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shi lei, co-founder of "huangwuxiang", is busy at the cash register. when the reporter of "daily economic news" visited, he was cashing in his store. in just 5 minutes, shi lei settled 7 customer orders.

the imported goods supermarket "huang wuxiang" is located in the new office complex of beijing capitaland. it has been open for more than a month. this is also huang wuxiang's new attempt: reducing the area to 300 square meters. shi lei told reporters that the current income "has reached expectations."

however, the discount industry has been booming in the past two years, and the proliferation of discount stores is becoming a new force that cannot be ignored in offline retail. just on september 5, hitgoo, a brand for selling expiring food, completed a new round of financing of more than 100 million yuan.

discounts are also popular in the eyes of consumers. on the xiaohongshu platform, users have posted more than 30,000 notes discussing “hard discounts”. there are more than 100,000 notes related to “good sales” and “hi special purchases”. on douban, the “i love expired food” group has 113,000 members.

offline retail has undergone many changes in recent years. on the one hand, offline discount stores are in full swing, and on the other hand, offline hypermarkets are adjusting and transforming. cross-border discount stores have also become a new growth point for hypermarkets.

zhuang shuai, founder of bailian consulting, told the daily economic news reporter that in offline retail, the discount format will have great room for development, and this industry also needs a lot of capital to expand its scale. he predicted that similar mergers and acquisitions will occur in this industry in the future. he also said that each format will continue to evolve. supermarkets, membership stores, convenience stores, community stores, and discount stores will coexist for a long time.

high-end office complexes also value traffic kpi

the "huang wuxiang" store adopts the distinctive "work yellow" color, with an overall industrial style decoration layout and densely arranged warehouse-style shelves, and the main concept of "value for money" is very prominent.

after shi lei escorted a group of customers to check out, he chatted with the reporter from china business network. he told the reporter that this store was newly opened in mid-july, and it was also the first time that "huang wuxiang" tried to open a store in an office building. the total area is more than 300 square meters, with more than 2,000 skus (stock keeping unit, used to distinguish and track each product in the merchant's inventory).

the characteristic of being located in an office complex can be reflected in the average customer spending: since the store opened, the average customer spending has been around 30 yuan. this is lower than the average customer spending of the previous "huang wuxiang". "many people come to this floor to eat and buy a bottle of water from my store. and many customers come here specifically to buy water because there are offices upstairs." shi lei pointed to the ceiling, indicating the office area upstairs.

shi lei told reporters that as the discount business has become popular in the past two years, both mass-market snack stores such as snacks mang and zhao yiming snacks, and near-expiry food stores such as haotemai and hitego, have attracted a large number of consumers. for commercial complexes, introducing discount supermarkets is not only a supplement to enrich their own consumer choices and business formats, but also a powerful tool for attracting customers to the mall.

previously, "huang wuxiang" preferred large-scale warehouse supermarkets such as sam's club and fudi. in 2019, the first store of "huang wuxiang" in beijing was set up in shouchuang outlets in fangshan district, with an area of ​​850 square meters. even with this area, shi lei was not very satisfied. in 2017, he opened his first store in henan, with an area of ​​more than 2,500 square meters and tens of thousands of skus.

huang wuxiang's big store in zhengzhou. photo provided by the interviewee

"property costs in beijing are relatively high in all aspects, so our stores are relatively small. the one in the outlet mall with an area of ​​more than 850 square meters is our largest store in beijing. there is another one with an area of ​​more than 650 square meters and another one with an area of ​​more than 500 square meters," he said.

it is precisely because of the small store area that "huang wuxiang" has begun to have a new store type. similar to the convenience stores opened in office buildings, this store of more than 300 square meters has three or four rows of shelves for beverages, fast food, and snacks, and a refrigerator is set up. facial masks and other skin care products are best-sellers and are on more eye-catching shelves. the difference is that "huang wuxiang" stores have special children's toys, as well as food areas such as rice, flour, grain and oil. shi lei said that this is related to customer flow: there are many residential areas around this store, and parents bring their children for a walk in the evening, so the store also hopes to meet the shopping needs of families.

in terms of product composition, at the beginning, more than 95% of the "yellow five boxes" were imported brands. but with the rise of domestic products, more and more domestic brands are available in shilei stores. like the pre-expiry discount brands, hard discounts also emphasize price power.

"for example, our first outlet store sold more than 200 boxes of facial masks in one weekend. this mask is also available in watsons, but my price is half of watsons'." shi lei still looks proud when talking about it. "at the beginning, some consumers doubted whether the product was fake."

"(fake goods) of course not. the price is so low because we rely on the supply chain, and direct purchase from manufacturers will reduce a lot of costs." shi lei gave an example, the goods in the "yellow five boxes" can all be purchased directly from manufacturers, eliminating the middle supplier link. relying on its own supply chain, the price of imported goods in the store can be 20% lower than that of retail supermarkets.

a reporter from the daily economic news looked at the price tags in the store and found that perrier water originally sold for more than 10 yuan, but here it was 5.9 yuan; a bag of internet-famous biscuits, which cost about 8 yuan online, was 5.9 yuan a box here.

the price of huang wuxiang's popular biscuits. photo by wang ziwei, a reporter from china business news

among the guests who checked out, the bills of families traveling together were generally over 60 yuan, while the total bills of a single person were generally lower, ranging from 10 yuan to 15 yuan. the current sales rate of the "yellow five boxes" products can reach 95%.

the killer feature of both soft and hard discounts is low prices

in the industry classification, the positioning of "yellow five boxes" is similar to that of costco, aldi, sam's club, etc., which belongs to "hard discount", while near-expiry food specialty stores represented by haotemai and hi-tech shopping belong to "soft discount".

the killer feature of both soft discounts and hard discounts is low prices, but the advantages of low prices for both parties are different.

the soft discount feature is "tail goods sale". the brand will sell whatever tail goods it receives, and it will be out of stock after they are sold out. because it is a "tail goods sale", the brand's purchase price is relatively low. therefore, for such brands, if they want to sell tail goods and highlight their characteristics, they must emphasize product selection. "buyers" are the focus of the construction of expiring food sales such as hi special purchase and hao special sale.

according to public information, haotemai has more than 100 professional buyers who are responsible for "scouring" the world for the most discounted products; zhang qiang, the founder of hi-tech shopping, once said in an interview that hi-tech shopping's buyer team will choose different products to attract customers based on the consumption attributes of different stores.

consumer ms. sun told the reporter that the expiring food sale store is like a "gathering", and every visit is full of freshness. but in previous visits, the reporter also encountered this situation: consumers want to make repeat purchases, but the clerk tells them that they don't know when the next stock will be on the shelf.

hard discounts emphasize the "supply chain", especially reducing middlemen and bringing price advantages to direct supply from manufacturers. because they purchase goods from manufacturers, stores with hard discounts have a more complete product structure and sell fresher goods. the characteristic of hard discounts is the control of the supply chain. after removing middlemen, the price of goods in hard discount stores can be about 20% lower than that of traditional hypermarkets and supermarkets.

the reporter of the china business network observed that many brands that offer hard discounts were originally suppliers. for example, xiaoxiang life, which started in jiangsu, currently has more than 60 stores in jiangsu and provides supply chain services to nearly 200 supermarkets. before huangwuxiang opened offline stores, most of its income came from supplying goods to offline supermarkets and hypermarkets.

based on tianyancha, media reports and public information

in recent years, capital has frequently invested in discount brands. in march 2021, tianjin brand "shihuibang" received tens of millions of yuan in financing; chengdu brand "aotele" received two rounds of financing in 2021, and completed nearly 100 million yuan in round a financing in february 2022. discount niu received nearly 100 million yuan and 10 million yuan in financing in 2021 and 2022 respectively. the reporter of "daily economic news" found that most of the brands that have received financing have entered rounds a to b.

in addition, whether it is a soft or hard discount brand, brands that have received financing generally focus on strengthening the supply chain. at present, in the stores of haotemai and hi-tego, the proportion of near-expiry products is no longer the majority, and fresh-date products have become the main part of the shelves. zhang qiang, founder and ceo of hi-tego, said in a public speech that 40% of hi-tego's products are leftovers.

zhuang shuai told the reporter of china business network that there are four supply chain models for offline discount retail. the first type is mainly to purchase goods at low prices from dealers, distributors and wholesale markets through buyers; the second type is direct supply from manufacturers, where channel merchants place orders directly with manufacturers based on large purchase volumes, eliminating the links of middle dealers and distributors; the third type is discount retail to create private brands; the fourth type is to build a factory by oneself.

"these four supply models are not substitutes, but exist simultaneously. many brands will use multiple supply models at the same time." zhuang shuai also said that the hard discount brands that started with supply chain advantages have shortcomings in chain operation management, multi-department and multi-organization team management, and corporate culture building. on the contrary, the latter is the advantage of soft discount brands, and the polishing of the supply chain has become a test for the latter.

offline development is unstoppable, and discount store mergers and acquisitions are about to occur

the reporter found on the tianyancha platform that there are nearly 27,000 companies related to "discount retail", of which 11,000 were established in the past five years, and 2,294 related companies were newly established in the past year.

screenshot of tianyancha data

in addition, another type of hard discount represented by sam's club and costco, membership warehouse supermarkets, are also achieving "strong performance" in china.

according to imedia consulting, the market size of my country's discount retail industry reached 1.62 trillion yuan in 2021, a year-on-year increase of 2.12%, with a compound annual growth rate of 4% in the past five years.

zhuang shuai said that the current discount business model is still highly regionalized. however, as mass-market snack brands and near-expiry food sales expand into provincial cities, this business model will develop into a national chain brand.

he also believes that the discount business requires relatively high capital, and that the scale advantage will be more helpful to the business, and that there will be more mergers and acquisitions among domestic discount stores in the future.

as offline discount stores are developing at an unstoppable pace, offline hypermarkets are undergoing transformation: closing stores, adjusting, and looking for new growth points. the financial reports submitted by traditional supermarkets such as yonghui supermarket and jiajiayue show that both revenue and net profit attributable to parent companies are declining.

embracing the discount model has become one of the new retail methods. jiajiayue stated in its financial report that in accordance with the strategy of "regional density and multi-format complementarity", it will continue to deepen the layout of snack stores, discount stores and other formats. at present, jiajiayue's yueji snack store has opened nearly 100 stores. in addition, domestic supermarkets have also started discounting attempts. at the beginning of 2024, walmart china also announced the addition of 1.99 yuan, 9.9 yuan, and 19.9 yuan discount areas in 29 hypermarkets in china.

zhuang shuai believes that the discount format will bring new business opportunities in the process of developing its own brands.

"after the emergence of discount supermarkets, our offline retail will also develop more services around this format. such as product research and development, product innovation, etc. the role of service providers may rise and form a new ecology," said zhuang shuai.

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