Source | Earphone Tech
Despite some brands still pursuing the '10,000-store' label, whether snack collection stores are a good business remains questionable, especially in the vast lower-tier market. Recently, Beige, who opened a snack collection store in his hometown in Anhui, has closed the store and plans to return to being an employee after a short rest. Beige, a member of a county town, worked at an internet company for years and, after saving some money, noticed the snack collection store business was 'trendy.' After research, Beige decided to franchise a snack collection store in his hometown. In Beige's view, rather than continuing as an employee living a nine-to-five life, it was better to start his own business and take a gamble. 'After all, it's hard to achieve financial freedom by working. Moreover, doing business offers more flexible hours and allows me to take care of my parents at home.' But Beige's plan fell through: 'Not only did I not make money, but I also lost all my savings.' Beige is not alone. According to incomplete industry statistics, the number of traditional snack stores nationwide plummeted from the wild growth period in 2015 to fewer than 250,000 by 2025, with over 500,000 stores disappearing in ten years, equivalent to nearly 140 snack stores being erased from the streets every day. County towns are the hardest hit. For example, media reports say that on a 100-meter street in Leling, Shandong, the number of snack stores increased from 1 to 3 within six months, and on a main road in a county in Anhui, four competing stores face each other. 'Serious homogenization, loss-leading products that don't make money, and product repurchase rates far below market analysis...' In Beige's view, this is not just a problem faced by one store, but the helplessness of the entire industry. Closed Snack Collection Stores in County Towns In 2023, while working at an internet company in the south, Beige returned to his hometown and found that there were no snack collection stores in the town. In Beige's understanding, such stores with moderate prices and rich SKUs were expanding rapidly in cities. In particular, a new brand he was familiar with had just announced a financing of over 100 million yuan. Multiple market analyses also pointed out that as a new snack retail format, snack collection stores were 'in a great situation' at least in the coming years. Tired of the nine-to-five life and considering taking care of his parents at home, Beige thought this might be an entrepreneurial opportunity. After researching industry information and visiting several snack collection stores, Beige began to advance his store-opening plan. 'First, there's a franchise fee, then a series of investments in site selection, decoration, stocking, and staffing,' Beige revealed to the author. 'From start-up to store opening, it cost nearly 800,000 yuan in total.' At one point, Beige was quite confident, 'looking forward to it every day.' But less than six months after opening, Beige began to feel quite disappointed. At first, Beige admitted, there was indeed a lot of foot traffic and business was good, but within two or three months, the store became deserted. Beige gradually discovered that 'consumers' freshness was fading, and the snacks that sold well were loss-leading products with low profit margins; while the products with truly high profit margins didn't sell.' 'What worries me most is the low overall repurchase rate,' Beige said. Sometimes the revenue looked high, but after deducting rent, staff, and various operating costs, there was no profit. Beige calculated that even if monthly revenue reached 300,000 yuan, what he ended up with was less than what he earned from working. Especially in county towns, except during the Spring Festival, most of the time the store was in a 'blank period' of business. Beige told the author that during his one year of operation, only the Spring Festival business was relatively good; in other months, 'there were pitifully few customers,' and 'basically all were losses.' After persisting for a year, Beige transferred the store. 'My previous savings were basically lost.' Beige also found that the new owner who took over his store no longer does snack business. The new owner converted the store into a restaurant specializing in beef noodles and baked flatbreads. In Beige's view, such local specialty snacks are popular among locals in county towns and have relatively stable customers, but for him, 'it's very hard work with thin margins, so I'd rather go back to work.' In fact, Beige's experience seems 'normal' to Dalei, a county-town youth who loves snacks. 'This kind of chain snack store requires too much investment and has no distinctive features. In our area, people just go for the novelty,' Dalei admitted. Initially, he also visited snack collection stores a few times. Compared with traditional snack brands like Liangpin Shop and Laiyifen, Beige's store was indeed cheaper and tasted good, 'but overall, the products are still the same old stuff: dried goods, meat snacks, small breads, and soft drinks, with no freshness at all.' Especially in terms of cost-effectiveness, Dalei believes, 'It's better to buy online with a group purchase.' As a seasoned foodie, Dalei is still willing to pay for snacks. But Dalei also believes that if you want to eat quality and safe food, you need to spend more money. 'I'll buy more well-known brands from e-commerce or offline supermarkets, and I also pay for Sam's Club.' After all, snacks as a consumer category are relatively low-priced overall. 'Even to save money, I can cut back on clothing, housing, and transportation, but when it comes to food, I still buy what I need and focus on quality.' In fact, Dalei is also skeptical about the quality of emerging snack collection store brands. 'As far as I know, many brands use OEM models. Even big brands have numerous food safety issues, so I really can't trust these emerging chain franchise brands.' The 'Pain' of Homogeneous Competition In Beige's view, the poor performance of his store was mainly due to industry homogenization. For example, within 400 meters of the national road where Beige's store was located, there were two snack collection stores. Beige said his store opened first, and within two months, another collection store opened nearby. Beige once visited a competitor's snack collection store as a consumer. After buying and tasting some best-selling snacks, he lamented, 'Except for the storefront and packaging, the taste and variety are basically the same: bread, dried fruits, preserved fruits, and meat snacks, with almost no difference.' Tang Lin, a merchant who has been in the FMCG industry for many years, believes that the 'closure' of snack collection stores is by no means accidental. In fact, Tang Lin had previously been pessimistic about this business. As a veteran retailer of over ten years, Tang Lin found that in county towns, this franchise business 'loses money for nine out of ten people,' especially for consumer brands driven by capital. Tang Lin pointed out that the expansion of many collection stores is essentially a 'franchise-driven' capital game. As Tang Lin said, the current market-leading snack collection stores all adopt a franchise model. Previously, leading brands like Mingming Henmang and Haoxianglai were expanding at a rate of hundreds of new stores per month. However, behind the rapid expansion, county towns are undergoing a reshuffle. For example, many county-town merchants represented by Beige invested hundreds of thousands of yuan to open stores, but their monthly net profit was less than 10,000 yuan, and the payback period changed from 2 years to 'indefinitely long.' Previously, media also reported that franchisees in a certain area of Guangxi said that early franchisees who enjoyed the industry dividend could indeed recoup their investment in 1.5 to 2 years. But in Beige's view, as the industry dividend fades and the rapid expansion phase ends, not only is the payback period delayed, but franchisees also face problems such as the brand inserting additional stores, densifying stores, and poor site selection, making it difficult to recoup investment. In addition, low profit margins are another crux of the continuous store closures. For example, Beige said, 'The products that sell well are loss-leading products with low profit margins; the ones with truly high profit margins are ignored and not even tasted.' Another media report said that a Haoxianglai franchisee in Nanjing also said that the comprehensive gross margin left for franchisees by snack discount stores is about 18%, but some single products have extremely low profit margins. For example, for Nongfu Spring's red bottle series, the store profit is only 0.1 yuan per bottle. If a customer buys 10 bottles, the profit is only 1 yuan, and the store also has to provide cashier labor and shopping bag costs, which makes many franchisees unwilling to order. Image: Netizens' discussions on 'snack collection stores' on social platforms More importantly, more and more consumers are 'tired of' snack collection stores. Dalei admitted that although these snack collection stores often have promotions like '9.9 yuan gift packs,' apart from some promotional items, other snacks are actually not cheap. 'For example, those loose small-packaged foods, if you calculate carefully, the unit price is even higher than the normal packaging in supermarkets.' Of course, more consumers point out that snack collection stores in county towns are too 'monotonous.' A consumer named Xiaomeng from a county in Hunan told the author, 'The products sold in chain snack collection stores lack personality. We locals like to eat some local specialty snacks, which are rarely seen in chain snack collection stores, but can be bought at the small supermarket downstairs.' Xiaomeng admitted, 'Over time, we go less and less.' Compared with 'homogenization,' Dalei hates various 'tricks' more, such as various sales pitches. 'As soon as you enter the store, you have to scan a QR code to join a private domain group as a 'member,' and they also recommend recharging,' Dalei said. This makes him 'extremely uncomfortable, as if being watched while spending. Also, if I recharge and the store runs away, who do I ask for a refund?' Previously, a consumer also told the author that shortly after recharging at a snack collection store, the store posted a transfer notice. 'Fortunately, I went to the store the day before it closed. The money in the card couldn't be refunded, so to use it up, I bought a bunch of bad-tasting junk snacks.' After that, the consumer warned friends, 'Never recharge at a snack collection store, or you'll be the fool.' The Next Step for Snack Collection Stores In fact, behind Beige's experience is a reflection of the snack collection store ecosystem. Snack collection stores, also known as 'snack discount stores' or 'bulk snack stores,' are stores that specialize in selling snacks. They generally adopt a strategy of low prices to achieve scale sales, with the obvious label of exchanging price for volume and small profits with quick turnover. In the past few years, on one hand, the leisure snack track has struggled to survive; on the other hand, snack collection stores have been on a rapid rise. In China, the bulk snack format started early. As early as 2010, 'Laopo Daren' opened its first store in Ningbo, creating the snack collection store model and expanding in the East China region through chain operations. But the bulk snack industry truly exploded only in the last two or three years. Leading brands such as Mingming Henmang and Haoxianglai, with the help of capital, have been rapidly expanding nationwide. According to data from iiMedia Research, at the end of 2021, there were only about 2,500 bulk snack stores nationwide, and in 2022, the number was about 13,000. By October 2023, the number of bulk snack stores in China had exceeded 22,000. Especially in county towns, a competitive pattern of 'five steps a post, ten steps a sentry' has formed. At the same time, leading brands are also trapped in a profit paradox. According to the 'China Snack Bulk Industry Blue Book,' the gross margin of a single bulk snack store should be around 20%, but from 2022 to 2024, Mingming Henmang's gross margin remained low, at 7.5%, 7.5%, and 7.6% respectively. 'Although the gross margin of traditional supermarkets has been declining in recent years, it still remains at around 19%. In comparison, the business model of snack collection stores may itself have problems,' Tang Lin explained. In Tang Lin's view, the industry is not without a way out. Tang Lin believes that brands might try to shift from 'scale competition' to 'value reconstruction.' 'Especially for snack collection stores to be reborn in the county market, they need to completely abandon franchise dependence and reconstruct supply chain reform, store differentiation, quality control, and trust rebuilding in all aspects.' Tang Lin gave an example: snack collection stores can refer to flexible supply chains. For example, distributors can return unsold products, with costs shared by manufacturers; brands and merchants can also develop county-specific customized products. In addition, to address homogenization, stores can differentiate themselves. For example, try a composite business model, introducing fresh food and express lockers while selling snacks; at the same time, deepen scenarios, launching gift packages for county banquet needs, etc. Beige also admitted that after his entrepreneurial experience, he found that the closure of snack collection stores in county towns is mainly due to the combined effect of uncontrolled expansion, generational demand gaps, cost structure, and business model inertia, which exposes the deep-seated problems of the retail industry. In the storm of instant retail popularization and rising rigid costs, Beige also said that transforming the store from a 'snack sales counter' to a 'snack culture demand response station' might help it gain a foothold in the new retail industry. But Beige can no longer afford to 'toss and turn,' after all, 'his pockets are empty.' In the view of Dalei and Xiaomeng, the endgame of county retail is still 'product power competition.' As 'foodies,' they believe that county consumers do not just want low prices; they crave the trust of 'buying with peace of mind.' To a certain extent, the future of snack collection stores lies not in the '10,000-store' label in financial reports, but in the profit accounts of each franchisee and the shopping experience of consumers. As Dalei said, 'Trust is more precious than traffic, and health is more important than speed.'