Source | China Entrepreneur Magazine

In recent years, as market competition has intensified and consumer demand has remained weak, many listed companies have experienced stagnant performance, with retail being particularly hard hit. For example, Yonghui's performance even dropped 20% after its 'Pangdonglai-style' reforms. However, entrepreneurs must pay attention to the fact that the domestic supermarket retail industry is in the midst of a transformation wave in its 3.0 stage, and the new market environment contains new opportunities. Yonghui's choice to follow the example of the current leader Pangdonglai is commendable in its general direction, but it must be cautious: the last thing it should do is blindly 'copy' Pangdonglai, falling into the trap of using strategic laziness to mask tactical diligence. It needs to clearly identify consumer demands to seize new opportunities in the retail industry. The Direction of Reform Is Correct, but Blind Copying Will Lead to Pitfalls Recently, while inspecting the local supermarket retail market in Henan, I deeply felt a renewed atmosphere in terms of store ambiance, product quality, and consumer experience. Similarly, stores claiming to 'learn from Pangdonglai' have been emerging across various markets nationwide. Among them, Yonghui can be considered the most active 'disciple,' aggressively launching reform stores nationwide, using 'Pangdonglai-style reforms' as a promotional highlight. However, based on the performance in the first half of this year, Yonghui's reforms have not yet shown results. Amidst store closures and reforms, its performance still dropped significantly by 20%, falling into losses. Many media outlets and experts have commented, suggesting that Yonghui should not only learn from Pangdonglai's model but also fully adopt its cultural framework, organizational system, and more—it must replicate Pangdonglai's high wages, high welfare, and corporate culture, racing down the path of imitation. I disagree with the above viewpoints. First, 'high recruitment requirements,' 'family corporate culture,' 'high salary and benefits' are superficial phenomena. Blindly and fully learning from them will lead to failure—attempting to draw a tiger but ending up with a dog. On one hand, Pangdonglai's success stems from aligning with the evolutionary trend of supermarket retail categories, becoming a benchmark in the retail 3.0 era. Looking back at the history of the supermarket retail industry, traditional NKA/LKA supermarkets represented by Carrefour and RT-Mart previously entered consumer minds with complete standard product categories and low prices, making many consumers 'primitive people in supermarkets.' However, with the arrival of e-commerce platforms offering more complete product ranges and lower prices, the supermarket retail industry entered the 2.0 era. Traditional offline supermarkets became yesterday's flowers, struggling to survive on fees charged to brands for entry, display, and shelf space amid insufficient consumer demand. Brands like Pangdonglai, Costco, and Sam's Club have returned to consumers' underlying needs for product quality and shopping experience, creating significant differentiation from traditional supermarkets through direct procurement, private labels, wide categories (such as catering and bakery), and narrow SKUs, becoming 'benchmarks' in many consumers' minds and marking the industry's evolution into the 3.0 era. It is precisely because Pangdonglai excels in retail, attracting loyal consumers for repeat purchases, that it can support high wages, high welfare, and a family culture. On the other hand, Pangdonglai's success relies on its own retail system—good products, good service, and good prices. Pangdonglai's strength lies in its private-label product development capabilities, humanized service experience processes, and competitive pricing strategies. Against the backdrop of Pangdonglai's private-label products gradually exiting Yonghui's stores, Yonghui's existing private-label products cannot compete in quality or price, making it difficult to establish a 'benchmark against Pangdonglai' perception. Second, from a brand operation perspective, fully copying Pangdonglai's model will bring extremely severe cost challenges. Undoubtedly, directly replicating Pangdonglai's cultural system and salary structure will lead to a significant increase in operating costs, adding fuel to the fire for Yonghui, which is already mired in losses. More critically, the increased operating costs will inevitably be passed on to product prices, but consumers will not pay for whose 'culture' you copy—they care more about whether they can get satisfactory products and services at reasonable prices. Third, China's consumer market is diverse, and a single model is difficult to adapt to different market regions and levels. Take Pangdonglai as an example: it started in prefecture-level cities in Henan Province, and obtaining resources and support from the government was one of the conditions for its success. New retail head brands represented by Sam's Club only lay out in first- and second-tier cities, with limited penetration into lower-tier markets. Those who learn from me survive; those who imitate me die. 'Pangdonglai-style reforms' did indeed inject a strong dose of vitality into Yonghui when it was in critical condition in 2024. However, it must be wary that against the backdrop of declining offline traffic, the novelty may fade and things may return to calm. Learning from Pangdonglai should focus on 'learning the logic,' not 'copying the model.' Following Retail Trends Is the Right Path

"Pay attention to changes in the times and society, and create unique products. If you cannot build a differentiated business model, the survival of the enterprise will become a problem." — Toshifumi Suzuki When Toshifumi Suzuki introduced 7-Eleven convenience stores from the United States to Japan, he made numerous optimization adjustments based on the core needs of local consumers, enabling it to become a giant in the Japanese retail industry. For example, adapting to the fact that Japanese office workers had little time for breakfast and lunch breaks and found it inconvenient to cook, he launched high-quality bakery products and ready-to-eat bento boxes at 7-Eleven, which won consumer favor. Against the backdrop of the supermarket retail industry nationwide entering the 3.0 era, Yonghui must consider how its core consumer groups and their needs have changed, to drive category differentiation under the 3.0 trend and become a national head brand. For example, at the level of consumer group needs, with the gradual increase in the proportion of the silver-haired population and their shopping habits of offline consumption, can it create new retail categories around the needs of the elderly? At the price and category level, for mass consumers who value cost-effectiveness, how can it use low prices and high quality as a starting point to establish mindshare in certain categories and create new retail categories? At the same time, Yonghui must also build exclusive strategic advantages in products, services, and prices around its category strategy. First, Yonghui must prioritize finding its own 'sharp knife product.' Looking at the global retail industry, successful retail enterprises all establish differentiated perceptions through 'sharp knife products.' Trader Joe's, the king of sales per square foot in the U.S. retail market, has established a perception of high quality and low prices with natural, healthy fruits and vegetables. Sam's Club has established a perception of global direct sourcing and high-quality selection through beef. Pangdonglai has established differentiated advantages through household products like facial towels, laundry detergent, and deli foods. Therefore, Yonghui needs to identify the most differentiated product categories, develop exclusive products, and offer the most competitive products based on its own conditions, market environment, and consumer needs. Second, since Yonghui is still a traditional retail supermarket and cannot compete with membership-based warehouse clubs or Pangdonglai's high-service-cost model, it needs to make reasonable trade-offs based on consumer needs. Third, under the focus on strategic-level sharp knife products, leveraging its store count advantage and economies of scale, it should further reduce SKUs within the same category to build 'good prices' and create a moat. In summary, only by returning to the logic of category differentiation in the retail industry and creating differentiated advantages that others do not have can Yonghui carve out its own bright path in the fierce retail competition. Borrowing the opening line of The Art of War: "War is a matter of vital importance to the state; a matter of life or death, a road to survival or ruin. It must be studied with the utmost care." For supermarket retail entrepreneurs or entrepreneurs in other retail formats, amid the current major transformation trends, they must prioritize strategic thinking, make long-term plans before transformation, and strive to achieve 'the victorious army wins first and then seeks battle.'