dig into the 500-meter community and understand residents' purchasing preferences.
This granularity is a business blind spot that data-driven giants and distant suburban stores cannot touch.
- Product Selection Profile: Precisely Capturing the Post-90s' National Pride
In terms of product selection logic, the market in 2025 has undergone a profound generational shift.
"Today's post-90s and post-00s no longer blindly believe in foreign brands; instead, they have high recognition for national trends and health," Ming Cong observed. Imported snacks from Japan and South Korea with many additives saw a significant decline in market share in 2025.
On community store shelves, local health brands with simple packaging, clean ingredients, and reasonable prices are replacing traditional big names. This pursuit of "healthy and good-looking" determines the upper limit of community store productivity.
If your product selection still sticks to the old mindset that "foreign brands are better," you won't capture these core users with high repurchase potential.
Final Thoughts
From the traffic exhaustion of convenience stores to the transformation pains of hypermarkets, and the rise of the 800-square-meter community model, traffic has never disappeared; it has just quietly moved from the familiar crossroads to elsewhere.
For regional supermarkets, the era of "enclosing land by scale" is completely over. The current survival path is to cultivate deeply, opening stores that consumers need and selecting products that consumers want.
In this battle for the "last 500 meters," what is defended is not just foot traffic, but also an opportunity for traditional retailers in a time of great change.
On March 17, 2026, in Chengdu, we will host the "CFC 2nd Instant Retail Supply Summit and Instant Retail Warehouse-Store Product Matchmaking Conference."
This edition focuses on one thing: getting the right products into the right warehouses and making them move faster. Key topics and outcomes will include:
- 100+ top warehouse-store distributors sharing their product selection logic;
- 70+ warehouse-store founders sharing their procurement logic on site;
- Latest brand case studies in instant retail operations;
- Warehouse-store matchmaking: brands × warehouse-stores × service providers for on-site exchange.
Make supply more controllable and growth more certain. Friends who care about instant retail channels should not miss it. Interested friends, scan the QR code below for details.