Summary of Key Points
This news article discusses two opposing trends in the domestic offline retail industry: traditional large supermarkets with a floor area of over 2,000 square meters are focusing on enhancing the shopping experience (improving the environment, offering more ready-to-eat/heat-ready foods, and providing better services), while smaller specialty stores for snacks, fruits, and milk tea are expanding their operations (increasing store size, variety of products, and using bulk purchasing to reduce prices). These seemingly opposite strategies both aim to meet consumers' current demands for convenience, quality, and value for money, with the ultimate goal of surviving and thriving in the market.
1. Large Supermarkets “Turning Left”: Forced to Upgrade the Experience
Traditional large supermarkets, such as Yonghui and Darunfa, used to be the main shopping destinations for residents. However, they are facing challenges: foreign-owned supermarkets (like some Walmart stores and Carrefour) have either withdrawn from China or reduced their operations; local leaders like Yonghui are experiencing declining customer footfall and profits, and even established stores of brands like Bobugao are struggling. Why? Because they cannot compete with the convenience and lower prices offered by smaller, community-based shops. If you want a bottle of drink, you can get it from a convenience store downstairs in just 5 minutes—why would you go to a large supermarket?
To overcome these challenges, large supermarkets are focusing on their advantages, such as their larger size, to offer experiences that smaller stores cannot. There are two main approaches:
1. Learning from Pangdonglai: For example, Bobugao has renovated its old stores by using lighter shelves, adding tasting areas, and improving services (such as helping customers with seafood preparation) to make shopping more comfortable.
2. Turning Supermarkets into Restaurants: They are introducing more ready-to-eat, heat-ready, or pre-cooked foods (like boxed meals, pre-prepared dishes that can be reheated, and freshly cut vegetables), allowing customers to have three meals without cooking.
These changes have been successful. For instance, the upgraded Walmart store in Deqing, Zhejiang, has seen a resurgence in popularity, and the emerging brand Yuehuo has attracted many young families with its freshly prepared foods and comfortable environment.
2. Small Stores “Turning Right”: Expanding to Increase Profits
Small stores specializing in snacks, fruits, and milk tea used to be limited in size and variety. For example, a snack store might only sell dozens of types of snacks or a fruit store might only sell fruits. However, they are now expanding:
- Snack Stores: Snack stores are becoming more popular, with some growing from tens of square meters to around 150 square meters and increasing the variety of products significantly.
- Fruit Stores: Traditional small fruit shops are growing more slowly, while large fruit supermarkets (with larger areas and a wider range of products, including cut fruits and snacks) are becoming more popular.
- Other Small Stores: Stores like Guoquan Shihui have expanded from 30 square meters to 120 square meters to offer more火锅 ingredients, and milk tea stores are also starting to sell snacks to increase revenue.
The reason for this expansion is that relying on a single product category doesn’t generate much profit. For example, if you only sell milk tea, a customer might buy just one cup and leave. But by adding snacks, you can encourage them to buy more items, thus increasing the average transaction value. Additionally, a larger store size allows for a wider range of products, meeting customers' desire to purchase everything they need in one stop, which leads to higher repeat purchases.
3. The Underlying Logic Behind Both Trends: Focusing on Consumers
Whether large supermarkets or small stores make changes, the essence is to adapt to consumer needs:
- Consumers are becoming more lazy and prefer convenience (being able to buy what they want whenever they want).
- They are more selective and expect a better shopping experience (good quality products and enjoyable shopping environments).
- Everyone values good value for money.
Therefore, both types of stores are trying to leverage their strengths and avoid their weaknesses: large supermarkets use their size to offer a better shopping experience, while small stores use convenience to attract customers.
4. Four Lessons from These Trends
These two trends reveal several key patterns in the retail industry:
- No one-size-fits-all solutions: Neither large nor small stores can rely on past methods for long-term success. For example, large supermarkets need to improve the shopping experience, and small stores need to expand their offerings.
- The transformation direction for large supermarkets is clear: they should focus on becoming more like restaurants (selling ready-made meals), offering higher-quality products, and providing good value for money.
- The path for small stores to upgrade is well-defined: first, establish a successful model (like the 150-square-meter snack store), then expand and add more products to reduce costs and attract customers with lower prices.
- Developing own brands is crucial: Large supermarkets can create their own baked goods and pre-prepared dishes, while small stores can make their own snack boxes and fresh fruit packs. This helps them avoid online competition and increase profits.
5. The Future of Retail: Coexistence Through Differentiation
Large supermarkets and small stores will not replace each other but will coexist for a long time, with large supermarkets focusing on quality and experience, and small stores on convenience. As long as they continue to meet consumer needs, they can survive and thrive in the industry.
In summary, the core of retail is understanding customers—knowing what they want and being able to meet their expectations is key to staying competitive.
(The entire text is written in plain language without technical jargon, making it easy to understand.)