The retail industry, already on shaky ground, is experiencing a harsh winter. On October 11, Bubugao Investment Group, a well-known retail company, added a new bankruptcy review case. Dongxing Construction applied to the Xiangtan Intermediate Court for bankruptcy review, citing "inability to repay due debts and obvious lack of solvency." Earlier, at the end of September, RT-Mart's parent company Gaoxin Retail was briefly suspended from trading on the Hong Kong Stock Exchange, and long-circulated acquisition rumors became a done deal. Even Yonghui Superstores was acquired by Miniso for 6.27 billion yuan, taking a 29.4% stake. Tianyancha information shows that Ye Guofu took over Guangdong Juncai International, which will become the largest shareholder of Yonghui Superstores. A series of events seem unusual. Currently, chain supermarkets are witnessing a mass retreat of traditional supermarkets. Meanwhile, new retail formats like Pangdonglai and Miniso are riding the wave of change. Amidst the transition, the retail industry is undergoing a major transformation, and it has reached a point where change is imperative. What is crushing retail supermarkets? "I won against all competitors but lost to the times; when the times abandon you, they don't even say goodbye." This is a famous quote from Huang Mingduan, founder of RT-Mart. It refers to himself and the entire traditional retail industry in China. Looking at RT-Mart's financial reports, this situation seems evident. On the evening of May 21 this year, RT-Mart's parent company Gaoxin Retail released its annual performance report for fiscal year 2024 (April 1, 2023, to March 31, 2024). During the reporting period, the company's revenue was 72.567 billion yuan, a year-on-year decrease of 13.3%; net loss was 1.668 billion yuan, a year-on-year decline of 2238.5% compared to the profit of 78 million yuan in the same period last year. This is the second time Gaoxin Retail has faced an expanding loss after a loss of 826 million yuan in fiscal year 2022. Behind the poor financial performance, there is another number: it closed 20 hypermarkets in fiscal year 2024. Yonghui Superstores, another well-known retail enterprise in China, is also going through a difficult time. At the end of August this year, Yonghui Superstores disclosed its 2024 semi-annual report. In the first half of 2024, the company achieved total operating revenue of 37.779 billion yuan, a year-on-year decrease of 10.11%; net profit attributable to shareholders was 275 million yuan, a year-on-year decrease of 26.34%; non-GAAP net profit was 29.8625 million yuan, a year-on-year decrease of 69.94%. From RT-Mart to Yonghui, China's traditional retail giants are facing increasingly severe survival pressure. The bleak undertone of RT-Mart has long been evident—young people no longer want to shop at supermarkets. Salesclerks wear grim faces, and no matter how you ask, you can't get the information you need. Their tasks have shifted from answering questions and making recommendations to simply stocking shelves. The shelves display a row of products at the front, but the once-diverse selection has been replaced by single items; removing one reveals empty shelves behind, just like RT-Mart's fate, which cannot withstand scrutiny. "I visited once when it was booming, but the experience was poor, and I never wanted to go again," this is not a problem unique to RT-Mart; almost all supermarkets are no longer as prosperous as before. Now, when you go to a supermarket, you'll find it's a place where middle-aged and elderly people rush to buy discounted goods. The change in consumer demographics has also led to changes in consumption habits. A long-time RT-Mart customer said, "I used to come every two days, but now I compare prices on my phone before buying. Often, RT-Mart's offline stores are more expensive, so I don't buy there. With so many chain stores and e-commerce same-day delivery, there's no need to go to RT-Mart. Unconsciously, my shopping habits have changed." Behind this is the impact of new shopping methods like O2O and community group buying on supermarkets. Previously, people went to supermarkets primarily to buy daily necessities like vegetables, fruits, and fresh meat, which were also the supermarkets' traffic drivers. But now, vegetables, fruits, meat, dairy, staples, and paper products—these items that most attract customers to physical stores—have become the main consumer goods purchased through O2O channels. As Huang Mingduan said, many times you are not wrong; the times have simply abandoned you.
Self-rescue is urgent
RT-Mart began thinking about today's situation seven years ago. At the end of 2017, Alibaba invested $2.88 billion to acquire a 36.16% stake in Gaoxin Retail, becoming its second-largest shareholder—the largest deal in the retail industry at the time. With the help of this giant that opened a new era, RT-Mart made a series of transformations to cope with the impact of e-commerce. It introduced mobile payment devices to make the in-store shopping experience smarter and faster; it integrated online delivery services like Taoxianda, Ele.me, and Tmall Supermarket to expand sales channels; it even adopted the "Hema model," with small-store and membership-store models advancing simultaneously. However, blindly replicating without considering whether it truly fits is problematic. In 2020, although RT-Mart's online revenue growth reached 80%, Gaoxin Retail's annual revenue growth was only 0.1%. Alibaba's involvement did bring rapid changes to RT-Mart, but it ultimately failed to support substantial capital inflow on RT-Mart's books. That year, RT-Mart launched a new initiative: RT-Mart Super, positioned as a community-based fresh food medium-sized supermarket. But prices were not as affordable as wet markets, and locations were not as convenient as downstairs convenience stores. These drawbacks still deterred consumers. When community group buying was booming, it launched Xiaorunfa, positioned as a new retail community fresh food supermarket, but it failed to achieve profitability due to lack of differentiation, becoming a burden instead. At the beginning of last year, it launched M Membership Store with a paid membership system, offering over 3,000 products, of which more than 10% were private label, and also providing hourly delivery within 5 kilometers. But Sam's Club and Hema users, who already had memberships, were unlikely to switch; they didn't need a new option. Meanwhile, RT-Mart didn't stop; the viral copy "I've been killing fish at RT-Mart for ten years" made it popular on social platforms like Xiaohongshu, but unfortunately, the traffic didn't convert into sales. Sparking consumer curiosity is just the first small step. Often, when the underlying business model lags behind the times, spending more time on tweaking the branches is meaningless. In fact, consumers who grew up in the millennial generation have completely different interests, habits, and aesthetics from the previous generation. They pursue personalization, brands, and innovative service methods. According to iiMedia Research data, as society's material life becomes more abundant, consumers' shopping focus is no longer limited to product quality; they increasingly demand personalized products and services, which invisibly drives the retail industry to continuously seek innovation and differentiation. By offering personalized products, exclusive brand packaging, or services, brands can effectively enhance consumer recognition and brand image. This makes traditional retail supermarkets, which only provide selling space without service capabilities, have an "original sin" in their business model. During the winter when the retail industry faces structural transformation, changing the model is undoubtedly difficult at the start.
The transition has already begun
The start doesn't matter; breaking through is what matters. When talking about supermarkets, we must mention Yonghui and Pangdonglai. "Over the past decade or so, I've traveled the world and seen various retail formats and models. In the last two years, I've found that a retail model better than Costco and Sam's Club is right here in China—the Pangdonglai model." This is a quote from Ye Guofu, chairman of Miniso. Positive signals may offer a new solution for the retail industry. Pangdonglai, the absolute internet celebrity in the supermarket sector, has turned supermarkets into tourist attractions. With sincerity rarely seen in capital stories and localized narratives, it has won acclaim. E-commerce models certainly impact Pangdonglai too. Why do people prefer to visit physical stores to buy the same products? At Pangdonglai, there are 7 types of shopping carts at the entrance alone, from those for children to those with magnifying glasses for the elderly, catering to the most painful needs of every audience. If your purchase needs are not met at Pangdonglai, you can leave your contact information, and Pangdonglai will even stock items specifically for you. Not only externally, but Pangdonglai is also absolutely sincere with its own employees. Online, there's a salary and benefits table for Pangdonglai, even including a "grievance award" column: "When rights are infringed, the company strives to improve in this direction." Being sincere with employees internally enables better external service; this closed loop is virtuous. The services and experiences that others can't offer are Pangdonglai's unbeatable trump card. Ye Guofu, founder of Miniso, has repeatedly stated that the internet wins with low prices, but if offline and online prices are the same and quality is guaranteed, consumers will return. A strong supply chain is Miniso's confidence, and rapid expansion has allowed it to leave its mark in the winter. Then, store upgrades and IP collaborations attract consumers, converting curiosity into foot traffic, reclaiming the "browsable" experience that differentiates offline from online. In recent years, Yonghui has retained its "agriculture-to-supermarket" foundation, changed the rule of opening at 10 a.m., and moved opening time to 6:30 a.m., giving middle-aged and elderly early shoppers a new option. But when a refined lifestyle is integrated into the hustle and bustle of the market, Miniso's supermarket story still awaits validation. In fact, whether it's Pangdonglai or Miniso's Yonghui, they haven't added many new models; they've just done better on certain details that consumers can perceive. In contrast, RT-Mart has only connected online and offline but failed to improve services and experience simultaneously. Retail seeks innovation; where is the innovation? Retail is an industry of picking up coins from the ground; because gross margins are low, the tolerance for mistakes is also low. It's not new retail just because you've changed to a more novel channel; what needs to be innovated is more down-to-earth service. When traditional supermarkets like RT-Mart and Yonghui meet new retail models like Pangdonglai and Miniso, a transformation has already begun.