---
title: "Traditional Supermarkets Struggle in Instant Retail, Risk Becoming Cannon Fodder"
description: "Traditional supermarket giants including Walmart, Carrefour, Yonghui, RT-Mart, Lianhua, China Resources Vanguard, Better Life, and Zhongbai are increasingly struggling under pressure from supermarket-like apps and platforms such as Meituan Instashopping, JD Daojia, Ele.me, Taobao Maicai/Taoxianda, Hema, Pupu Supermarket, and Dingdong Maicai. Compared to their dominant positions 20 or even 10 years ago, many traditional supermarkets now find even suppliers indifferent to them, as they are forced online and into instant retail, facing significant losses and store closures."
author: "抛砖"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-08-04"
language: "en"
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# Traditional Supermarkets Struggle in Instant Retail, Risk Becoming Cannon Fodder

> Traditional supermarket giants including Walmart, Carrefour, Yonghui, RT-Mart, Lianhua, China Resources Vanguard, Better Life, and Zhongbai are increasingly struggling under pressure from supermarket-like apps and platforms such as Meituan Instashopping, JD Daojia, Ele.me, Taobao Maicai/Taoxianda, Hema, Pupu Supermarket, and Dingdong Maicai. Compared to their dominant positions 20 or even 10 years ago, many traditional supermarkets now find even suppliers indifferent to them, as they are forced online and into instant retail, facing significant losses and store closures.

Currently, under the relentless pressure from a host of supermarket-like apps or platforms including Meituan Instashopping, JD Daojia, Ele.me, Taobao Maicai/Taoxianda, Hema, as well as Pupu Supermarket and Dingdong Maicai, traditional supermarket giants such as Walmart, Carrefour, Yonghui, RT-Mart, Lianhua, China Resources Vanguard, Better Life, and Zhongbai are finding it increasingly difficult to cope.
Compared to their status as industry leaders 20 years ago, or even 10 years ago, many traditional supermarket companies now find that even suppliers are indifferent to them.
**Traditional Supermarkets Forced Online**
In recent years, many tech companies have complained about difficulties surviving due to being "choked," but the most struggling entities are physical retail enterprises, especially traditional supermarket companies.
According to incomplete statistics, over the past three years, the cumulative number of store closures by supermarket companies nationwide has exceeded 2,000.
Looking at specific companies, Lianhua Supermarket, a representative of state-owned supermarket giants, closed more than 1,000 stores cumulatively over the past three years (589 stores in 2020, 249 in 2021, and 198 in 2022). Similarly, Yonghui, one of China's top three private supermarket chains, closed nearly 400 stores, a sudden one-third reduction from its peak.
Additionally, Better Life, known as China's "first private supermarket stock" and the "king of the southwest," has also been struggling, closing over 150 stores at one point, nearly a quarter of its peak number.
There are many reasons for these store closures, but essentially it is due to the impact of the internet breaking the limits of time and space, bringing a convenient "what you see is what you get" shopping experience.
Over the past decade, traditional supermarkets have been standard community supporting facilities. On one hand, real estate developers needed supermarkets to increase the market premium of their properties; on the other hand, traditional supermarkets relied on real estate developers to strengthen their channel density in community settings.
Thus, the two sides hit it off, and with community residents included, it was a sustainable win-win-win relationship, so this model remains popular today.
But now, with the maturity of e-commerce platforms and local life platforms, in-store consumption is becoming less popular, replaced by the widespread trend of instant home delivery consumption.
According to the "Chain Supermarket Operation Report (2020)" released by the China Chain Store & Franchise Association, foot traffic in chain supermarket stores generally declined by 4.9%. By 2021, 68.39% of supermarket enterprises saw a year-on-year decline in store foot traffic. Entering 2022, the proportion of supermarket enterprises with declining customer numbers reached 81.4%.
Although foot traffic in traditional supermarkets is declining, consumers are still choosing to shop online. As of now, JD Daojia has 78.6 million active users, while Meituan Instashopping has 230 million active users.
Driven by the trend of instant consumption, national chain supermarket giants including Walmart, Carrefour, Yonghui, RT-Mart, Lianhua, and China Resources Vanguard have been forced to enter the water, starting home delivery businesses and offering instant retail services. Statistics show that by 2020, the store coverage rate of home delivery services among China's top 100 supermarkets had reached 65.1%.
Thus, driven by internet platforms and traditional supermarket giants, as of February 2023, the number of small and medium-sized supermarkets and convenience stores on Meituan Instashopping had grown from 280,000 in January 2022 to 390,000 (as of April 2021, there were 920,000 supermarket and convenience store outlets in China). Based on this data, nearly half of supermarket and convenience store outlets have opened instant delivery services.
Currently, whether for residents in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, or netizens in third-, fourth-, and fifth-tier cities like Linyi, Yichang, Enshi, Changde, Zhangjiajie, and Hegang, online shopping no longer requires waiting 3-5 days; 30-minute delivery for everything is becoming a new choice for daily consumption.
Although shopping is becoming more convenient for consumers, and riders on platforms like JD Daojia, Meituan, Ele.me, and Hema are busy, traditional supermarkets like Yonghui, RT-Mart, and Better Life are in an awkward position.
Clearly, in this new wave of instant consumption, they are the protagonists, contributing effort, money, and labor, but in the end, they lose both people and money.
Not only have they closed hundreds of offline stores, but they have also invested hundreds of millions online to build platforms and products, only to end up with annual losses of hundreds of millions. Community Super Chain found that, according to incomplete statistics, nearly 90% of supermarkets and convenience stores are currently in a stage of periodic losses.
Specifically, according to statistics from Winshang, 13 listed supermarket companies including Yonghui Supermarket, Better Life, and Jiajiayue achieved total revenue of 204.64 billion yuan in 2021, with an average revenue decline of 6.96%. Total net profit turned from a profit of 3.147 billion yuan in the same period last year to a loss of 5.452 billion yuan, a year-on-year decline of 273.26%, with an average decline of 330.79%.
More seriously, the net profit of these 13 listed supermarket companies declined sharply; only 4 of the 13 were profitable, namely Hongqi Chain, Xinhua Du, Sanjiang Shopping, and Guoguang Chain, but all saw their net profits decline.
Among the 9 loss-making companies, Yonghui Supermarket, Better Life, Jiajiayue, Zhongbai Group, and Jingkelong all experienced their first annual losses since listing, with Yonghui suffering a massive loss of 3.944 billion yuan in 2021. Meanwhile, Renrenle's highest net profit plummeted by 2522.90% year-on-year.
Entering 2022, the total revenue of 11 listed supermarket companies was 184.284 billion yuan, compared to 191.257 billion yuan in the same period last year, an average revenue decline of 6.15%; total net profit was -5.755 billion yuan, with an average decline of 238.25% year-on-year.
In terms of net profit, only 4 companies were profitable in 2022: Jiajiayue, Hongqi Chain, Sanjiang Shopping, and Guoguang Chain.
By company, Hongqi Chain performed best, with the highest revenue growth rate of 7.15%; net profit ranked first at 485 million yuan, up 0.9% year-on-year. Conversely, Better Life's performance hit rock bottom, with the largest revenue decline of 34.48%; losses expanded 12.8 times to -2.544 billion yuan. Additionally, Zhongbai Group's losses also increased significantly by 13.2 times to -320 million yuan.
Although the data samples selected in this article are from the pandemic period, in fact, before the pandemic, i.e., before 2020, most supermarket companies had already seen a downward trend in both revenue and net profit. So for traditional supermarket companies, being forced online or into instant retail is an indisputable fact.
**Traditional Supermarkets Fight Back**
In the article "All In Instant Retail: Better Life and Yonghui Have No Choice," we mentioned that there are only two direct ways for traditional supermarket companies to go online: building their own platforms or joining third-party platforms like JD Daojia, Meituan, Ele.me, Duodian, and Douyin.
Currently, most supermarkets and convenience stores have tried both methods, but it seems that no supermarket or convenience store has successfully run its own platform model, including international giants like Walmart and Carrefour.
According to incomplete statistics, there are currently about 300 supermarket-like apps on the market. Apart from those under major internet platforms, most are from offline national chain supermarkets, small and medium-sized traditional supermarkets, convenience stores, and department stores.
Community Super Chain found that although there are various supermarket apps available for download, 90% of them have stopped updating.
Currently, active apps include RT-Mart Youxian, Duodian, Yonghui Life, iBailian, and China Resources Vanguard. In the Apple App Store, RT-Mart Youxian has over 270,000 downloads, Duodian over 80,000, and Yonghui Life over 20,000.
In the Huawei App Market, iBailian has over 20 million downloads, China Resources Vanguard over 50 million, RT-Mart Youxian over 100 million, and Yonghui Life and Duodian each over 400 million downloads.
Overall, if you were to download and install most supermarket apps on the market, assuming 24 apps per screen, you would need at least 13 screens to install them all. Note that these apps do not include other apps released by supermarkets and convenience stores for functions like membership points or logistics. If your phone has less than 10GB of storage, you simply cannot install all these apps.
In reality, for netizens in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, or residents in second- to sixth-tier cities, mainstream food delivery apps already cover almost the entire country, and most supermarkets have joined these third-party platforms. From this perspective, consumers obviously do not need to download so many merchant apps, since their need is simply to buy goods.
These existing apps not only have severely homogenized functions, but also similar product categories, brand counts, and product types, with the only difference being slight price variations.
Additionally, Community Super Chain found about 100 supermarket shopping mini-programs on WeChat, including store-based mall mini-programs. Apart from national chain supermarket mini-programs that operate normally, most mini-programs are not actually operational. For example, the Jinan Huoduo Fresh Supermarket mini-program certified to Jinan Yinhui Trading Co., Ltd., the Ougang Supermarket mini-program certified to Jiaxing Bailuke Supermarket Management Co., Ltd., and the Fumeng Chain Life Supermarket mini-program certified to Wuhan Fumeng Trading Co., Ltd. all have no products for sale.
Currently, besides the two online methods mentioned above, most stores of supermarkets including Walmart, Carrefour, Yonghui, RT-Mart, China Resources Vanguard, Lianhua, Renrenle, and Zhongbai Supermarket have already connected to major platforms like JD Daojia, Meituan, Ele.me, and Duodian, providing home delivery services to consumers nationwide.
By company, Yonghui Supermarket is currently the most active in online layout, with the largest and fastest exploration steps.
According to Yonghui's Q1 2023 financial report, as of April this year, Yonghui had 966 e-commerce warehouses nationwide (as of end of 2022, there were 1,033 stores in the supermarket format), including 156 full warehouses (covering 22 cities), 161 high-standard semi-warehouses (covering 44 cities), 22 satellite warehouses, and 627 store warehouses (covering 150 cities).
With the company going all-in, online business revenue in 2022 reached 15.936 billion yuan, a year-on-year increase of 21.37%. In Q1 2023, online business revenue was 4.02 billion yuan, with an average daily order volume of 469,000. During the reporting period, "Yonghui Life" self-operated home delivery covered 952 stores, achieving sales of 1.95 billion yuan, while third-party platform home delivery covered 942 stores, achieving sales of 2.07 billion yuan.
Meanwhile, Jiajiayue also provided home delivery services through third-party platforms like Meituan and JD, as well as its own Jiajiayue Youxian platform, reaching 511 stores (Jiajiayue had 960 stores at the end of the period), with more than half of its stores offering home delivery.
Additionally, Renrenle has built a home delivery service network through its "Renrenle Daojia" mini-program and official App, as well as third-party platforms like Meituan Waimai, JD Daojia, Ele.me, and Douyin, achieving revenue of 400 million yuan in 2022, accounting for over 10% of total revenue.
Overall, supermarket companies including Yonghui, RT-Mart, Lianhua Supermarket, China Resources Vanguard, Inzone Supermarket, and Zhongbai Supermarket are relatively fortunate, having achieved phased results for now.
Among them, RT-Mart's online revenue reached 24 billion yuan, Wumart 18.878 billion yuan, Lianhua Supermarket 5.629 billion yuan, Tianhong Shares about 5.7 billion yuan (including shopping centers/department stores), Xingsheng Youxuan 3.388 billion yuan, Chongqing Department Store's online sales exceeded 2.8 billion yuan, Xinhua Du 2.2 billion yuan, Zhongbai Group's online sales reached 1.724 billion yuan, and Aeon's online revenue was 1 billion yuan. Additionally, Meiyijia's online retail sales reached 1.646 billion yuan, and Lawson's 1.385 billion yuan.
Furthermore, according to the "2021 China Supermarket Top 100" released by the China Chain Store & Franchise Association, online sales of the Top 100 supermarkets in 2021 reached nearly 100 billion yuan, up 40% year-on-year. Among them, nearly 40% of sample companies had online sales accounting for over 6%, and over 70% had online sales accounting for over 10%.
Combining the above loss data, it is not difficult to see that whether it is international giants like Walmart and Carrefour, or domestic leading supermarkets like Yonghui, RT-Mart, and Lianhua, everyone is currently in a passive position. Although the integrated online-offline development seems to have opened up a situation, it has not yet formed a climate. Each supermarket's online business not only relies on offline store traffic but also depends on the full set of operational and fulfillment solutions from third-party platforms.
Therefore, in this new consumption trend of instant retail, traditional supermarket companies are far from being able to compete with internet giants like JD Daojia, Meituan Instashopping, Ele.me, Taobao Maicai, and Douyin Supermarket. Since they cannot compete, in this game within a game of instant retail, as the platforms grow larger, traditional supermarkets are likely to become cannon fodder.
**Dependence on Third-Party Platforms**
Unlike big brands entering offline supermarket stores with strong bargaining power, giants including Walmart, Carrefour, China Resources Vanguard, Lianhua Supermarket, Yonghui, and RT-Mart find it difficult to be on an equal footing with platforms like JD Daojia, Meituan, Ele.me, and Duodian.
Previously, a person in charge of a well-known supermarket company bluntly stated that the relationship between traditional supermarkets and platforms is essentially that of merchant and channel, so platforms will not give you preferential treatment just because you are a chain supermarket.
Currently, although most stores in the China Supermarket/Convenience Store TOP100 have entered platforms like Meituan, Ele.me, JD Daojia, and Douyin, providing both in-store and home delivery services, the competitive pressure online remains enormous.
Recently, Community Super Chain extracted some data from Meituan, Ele.me, and JD Daojia and found that in the TOP15 cities with dense distribution of mainstream new retail supermarkets, according to incomplete statistics, among the top 50 stores with over 10,000 orders, national chain supermarkets accounted for only 10%, with the rest being small and medium-sized supermarket stores.
For example, in a certain community in Guangzhou, none of the top 20 stores offering home delivery services were large supermarket companies, including well-known supermarket and convenience store brands like China Resources Vanguard, Lianhua Supermarket, Yonghui Supermarket, Metro, Meiyijia, JD Convenience Store, 7-Eleven, and FamilyMart, all ranking after 20th.
Additionally, in a certain community in Beijing, among the top 50 stores offering home delivery services, there were no national chain supermarket companies, including Jingkelong, Yonghui, Wumart, and Lotus, all ranking beyond 50th.
Meanwhile, in a certain community in Fuzhou, among the top 20 stores offering home delivery services, only 2 were Lianhua Supermarket stores, with the rest being small and medium-sized supermarkets.
In a certain community in Wuhan, among the top 30 stores offering home delivery services, only 3 were national chain supermarket stores, with the rest being small and medium-sized supermarkets.
Finally, in a certain community in Shanghai, among the top 50 stores with over 10,000 orders offering home delivery services, Lianhua accounted for 29, Hema Fresh 1, RT-Mart 1, and the rest were small and medium-sized supermarkets.
Overall, large supermarket chains have not shown any advantage online; on the contrary, some community mom-and-pop stores or new pre-warehouse merchants have demonstrated strong internet operation capabilities, capturing a large number of young people's orders.
Currently, facing the trend of "10,000 stores to home," traditional supermarket companies, having no competitive advantage online, will inevitably face dual pressure. On one hand, they need to address how to escape the vicious competition of low-price fighting on the same starting line with 10,000 stores in the short term; on the other hand, they worry about how to build a long-term development moat.
At present, both problems are unsolvable. Although traditional supermarket representatives like Better Life, Yonghui, and Gaoxin have invested over 1 billion yuan in home delivery business, the output ratio they achieve is incomparable to that of several new retail players.
Community Super Chain believes that the core reasons why offline traditional supermarkets and convenience stores choose to connect to these platforms are two:
On one hand, companies do not have their own online channel networks, and the cost of building and managing channels is too high. Just developing an app with a score above 80 requires hundreds of staff, and the initial development cost can range from hundreds of thousands to over a million yuan. This leads many companies to settle for second best and enter third-party platforms;
On the other hand, the mainstream consumer groups are on these platforms, and these platforms can provide support including store operation, product management, membership systems, digital marketing, digital supply chains, and last-mile delivery fulfillment services. So choosing to connect to these platforms helps companies save time and gain more experimental opportunities.
In summary, it is not easy for most supermarket companies to break free from dependence on third-party platforms. Over the past decade, under the wave of e-commerce, the people, goods, and places in traditional retail have been re-matched and recombined online.
For traditional supermarkets that also sell goods, they now do not have an advantage in any of the three factors—people, goods, or places—so they are constrained everywhere.
Conversely, platforms like JD Daojia, Meituan Instashopping, Ele.me, Taobao Maicai, and Douyin Supermarket have millions of traffic, abundant goods (most brands have directly or indirectly entered these platforms), and places—several apps can launch marketing activities or product collection pages targeting different groups and scenarios at hourly dynamic levels.
For example, during the annual 618 and Double 11 promotions, opening any app reveals at least a dozen promotional activities with different themes for different groups. Such operational efficiency is unattainable for all traditional supermarket companies in the short term.
Therefore, for listed supermarket companies like Yonghui, RT-Mart, Better Life, Jiajiayue, Hongqi Chain, and Zhongbai Group, to avoid becoming more passive in this instant retail game, they need teams and, more importantly, the suppliers who once fought alongside them offline.
Community Super Chain found that in recent years, management changes have been significant in traditional supermarket companies including Yonghui, Better Life, China Resources Vanguard, Chongqing Department Store, Zhongbai Group, Jingkelong, Chaoshifa, and Tianhong Shares. Among them, Zhongbai Group issued 11 personnel change announcements in 2022, including the departure or transfer of the chairman, deputy general manager, directors, supervisors, and board secretary.
Similarly, Chongqing Department Store saw the departure of its chairman, deputy general manager, financial director, board secretary, and supervisors within about a month around September 2022.
Additionally, since 2021, Yonghui Supermarket's management has been in constant turmoil, with the CEO, board secretary, vice president, and other management members choosing to leave.
In combination, whether these management changes were voluntary or forced, they at least indicate that traditional supermarkets' layout in instant retail has reached the middle of the game.
In the second half, whether traditional supermarket companies can break the deadlock where internet platforms call the shots will be the biggest highlight of their online layout.


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