Easyhome continues to race in the home furnishing industry, while Zhongshang Supermarket gradually loses its voice. Facing the wave of discounting, even a belated transformation, Zhongshang still wants to seize the hope of development. When Pangdonglai's 'adjustment and reform' trend swept through traditional supermarkets, Zhongshang Supermarket, which remained unmoved, accelerated the opening of its discount brand 'Baokou Zhexuan'. On June 1, Baokou Zhexuan opened a large store of about 1,000 square meters in Wuhan's new urban area (Guanggu Zhiyu Future Store), its fourth store in Wuhan. Public data shows that since registering the WeChat official account for 'Baokou Zhexuan' in October last year, Zhongshang Supermarket has quietly opened stores in Lingjiao Lake Wanda Plaza, Zhongnan University of Economics and Law, and Zhongshang World · Pengcheng Xiaopinmao Shopping Center. Although Zhongshang Supermarket remains optimistic about the discount format, our reporter's visit found that even on the opening day, whether it was high-frequency fresh products or FMCG products slightly below the 'suggested retail price', Baokou Zhexuan did not demonstrate the supply chain strength it should have on the price side, with an unstable foundation, and consumers can hardly expect any 'quality' service from hastily opened stores. Combined with Zhongshang Supermarket's move in November last year to 'attract' Fresh Legend to open its first 'Ladybug Fresh' community fresh store, Zhongshang's exploration of the 'discount' model is, to some extent, a helpless move in response to shrinking retail market share and weak performance of traditional business formats. The author believes that in the current increasingly fierce competition, the mindshare of 'Zhongshang Discount' is hard to surpass the former 'Zhongshang Pingjia' (Zhongshang Fair Price), especially after Easyhome took over, Zhongshang's new retail path has been somewhat bumpy. Whether it is regional breakthrough or national ranking, the time left for Zhongshang to trial and error is running out. Weak price competitiveness, lack of service capability The new Baokou Zhexuan store is located in the 'Zhiyuli' commercial complex in the Future Science and Technology City area of Wuhan New City, surrounded by key technology enterprises and industrial parks such as Xiaomi and Huawei. The store's main categories include snacks, daily chemicals, fresh dairy, alcoholic beverages, and beauty products, with SKU count within 2,000. Image source: Retail Business Finance On the left side of the store is the fresh area, where durian, lychee, and watermelon served as the main traffic drivers on the opening day, but these three products did not have clear price tags, with the promotional watermelon priced at 2.99 yuan per jin, the same as the normal price at Pagoda Fruits. Image source: Retail Business Finance Overall, the price competitiveness of Baokou Zhexuan's fresh products is weak and the categories lack appeal. Therefore, the actual traffic-driving effect of the new store is not strong. The author observed that the store optimizes product structure and layout design to tailor to the needs of surrounding tech enterprise employees. Image source: Retail Business Finance One of the most obvious features is that Baokou Zhexuan places alcoholic beverages, instant food, and frozen fresh food in prominent positions at the entrance, which can quickly meet the needs of the surrounding crowd (busy work, irregular schedules, fast-paced life, and most enterprises have canteens). Image source: Retail Business Finance Furthermore, since the target customers often consume in bulk, Baokou Zhexuan also displays slogans such as 'Stock up!' and 'Incredible price! You read it right! Solid!' in the store. Image source: Retail Business Finance The slogans are loud, but the weakness in price competitiveness exposes Baokou Zhexuan's not-so-solid supply chain foundation. For example, Perrier is priced at 5.8 yuan per bottle at Baokou Zhexuan, while HotMaxx sells it at 4.3 yuan, and Ele.me's Xiaoxiang Supermarket and Puhui Supermarket both sell 4 bottles for 21.9 yuan, equivalent to 5.5 yuan per bottle. On the same shelf in the beverage area, 'Zhongshang Youxuan' natural drinking water (1.2 yuan), Ganten (2 yuan), and C'estbon (1.2 yuan) are displayed. Interestingly, the Ganten on the shelf has sold out, while the private label 'Zhongshang Youxuan' is not selling well. Image source: Retail Business Finance Moreover, Lay's potato chips are only 0.5 yuan cheaper than the suggested retail price. Image source: Retail Business Finance According to public information from Baokou Zhexuan's official account, in April, in the beverage sector, Lehu Vitamin Functional Drink, Alien Electrolyte Water, and Wahaha AD Calcium Milk became the bestsellers in their respective subcategories; in snacks, Nanjingcun Beijing Guoba and Xizhilang Xixi Guodong were more popular; in household items, Chamomile Wet Toilet Paper and Big Rooster Cleaner attracted the most attention; in beauty and personal care, bestsellers included UNO Facial Cleanser, Oriental Gem Shower Gel, JMsolution Mask, and AKF Lip Mud. Image source: Retail Business Finance Overall, the best-selling items in each category at Baokou Zhexuan generally have low unit prices and high market awareness, making them value-for-money products. For example, Lehu Vitamin Drink is priced at 8.9 yuan for 3 cans on Taobao's official flagship store, averaging 3 yuan per can, while Baokou Zhexuan sells it at 2.2 yuan; Wahaha AD Calcium Milk is 5.89 yuan per pack at Xiaoxiang Supermarket, 7.5 yuan at Puhui Supermarket, and 6.5 yuan at Baokou Zhexuan. Image source: Retail Business Finance In addition to weak price competitiveness, Baokou Zhexuan's service is also lacking. During the opening period, although marketing activities such as 'Spend 50 yuan get 50 yuan' and 'Spend 50 yuan get 10 yuan off' were used to attract customers, the actual discounts were not significant and lacked sincerity. 'Spend 50 yuan get 50 yuan' means giving 5 category-specific 10-yuan coupons with usage restrictions, and the 'spend and reduce' is also through coupon deduction. Image source: Retail Business Finance In addition, some fresh fruits lacked price tags, leading to repeated inquiries from customers, and the checkout area had issues such as unfamiliar staff and slow pricing. Whether it is product prices or store services, the actual situation of the new Baokou Zhexuan store is less than satisfactory. Already lagging behind other competitors, and arriving late to the new wave with insufficient sincerity, accelerating the opening of discount stores, Zhongshang Supermarket clearly has not exerted its full effort. Gradual loss of 'voice' In fact, Zhongshang Supermarket is cautious in controlling the overall operation rhythm of Baokou Zhexuan. In terms of site selection, Baokou Zhexuan mostly opens in locations with lower operating costs, rather than moving closer to high-traffic areas like HotMaxx and Hi-Tech Go. In October 2023, Zhongshang Supermarket placed the first Baokou Zhexuan store in Lingjiao Lake Wanda Plaza in Jianghan District, an area with dense working and living traffic and numerous commercial types. However, after the original chain supermarket Walmart closed, Lingjiao Lake Wanda Plaza experienced a long vacuum period, and Zhongshang Supermarket took this opportunity to enter. Just one month later, Baokou Zhexuan turned its attention to the Guanggu area, where students gather, and opened its second store on the campus of Zhongnan University of Economics and Law; in January this year, Easyhome's fourth shopping center nationwide, 'Zhongshang World', opened, and Baokou Zhexuan took the opportunity to enter. Image source: Internet The 'Zhiyuli' that Baokou Zhexuan entered this time is the largest commercial complex in the Future Science and Technology City area, and is a key supporting facility for serving talents from surrounding key enterprises in Wuhan. The surrounding area covers many technology enterprises led by Huawei and nearly 2,600 households, but due to the short development time, the retail format is currently scarce. Zhongshang Supermarket is one of the first enterprises to enter, filling the market gap for large well-known chain supermarkets in the area. Image source: Zhiyu Commercial Baokou Zhexuan's site selection is not based on the 'traffic first' mindset to expand brand awareness, but rather the 'cost first' mindset to reduce operating costs. Although it is difficult to increase exposure, at least the trial-and-error threshold is lower. Now, Zhongshang Supermarket's cautiousness is closely related to its gradual loss of voice within the Easyhome system. Wuhan Zhongshang, as an important part of Wuhan's commerce, competed with Ewushang, Zhongbai Group, and Hanshang Group in the city. However, because it is under the same Wushang Lian as Ewushang and Zhongbai Group, Zhongshang has long faced fierce horizontal competition, ultimately resulting in profitability that never met expectations. So in 2019, Wuhan Zhongshang, whose market value was less than 1.7 billion yuan at the time, was swallowed up by Easyhome. Unfortunately, Easyhome, which extended an olive branch, did not explore the synergy between the two businesses, but instead continued to focus on the home furnishing field and attempted to build large shopping centers as a second profit curve. Since then, Zhongshang Supermarket has lost its voice internally. Moreover, in the same industry, Zhongshang Supermarket also lacks competitiveness. Public data shows that currently, Wuhan Zhongshang has 2 shopping centers, 6 department stores, and 28 supermarkets, with a relatively small number of stores. Taking Zhongbai Group and Wushang Group, also in Wuhan, as examples, Zhongbai Group has a large scale and broad business, with 165 large stores in Hubei alone, and its convenience store format 'Zhongbai Lawson' is developing rapidly; Wushang Group has great commercial advantages, with the Wushang Mall composed of Guoguang, Wuguang, and Shishang, which has become a top-tier business district in the country. Even competing within the Wuhan region, Zhongshang Supermarket finds it difficult to cope, let alone facing pressure from fresh e-commerce platforms like Xiaoxiang Supermarket and Puhui Fresh, as well as national large chain supermarkets like RT-Mart, Yonghui Superstores, and China Resources Vanguard. Returning to the discount store business, Zhongshang Supermarket's current advantage lies more in the supply chain of local agricultural products, but this advantage cannot provide much help to its discount format. In the retail industry with many strong competitors, lacking unique market competitiveness will only leave Zhongshang with no place to stand. How to break through? Discount operation is an inevitable choice under the current consumption model. According to the '2023 McKinsey China Consumer Report', Chinese consumers are shifting to more price-attractive channels and actively seeking discounts and promotions. When consumer value orientation changes, discount operation is an inevitable choice for enterprises to cater to consumption trends. But whether it is discount operation or discount stores, it is not simply a matter of lowering prices; while maintaining low-price competitiveness, it is also necessary to retain profit margins. Image source: Retail Business Finance Discounting is not a game for one enterprise; it requires the cooperation of every link and every merchant in the supply chain. Discounting is not a zero-sum game. Only players who can master the supply chain upstream can do discount operation well. But even under such high requirements, there are still many 'players' joining the discount competition. A stone stirs up a thousand waves; the biggest stir in the market is naturally Hema's entry. Hema started its 'discount' transformation in October last year. Yonghui Superstores added 'authentic discount stores' in its stores nationwide, carrying out the discount format in a store-within-a-store form, and simultaneously added discount sections on its online App/mini-program, offering surprise discounts on food and daily necessities. On the one hand, this can attract traffic to existing stores with low prices; on the other hand, it can avoid the cost increase caused by new business. Image source: Yonghui Now more and more enterprises are joining the discount format, not only HotMaxx and Hi-Tech Go, which focus on clearance goods, but also many snack specialty discount stores like Snacks Are Busy, Zhao Yiming Snacks, and Haoxianglai, as well as Hema, Yonghui Superstores, CP Lotus, and Tianfu Convenience Stores. Under these circumstances, what strategies does Zhongshang Supermarket use to break the deadlock? It is worth mentioning that on the same day the new Baokou Zhexuan store opened, Zhongshang Supermarket opened another similar yet completely different store in Zhongjiacun, a traditional business district in Hanyang, Wuhan. This store cooperates with Hanshang Yinzhuo and Zhejiang Business Group to open a new model discount store. It is both a discount store and a boutique supermarket, covering an area of over 6,000 square meters, integrating fresh food, groceries, daily necessities, and dining, and also incorporating online sales and community group buying in its sales channels. When the discount wave is surging in the market, China Resources Vanguard chose to face it in the form of 'boutique supermarkets'. Zhongshang Supermarket seems to hope to combine the boutique supermarket format with its own 'Zhongshang Pingjia' label to explore the enterprise's competitiveness and moat. Image source: Retail Business Finance Specifically for Baokou Zhexuan, despite facing relatively lower competition and operating costs, the not-so-affordable prices also declare that Zhongshang Supermarket does not have an advantage over peers in the supply chain. To maintain long-term low-price promotions, Zhongshang Supermarket's voice in the supply chain seems insufficient, but its attempts at the discount format should continue, though it is likely just an experiment in the multi-format 'horse race'. From August 20 to 22, 2024, the '2024 6th China FMCG Conference' with the theme 'Crossing the Era of Shrinkage' and the '3rd China FMCG Hard Discount Conference' & '3rd China FMCG Distributor Conference' will be held grandly in Shanghai. At this conference, we will focus on the top guest matrix of China's leading FMCG brands, authoritatively interpret market trends, professionally analyze industry status, provide precise business docking and cooperation opportunities, help enterprises accurately grasp market pulse, formulate effective response strategies, and achieve resource sharing and coordinated development. At the same time, we will invite national leading retail platforms to thoroughly explain the hard discount retail competition model from multiple dimensions, interpret long-cycle trends and opportunities through practical cases, help enterprises find key opportunities, and achieve hard growth through cycles. Gathering 500+ outstanding distributors from across the country, from enterprise growth paths, challenges and opportunities, operational practices, etc., comprehensively interpret distributor business, help distributors open up survival radius, and solidify the business cargo! 🔺Scan code for ticket consultation🔺 ****Recommended reading