Summary of Key Points
Recently, traditional tobacco and alcohol stores have been facing tough times: it's difficult to transfer them (no one has shown interest in buying them in three months), and many have closed (320,000 fewer stores nationwide in 2025). However, overall consumption of tobacco and alcohol continues to rise (retail sales increased by 13.2% in the first half of 2026). The problem lies in the fact that customers and profits have been diverted to online platforms and new business models. Store owners are either scaling back operations to minimize losses (closing stores, reducing rent, cutting staff, and reducing inventory) or transforming their businesses (adding convenience goods for the community, offering significant discounts, and providing online services). In the future, tobacco and alcohol stores will evolve into a new format that combines the sale of tobacco and alcohol with community-based convenience services.
Why Are Tobacco and Alcohol Stores Difficult to Transfer?
The reason isn't so much high rent costs as the numerous hidden pitfalls for potential buyers. For example, Zhang Peng's store only charges a rent of 3,000 yuan, but potential buyers face significant challenges: they have to take over the existing inventory (which may be of high value but not easy to sell), compete with online prices (Moutai is sold for 2,400 yuan online, while the purchase price is even higher in stores), and lose business to snack and discount stores that attract customers who would otherwise make additional purchases. What worries them most is whether their business can survive in the new environment.
Why Have the Profits of Tobacco and Alcohol Stores Declined?
Two main sources of profit for these stores have weakened:
1. High-end alcohol has become a loss-making venture: Products like Feitian Moutai and Wuliangye, which used to be major profit generators, now result in losses because online prices are more transparent, and the cost of purchasing them in stores is higher than their online prices. If prices are not lowered, no one will buy them; if they are reduced, each sale results in a loss.
2. Cigarettes have become a means of retaining customers: High-priced cigarettes are hard to sell, and low-priced ones offer little profit. Keeping cigarettes around is mainly to prevent regular customers from leaving—however, if customers can't find their preferred cigarettes, they won't come back to buy alcohol either. Additionally, snack and convenience stores (such as Happy Monkey and Haolai Lai) as well as discount stores have taken away business that would otherwise have gone to tobacco and alcohol stores, leaving them with even fewer sales.
How Are Store Owners Trying to Minimize Losses?
They are focusing on reducing costs to the lowest level possible:
- Closing stores and reducing rent: Zhang Peng reduced the number of his stores from eight to two by moving to smaller locations in the community, allowing him to retain regular customers who can place orders and have goods delivered via WeChat, thus saving half of his rent expenses.
- Cutting staff costs: Running the store as a couple allows them to avoid paying for sales and cashier salaries, saving on labor costs.
- Eliminating franchise fees: By removing the brand's name from the store, he avoids paying management fees and is able to operate as an independent business again.
- Reducing inventory: They stock fewer high-end alcohol products and order them as needed, and they only restock cigarettes based on sales. The priority is to avoid incurring losses rather than investing heavily in inventory.
How Are They Transforming Their Businesses?
The transformation involves shifting from simply selling tobacco and alcohol to providing community-based convenience services:
- Lin Fang transformed her store into a "community convenience store that also sells tobacco and alcohol." She adopted three strategies:
1. Diversified operations: She added drinks, snacks, and daily necessities to encourage customers to make additional purchases while buying cigarettes, increasing the frequency of their visits.
2. Offering significant discounts: She focuses on selling high-frequency, reasonably priced items (such as cola and instant noodles) to improve turnover.
3. Expanding online services: She uses WeChat to accept orders from regular customers, offers corporate group purchases, and provides same-day delivery to expand her customer base without waiting for customers to come to the store.
The key is to leverage the community's advantages—being close to customers and understanding their needs (e.g., providing alcohol for family gatherings or instant supplies of soy sauce when needed)—to retain them.
What Will Become of Tobacco and Alcohol Stores in the Future?
They won't disappear, but the traditional model of just selling tobacco and alcohol will become less common. The future direction for these stores is to combine the sale of tobacco and alcohol with community-based convenience services:
- Combining tobacco and alcohol with convenience: Continuing to sell tobacco and alcohol to retain existing customers and meet gift needs, while adding high-frequency, affordable items to attract daily customers.
- Offering significant discounts and using online services: Streamlining the product range to improve turnover and using online platforms to attract more customers.
- Being small but specialized: These stores won't need to be large; they will survive by being close to customers and understanding their local needs.
In essence, traditional tobacco and alcohol stores will evolve into "convenience stations within the community" that offer a mix of essential products and services.
This news article discusses how traditional small businesses are adapting to changes in consumer behavior. For the general public, it's likely that in the future, tobacco and alcohol will be purchased more often at community convenience stores rather than at traditional tobacco and alcohol stores.