On October 19, 1992, a small store covering only 60 square meters opened in Nancheng, Dongguan. Chairman Hu Jintai named it "Jiarong." Just a few months before the store's opening, Deng Xiaoping's southern tour kicked off the market economy, prompting a wave of entrepreneurs to dive into business, injecting vitality into various industries. They later became known as the '92 generation of entrepreneurs, and Hu Jintai was one of them.
"Thirty years ago, when I opened the first Jiarong store in Dongguan, I never imagined it would become what it is today. I was young and driven by the tide of the times, making one choice after another; Jiarong was just one of them," Hu Jintai wrote this October.
In 1992, he likely didn't foresee that Jiarong would evolve from a small shop into a large group with retail as its core, spanning supply chain, investment management, education services, and more, with over 150 supermarket stores. In the 2021 China Chain TOP 100 list by CCFA (June 2022), Jiarong ranked 51st.
In the business tide, countless possibilities lie beneath the waves. The development of China's retail industry has been completely reshaped by the internet. Over three decades, from offline prosperity to online rise, and then to the standoff between online and offline, enterprises have indeed been pushed along by the times.
Just as no one could have predicted that the sudden pandemic would severely impact offline retail formats.
According to the "2021 China Supermarket TOP 100" released by the China Chain Store & Franchise Association, in 2021, the overall performance of the top 100 supermarket enterprises was not optimistic, with sales scale declining. Among them, 62 enterprises saw negative sales growth, nearly double the number from the previous year.
But the window for online-offline integration also opened, and physical businesses began to fight for survival. Instant retail became an important direction to explore. In September 2020, Jiarong Supermarket launched its delivery service, testing the waters of instant retail.
Instant retail, rooted in local physical supply, turns online and offline from a zero-sum game—where one's gain is the other's loss—into a complementary relationship. Delivery riders active in every corner of the city connect offline and online seamlessly, even making physical stores one of the biggest beneficiaries of change.
As Hu Jintai said, the 30-year-old Jiarong Supermarket has been "pushed by the tide of the times, experiencing one choice after another."
For example, as early as around 2010, Jiarong, as an offline supermarket, had already begun to face the challenge of online retail.
Besides Taobao and JD.com having already grown large, that year saw several events: group-buying models were introduced from abroad, with nearly 5,600 group-buying companies flooding in; Mecox Lane and Dangdang's listings triggered the first wave of B2C IPOs, accelerating the e-commerce transformation of large traditional channels, manufacturers, and even central enterprises; and the trend toward B2C department stores and platforms became evident.
According to monitoring data from the China E-Commerce Research Center, in 2010, China's online retail market transaction volume reached 513.1 billion yuan, nearly doubling from 2009; the number of domestic B2C, C2C, and other e-commerce model enterprises reached 15,800, a 58.6% increase from the previous year, and it was expected to exceed 20,000 in 2011.
In April 2011, Jiarong also established an online shopping department, invested over 1 million yuan in R&D, and launched a local online e-commerce platform called "Xiban Lala," attempting the traditional store + online mall model.
To promote online shopping, Jiarong implemented various marketing strategies, such as offering wholesale prices to customers buying full boxes, and providing group purchase prices below market rates for enterprises with large procurement volumes.
Of course, for this local offline retail enterprise, in the era of rapid online retail expansion, wanting to do something and being able to do it are clearly two different concepts.
This problem is quite representative. Walmart launched its online mall as early as 2010, and even in 2015, when O2O was booming, it launched an O2O platform called "Sugou" in Shenzhen. Also in 2015, Carrefour tested its online mall app in Shanghai and expanded to Beijing, Chengdu, Kunming, and other places.
But whether regional or national brands, the outcome of their online layouts was clear: they ultimately couldn't compete with online e-commerce platforms with greater financial strength and scale effects.
The reasons are simple. Online ventures inevitably face high customer acquisition costs and difficulty, and offline-based supermarkets also face the problem of left-hand-right-hand competition during transformation. Additionally, on the delivery side, insufficient fulfillment capability and high costs are major obstacles to embracing online.
During the rapid iteration and flourishing of traditional e-commerce, even if offline supermarkets tried to make waves, they couldn't avoid becoming the object of revolution.
The pandemic gave offline supermarkets a chance to re-evaluate their online projects because the business environment had changed significantly. From the perspective of business survival, they had to take big strides to integrate online capabilities.
According to Euromonitor data, in 2021, China's supermarket market size exceeded 3 trillion yuan, but overall market growth was sluggish, with a compound annual growth rate (CAGR) of only 2.6% from 2018 to 2021, and hypermarket formats saw almost no growth (CAGR of -0.4% during the same period).
More importantly, consumer shopping habits are also shifting.
A research report by Accenture shows that over 50% of post-95 consumers want to receive goods on the same day or even within half a day, and 7% want delivery within 2 hours of ordering.
A classic example: this September, on the day the iPhone 14 went on sale, under the topic "How to get the iPhone 14 fastest," the answer pointed to "buying a phone via delivery." That day, Meituan Waimai released data: as of 11 a.m. on the first day of iPhone 14 sales, orders for iPhone 14 via delivery nearly tripled compared to iPhone 13 orders the previous year, with over 50% of users receiving their new iPhone 14 within half an hour.
This consumption habit has been cultivated over the past three years of the pandemic, as consumers purchased supplies and daily necessities through instant retail platforms.
These changes all point to a new breakthrough: instant retail, which meets instant demand, local supply, and instant fulfillment.
This time, however, Jiarong Supermarket no longer only considered building its own platform.
Instant retail is a business that integrates three elements: local supply (commerce flow), instant demand (customer flow), and instant fulfillment (logistics). Only when these three are matched most efficiently can the model work.
For an offline supermarket, the cost of building its own online customer traffic and offline logistics is too high. Jiarong decided to cooperate with online platforms that have customer traffic and logistics. They first chose Meituan, which has the highest penetration rate in Dongguan.
Such cooperation can bridge online and offline in one industry chain, complementing each other's strengths. Offline stores can gain incremental online transactions and expand their customer radius through instant retail; Meituan can also become a 24/7, all-category "instant delivery supermarket" through its instant retail business.
The significance of cooperation also lies in the fact that food delivery capacity has obvious peaks and valleys, which prevents the platform's capacity resources from being matched most efficiently. Instant retail is different; its capacity demand curve is relatively flat, which will flatten the overall capacity distribution curve to a considerable extent, thereby improving overall capacity efficiency.
In mid-2020, Jiarong sent colleagues to understand the details with Meituan's channel contacts. The entire negotiation and communication cycle was actually long, reaching 3 months.
For Jiarong at that time, it was a clear strategy to combine online channels for reach and output, develop a physical + online model, and choose to access third-party platforms for instant retail.
"Meituan Waimai has high user stickiness, so we also wanted to see how high the perception of supermarket-end users could be and whether we could attract this traffic to our supermarkets. In addition, Meituan started with food delivery, so its overall fulfillment and delivery capabilities, timeliness, and other strengths are strong," Huang Rubo told us.
As for why communication took so long, it was related to the particularity of Jiarong's layout in Guangdong.
Taking Dongguan, the main city, as an example, Jiarong has over 70 stores there, spread across the urban area and 28 towns. Dongguan's geographical characteristics mean that although Jiarong has many stores in towns, they are very scattered.
The stickiness of users in various towns to Meituan Waimai and the demand for instant retail remained to be tested.
The final solution was for Jiarong's stores in the main urban area to go online first as a trial, with headquarters providing guidance and support.
So on September 29, 2020, the agreement was officially signed, and 6 stores in the urban area officially went online on the Meituan Waimai platform.
Since then, as the test gradually deepened and the group's central coordination management capabilities matured, over 71 large supermarket stores in the four major districts of Dongguan had all landed on Meituan's instant retail by June 2022.
According to Huang Rubo's observation, this landing brought obvious changes to Jiarong. For example, although offline customer traffic was declining due to pandemic controls, overall inventory turnover efficiency improved; the brand's user profile also showed a younger trend due to the traffic diversion from Meituan Waimai.
From the results, instant retail can indeed achieve a win-win for online and offline. Now, chain supermarkets like Jiarong have safely weathered the pandemic and achieved integrated online-offline development.
On the other hand, Meituan's strategic upgrade has also been effective. On November 25, Meituan released its third-quarter results. Its instant retail business, covering food delivery and flash purchase, saw total orders exceed 5 billion, a year-on-year increase of 16.2%. Among them, Flash Purchase hit a new high of 9.7 million orders on Qixi Festival in August, just one step away from the daily average of 10 million orders set in the second quarter.
But in fact, over the past two years, everyone has been crossing the river by feeling the stones.
First is the standardization of fresh products, a hurdle that Jiarong and others had to overcome. In the past, in offline scenarios, most supermarkets sold fresh products by weight, but when consumers order online, they can't weigh before purchase, which greatly affects the consumer experience and inevitably leads to disputes.
But to standardize all fresh products, supermarkets need to weigh and repackage products uniformly before shelving, which is also a significant workload.
What about fresh products that can't be repackaged, like live fish and whole chickens? Huang Rubo felt that the platform should at least have a price difference refund function. But "when we first connected with Meituan, there was no refund function. It's normal for fresh products to have overpayment or underpayment, but the system couldn't handle it, which really affected customers."
This led to continuous communication and coordination between the two sides until mid-2021, when the refund function was developed and officially launched.
Additionally, in terms of shopping experience, the core elements of online and offline differ. Offline, people often talk about "browsing the supermarket," where the consumer has the choice of goods, and supermarkets use strategies like product display and traffic flow design to promote actual consumption and shopping experience. Online, efficiency becomes the most important thing.
Thus, pickers have become core positions in supermarkets, needing to prepare goods and hand them to delivery riders in the shortest possible time.
Like most traditional supermarkets, Jiarong doesn't have conveyor belts; each store currently uses a configuration of 1 person in charge + 3 full-time pickers. During peak shopping hours, all staff are involved in picking.
For any supermarket, the supply chain is the core capability.
Since the focus was previously on offline scenarios, each store could make relatively accurate estimates of its product SKUs and sales after operating for a period, then adjust the supply chain accordingly. But after going online, online consumers' shopping habits and purchase radius differ from offline, placing more refined demands on the original supply chain system.
To better manage the supply chain after going online, Jiarong centralized inventory authority at the group headquarters and set a safety stock value, meaning store product and inventory management are precise to within ±5, to avoid poor customer experience caused by out-of-stock empty pages.
Over the past two years, many offline supermarkets have carved out a path online and achieved a second growth curve.
Meiyijia, a convenience store chain also based in Dongguan, as early as 2019, before the pandemic, defined its store profit model as "offline sales, delivery, and e-commerce value-added services." Data shows that in the past three years, on the Meituan platform alone, Meiyijia's online order growth rate exceeded 100% annually. In 2021, Meiyijia's instant retail sales reached 1.485 billion yuan, surpassing many foreign convenience stores.
Pangdonglai, known as the "Haidilao of the supermarket industry," began cooperating with Meituan as early as 2018. During this year's Mid-Autumn Festival, Pangdonglai's two mooncake varieties were not sold offline at all; they were all switched to online delivery sales.
The reason for this change is that the mooncakes are internet-famous, mainly targeting the young market, which perfectly matches the user base of delivery platforms. These users are not only willing to give up the "right" to queue but also have increasingly high requirements for delivery time, often using delivery as express delivery.
So, many consumers were pleasantly surprised to find that in the past, buying mooncakes meant bringing a small stool to queue at the supermarket entrance, but this year, they could sit at home and wait for the mooncakes to be delivered to their door.
The two internet-famous mooncakes sold out as soon as they were launched, with over 10,000 orders concentrated within 1 second. As a result, Pangdonglai had to quickly adjust its production plan and work overtime to meet consumer demand.
It's worth noting that despite its fame, Pangdonglai has never expanded beyond Xuchang and Xinxiang. As of the end of 2021, Pangdonglai had opened 12 stores in the urban and county areas of these two cities.
In people's traditional impression, the fourth- and fifth-tier markets where Pangdonglai is deeply rooted are not fertile ground for online retail. But that's not the case. In Pangdonglai's plan, in the next 5 to 10 years, its online business will reach a scale of 1 to 2 billion yuan.
This is probably the biggest change that instant retail has brought to offline supermarkets: a confidence established for growth.