Summary of Key Points
This year, the business of traditional community shops has generally declined (many owners have reported a 50% reduction in sales), mainly due to a decrease in customer footfall and a sharp drop in average transaction values. Consumers now only buy cigarettes and water when they visit these shops, as the sales of snacks and household items, which used to be profitable, have been taken over by new channels. Shops have fallen into a vicious cycle where declining customer traffic leads to reluctance to purchase goods, resulting in a poor inventory, which in turn further reduces customer traffic. The only way out is to establish partnerships with local supply chains and rely on professional support to optimize product selection and operations.
Current Situation of Small Shops: Surviving on the Surface, but with a Crumbling Profit Structure
Many small shops are still in operation, but the foundation of their profitability has weakened:
- Wave of closures and declining orders: Dealers have noticed that many of the small supermarkets that used to supply them have closed, and the remaining core stores have seen a 50% reduction in orders.
- Average transaction value limited to cigarettes and water: In the past, consumers would buy cigarettes, water, snacks, and drinks; now, they only buy one or the other. Cigarettes and water are the main items sold, but they generate little profit, leaving the revenue from snacks and household items gone.
- Demand remains, but not at these shops: Consumers buy snacks from bulk stores, household items from discount stores, and use emergency delivery services (like lightning warehouses) for urgent needs. The one-stop convenience of small shops is no longer a competitive advantage.
Four New Channels Competing with Small Shops
The business of small shops has not disappeared; it has simply been distributed among other channels:
1. Bulk snack stores: These stores offer a wider variety of snacks at lower prices, not only taking over the snack market but also attracting customers with their affordable water and milk. They have even drawn away the younger consumer demographic.
2. Chain convenience stores: With their widespread presence (208,000 of the top 100 companies in 2025), chain convenience stores offer a better shopping experience and fresh products (such as breakfast and coffee), eroding the proximity advantage of small shops.
3. Discount stores: They can offer lower prices through bulk purchases—for example, selling cola for less than 2.5 yuan, while small shops have to charge more. With smaller order volumes, small shops lose profit margins when they lower prices, or customers simply go elsewhere.
4. Emergency delivery services: These services meet urgent consumer needs, such as delivering beer in 30 minutes. They are more convenient than small shops, especially in rainy weather or when customers don’t want to go out, leading to a decline in sales for nearby small shops.
The Vicious Cycle of Decline
Once small shops start to decline, they fall into a harmful cycle:
- Owners hesitant to purchase goods: They order fewer items, only buying 1-2 of the best-selling products and avoiding new ones, resulting in outdated products on the shelves.
- Decreasing customer traffic: Without new products and higher prices, customers turn to other channels, further reducing customer traffic.
- Dealers reducing support: With fewer orders and lower delivery efficiency, dealers raise the minimum order amounts and reduce visits. Without the recommendation of sales representatives, owners have to make decisions based on intuition.
- Poor inventory: Popular items run out, while unsold items tie up capital, creating a cycle of declining customer traffic and worsening inventory.
The Way Forward for Small Shops: Partnering with Local Supply Chains
It’s difficult for small shops to turn things around on their own; they need to partner with capable local supply chains:
- Proactive support: Supply chains should help with product selection, strategy formulation (determining which products to keep or discard), and promotional activities to avoid overstocking.
- Data-driven decision-making: Using sales data to identify profitable and capital-intensive products and optimize inventory turnover.
- Maintaining proximity advantages: Supply chains should ensure a steady supply of essential items (cigarettes, water) and timely updates of new products, turning the proximity of small shops into a competitive advantage.
- Independence without isolation: Small shops can remain independent but must work together with supply chains to counter the challenges from new channels.
Future Trends: Only the Strong Survive
Traditional small shops will not disappear completely, but only those that integrate with strong supply chains will succeed. These shops will be able to retain customers by knowing what nearby residents prefer and offering competitive prices. In the future, community shops will no longer operate as standalone businesses; instead, they will form partnerships with supply chains.
In essence, this news indicates that the era of easy profits for traditional small shops is over. To survive, they must shift from relying on experience to relying on professional support and partnerships with strong supply chains to protect their market presence in the face of new competitive forces.