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How is instant retail changing stores, platforms, and supply chains?
Coverage of flash warehouses, front warehouses, discount stores, supermarket transformation, and local commerce platforms in China.
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Bulk Snack Supermarkets Down 30%, Standard Products Down 15%: Can Snack Distributors Survive This Winter?
Hello friends. I'm Yuan Lai from New Distribution. Recently, while preparing for the first China FMCG Hard Discount Conference in Zhengzhou, I spoke with over a dozen major food and beverage distributors. They unanimously reported significant declines: standard snack products in supermarkets down 10%-20%, and bulk snack products down around 30%. One distributor noted that no store is immune, with return rates rising and promotional costs increasing. This article explores whether distributors can open stores, how to maintain local supermarket business, and what else they can do to offset declines.
袁来Zhao Bo: Ten Thoughts on the Discount Retail Model
1. The current discount model is not based on supply chain optimization but on subsidies from investors and low-margin franchise models, leading to unsustainable losses. 2. Discounts and snacks are still in the early stages of the Dunning-Kruger effect, but will likely peak soon, with negative effects possibly emerging by mid-next year as small entrepreneurs can't sustain losses. 3. Discount is a long-term, penny-picking business, not a quick-money scheme; the current aggressive consolidation in snack stores is a VC-driven model that will likely lead to many brand failures.
赵波2000+ Stores in Three Years, 70% in Townships: 'Happy Squirrel' Taps the Downgraded Market with Hard Discounts
When it comes to snack discount stores, you can name a string of brands: Snacks Busy, Haoxianglai, Snacks Youming, Zhao Yiming, Love Snacks... There is a brand that has opened 2000+ stores in 3 years, ranking among the top by store count. But its name may be unfamiliar to you, as the media rarely mentions it and the founding team is very low-key. This brand is Happy Squirrel. Of its current 2000+ stores, over 1000 were added in the past year. Unlike other well-known snack stores, 70% of its stores are in townships.
任文青AndyWhy Are Private Labels So Cheap?
Low price is the hallmark of private labels, which offer quality at a lower price compared to well-known brands. The price difference can be significant, as illustrated by Aldi's private-label ketchup costing €0.95 versus Heinz at €3.39. The low price stems from eliminating marketing and channel costs, and is enabled by scale, which allows retailers to source directly from manufacturers at lower costs.
刘春雄Snack Discount Stores: Flooring the Accelerator, Beware of Overturning!
The author, an investor and participant in the discount retail sector since 2021, warns that the rapid expansion of snack discount stores, characterized by excessive store openings and price wars, is unsustainable and harmful to the industry. He calls for a shift towards long-term, quality-focused development.
老谭聊连锁Exclusive Release | 2023 China Discount Chain Brand TOP List
The curtain has risen on China's retail discount transformation. By the end of 2023, the number of snack discount stores nationwide is expected to reach 22,000-25,000, with sales scale of 70-80 billion yuan, a more than tenfold increase in three years. Meanwhile, hard discount stores in various categories and forms are accelerating growth, and traditional retailers are also seeking discount transformation.
New Distribution“Convenience store business has never been as difficult as this year”
Convenience store owners in China are facing unprecedented difficulties this year, with sales plummeting and competition intensifying. The decline in low-priced cigarettes, changing consumer habits, and an oversupply of stores are key factors. Despite the challenges, new stores continue to open, and the industry is expected to consolidate in the coming years.
晴山Hard Discount: Selling Products at Low Prices vs. Selling Products Cheaply?
The topic of snack discount stores is hotly debated, with rapid growth and controversy. New Distribution predicts that by the end of 2023, there will be 22,000-25,000 snack discount stores in China, with sales reaching 70-80 billion yuan, a tenfold increase in three years. The article distinguishes between two business logics: selling cheap products (low-price selling) and selling quality products at low prices (product-led low pricing), arguing that the latter, which focuses on supply chain efficiency and quality, is the sustainable model.
田静Snack Discount Stores Pressuring Traditional Supermarkets to Seek Self-Rescue
Traditional supermarkets are facing declining foot traffic and sales as snack discount stores proliferate, offering the same products at significantly lower prices. To survive, many are exploring discount-oriented reforms, such as opening discount stores, creating store-in-store concepts, or implementing full-scale discounting, though success depends on supply chain efficiency and decisive transformation.
赵胜男“Consumers Have Matured”: Brand Disenchantment Is the Key to the Era of Hard Discounts
The boom of snack discount stores has fired the first shot in the retail industry's comprehensive move toward discounting, ushering in a supply chain revolution—a major trend that will shape China for the next decade. The emergence of discount stores can be interpreted in two ways: one focuses on low prices and discounts, resonating with the current wave of consumption downgrading, but whether this short-term factor can sustain the long-term development of hard discount models is questionable. The other interpretation sees it as a historical inevitability, emphasizing the outcome of commercial concentration. Ultimately, the hard discount era has fully arrived in China, and the supply chain revolution has begun.
刘春雄Snack Discount Stores: How Many Can Survive 2024?
The underlying logic behind the discount store boom: hard discount is not new, but why did it explode in 2023? Who is making money and who is losing in the hard discount model that emphasizes quality, low prices, and no tricks? After B2B and community group buying ended in chaos, will hard discount enter the same fate in 2024? Is it worth manufacturers embracing hard discount? To answer these questions, we must first understand the essence of hard discount, why it exists, and why it became popular. This is not a theoretical question; understanding it is crucial. We...
陈思廷Traditional Supermarkets Close One After Another, While Warehouse Club Stores Surge Ahead
Warehouse club stores are booming, but why are they so popular? On August 26, Hangzhou's first Costco opened, drawing massive crowds with hour-long queues for parking. This is Costco's fifth store in mainland China, and each new opening has seen similar scenes. In contrast, traditional supermarkets are struggling, with closures and declining performance. The article compares the two formats and analyzes the rise of warehouse clubs, highlighting the competitive landscape among Hema, Sam's Club, and Costco, as well as the emergence of local brands.
张凌寒Shadows Loom Over Supermarkets
Traditional supermarket channels are facing increasingly severe diversion of customers and sales. Especially this year, supermarkets have truly experienced what it means to be in an 'era of stock': from front warehouses and online supermarkets that continuously expand categories, which are already 'invisible killers', to the expanding membership stores that pose the biggest potential threat. Additionally, new small-format stores focusing on vertical categories, mostly dealing in fresh produce and FMCG, are cutting into supermarkets' core strengths, further eroding their sales. Market concerns over supermarket performance have amplified, with talk of a 'wave of closures' rising and falling, and the market's attitude towards supermarket stocks seems overly pessimistic.
十里Who Will Defeat Sam's Club? — Development Strategies for Local Hard Discount
Sam's Club and other similar retailers, despite being labeled as membership or warehouse stores, are essentially hard discounters. Their competitive advantage lies in private-label products with no advertising budgets and direct sourcing without distributors, resulting in high cost-performance. To defeat Sam's Club, Chinese retailers must offer a faster-iterating, more dynamically leading, and appropriately scaled product pool, leveraging China's unique conditions such as fragmented supply and demand, advanced internet, and socialized hard discount movement.
连杰、上官易易The Wave of Discount Transformation in Physical Retail Begins: What Impact on the FMCG Industry Chain?
In October this year, Hema announced the launch of a 'discount-oriented' transformation. Meanwhile, traditional supermarkets are also following suit, with trials such as Yonghui setting up discount sections in its stores and Jining's Aikedo converting over 30 stores into discount outlets. The wave of discount transformation in physical retail has begun. This transformation is not simply about lowering retail prices but achieving sustainable and significant reductions in distribution costs.
New DistributionThe Snack Discount Format at the Forefront: A Prelude to China's Discount Retail Wave
As many readers of New Distribution are distributors, this article offers insights from an investor and researcher's perspective on hot topics: why snack discount stores are booming, whether they are a passing fad, the essence of discount formats, and industry evolution. With nearly 20,000 snack discount stores nationwide, they have disrupted existing distribution systems, causing many distributors' sales to decline sharply. During my visits to third- to fifth-tier cities, the first question I often hear is whether to franchise a snack discount store.
戚特How Deep Is the Discount Store Water?
Discount MAMA's store in Beijing's Yizhuang area has recently seen a surge of check-in posts, many saying, 'I came because of Teacher Liu Run.' Before the annual speech by renowned business consultant Liu Run on October 28, few had heard of the discount retail brand Discount MAMA. In Liu Run's presentation, the figures of 2,500 stores, 1.7 billion yuan in revenue, and 32% gross margin drew external attention. Among them, peers in discount retail questioned: 'Why can only 4 stores be found on the map?' and 'Calculated, each store sells 680,000 yuan a year, with daily turnover of over 1,800 yuan and gross profit of over 600 yuan. After deducting employee wages of 200 yuan and rent of 200 yuan, can it make money?'
定焦团队Why Industrial Chain Thinking Is Essential for Community Group Buying | Recommended Reading from 'Little Blue Book'
What is industrial chain thinking? To understand it, one must first recognize that it is a more three-dimensional and objective perspective, enabling us to establish a more professional analytical model and think more deeply. For instance, when asked 'How do you view the rise of prepared dishes?', most people would answer 'technology-driven, market demand', which is correct but fails to hit the core. With industrial chain thinking, the answer becomes: at the social level, emergency/disaster relief/military preparedness needs for living supplies; at the upstream supply chain level, product standardization, production scaling, and loss control; at the catering enterprise level, cost reduction and efficiency improvement, centralized procurement, and lower labor costs; at the industry talent supply level, chefs' heavy workload and a decline in professional chefs; at the market demand level, young people mostly don't cook but pursue deliciousness.
黄腾飞The Supply Chain Revolution Has Begun!
At the current stage of China's commercial development, following the trends of the US and Japan, it is time for a supply chain transformation. The US supply chain revolution occurred from 1946 to 1964, and Japan's in the 1970s and 1980s. Due to the rise of the middle class, the popularization of mass consumer brands, and consumer confidence, a supply chain revolution characterized by 'brand disenchantment' has emerged. Currently, four forms of supply chain have appeared in the Chinese market: private labels, hard discount stores, platform distributors, and the chain-ization of BC stores. The supply chain revolution is unfolding.
刘春雄Hard Discounts Arrive, Accelerating the Reshuffling of Local Distributors
The rise of hard discount retail formats such as snack discount stores and warehouse discount supermarkets is accelerating the reshuffling of local distributors. Large distributors will grow larger, while small distributors will gradually be eliminated. Distributors must adapt by adjusting their business strategies, such as expanding into other channels and becoming super suppliers in core categories.
袁来How Should FMCG Manufacturers Respond to the Impact of Snack Discount Stores on the Channel System?
From a distributor's perspective, the rise of snack discount stores is a product of changing times, reflecting the shift from manufacturer-led to consumer-led markets. Manufacturers must adapt by supporting regional brand chains and avoiding the trap of involution, as these discount channels become an unavoidable force.
于秀伟Hema's Self-Revolution: Competing with Itself First!
Nearly a month has passed since Hema announced a 20% price cut on selected offline products. If the opening of Hema Fresh Outlets was a trial, this move marks Hema's strategic entry into the hard discount sector. This year's hard discount market is fiercely competitive, and Hema is not alone. On October 10, Yonghui Superstores announced the launch of 'authentic discount stores' in its nationwide outlets, adding discount sections to its online app and mini-program. When brands positioned as high-end join the hard discount fray, terms like 'delicate poverty' and 'tightwad economy' come back into the spotlight.
赵胜男How Jinbaibai Opened 100+ Warehouse Discount Stores in 3 Years, Reaching 1 Billion in Sales
Last week, I visited Tianjin and had an in-depth conversation with a local discount retail founder. They started in retail by selling near-expiry surplus goods, later transitioning to hard discount warehouse stores and gradually developing a replicable model. Over the past three years, through franchising, they expanded to over 100 stores with total sales exceeding 1 billion yuan.
任文青AndyTang Guangliang of Ailingshi: Discount snack stores are not a 'cutting leeks' model, but will achieve a chain of 10,000 stores
Discount snack stores will not disappear within the next decade, as they are becoming an indispensable part of daily life. Despite concerns about 'cutting leeks', high closure rates, and low margins, the model has the potential for a 10,000-store chain, with supply chain optimization and the continued value of distributors.
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