The competitive landscape of the snack retail sector in China is undergoing a notable transformationNo longer limited to mere competition among established brands, the industry is witnessing a shift, with major players now venturing into the realm of multi-category supermarketsRecently, Wancheng Group’s subsidiary, Laiyoupin, revealed strategic plans to launch a new supermarket chain known as "Laiyoupin Money-Saving Supermarket," which aims to offer a wide array of products including rice, flour, and cooking oilThis move is not isolated, as other snack brands such as Ling Shi You Ming and Three Squirrels are also pursuing similar supermarket expansions.
The emergence of these supermarkets is characterized by a community-oriented approach, focusing on cost-effectivenessThe model emphasizes direct supply and wholesale pricing to cater to frontline consumersIndustry experts suggest that by restructuring the supply chain, the snack retail format can invoke a supply-side reform, thereby revitalizing upstream production capacities
With these developments, a paradigm shift in the traditional community supermarket market in China is anticipated; the consolidation of supermarket chains could foster a more interconnected retail environmentHowever, this transition comes with its own set of challenges, principally the need for robust supply chain integration and enhanced operational efficiency.
At the forefront of this transformation is Wancheng Group, which has recently announced that the first Laiyoupin Money-Saving Supermarket will open its doors in Hefei on January 10, 2025. This signifies a bold step for leading snack brands into the realm of deep-discount supermarketsThe forthcoming supermarket will encompass a product range that spans from leisure snacks to essential food items, with inventory expected to soar from 1,900 to 3,000 SKUs.
According to Chen Xianzhen, the supply chain head of the company, the supermarket will be strategically categorized into three primary modules: optimizing the product structure centering on snacks, reducing costs for essential daily necessities via direct sourcing, and developing private label brands to provide unparalleled value
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The current landscape sees snack retail brands leveraging integrated upstream production processes, thus facilitating supply-side reforms and delivering high-quality, cost-effective snack offerings to consumers.
Since its inception in 2022, this operational format has enjoyed rapid growth, with two major groups reportedly exceeding 10,000 store locations each, while several brands boast store counts upwards of 3,000. However, this exciting growth is coupled with intensifying competition, posing the challenge for snack retail brands to continuously evolve and adapt.
As expressed by chain operation expert Li Weihua, the multi-category supermarket model is seen as a pivotal strategy for businesses aiming for enhanced performanceNot limited to Wancheng Group, other organizations like Three Squirrels and Ling Shi You Ming are also making similar strides.
For instance, Li Shuyu, founder of Ling Shi You Ming, disclosed that the company's "Ling Shi You Ming Wholesale Supermarket" sites have exceeded 1,000 locations
In a parallel move, another snack retail brand, Ling Shi You Xuan, launched a dual-brand strategy with “Hui Zhen Wholesale Supermarket.” Its slogan, "Snacks and daily necessities at wholesale prices every day," indicates a commitment to expanding its range into essential household itemsZhang Guoqing, a co-founder, reported that they currently operate around 100 wholesale supermarket locations.
In a concurrent development, Three Squirrels secured control of “Aizhekou” and “Aizhongguo” by acquiring their assets and related business operationsThe former operates a comprehensive discount supermarket, while the latter opened its first “Aizhongguo Hard Discount Supermarket” in early December, aiming to launch 200 such stores within 60 days.
These supermarkets, with names emphasizing affordability, wholesale, and discounts, signal a broader value proposition to consumers
Aizhongguo’s hard discount model, for example, promotes a "bulk wholesale" strategy, allowing shoppers to enjoy one-stop service with direct supplier pricing.
Industry consultant Wen Zhihong highlighted that established snack retail brands enjoy significant bargaining power due to their size, allowing them to secure favorable pricing from suppliersThis model injects fresh energy into traditional supermarket formats.
The market dynamics reveal that community remains the battleground for retail in China, as highlighted during a Three Squirrels offline brand conference, where founder Zhang Liaoyuan estimated the number of unchained community supermarkets in China to be between 120,000 and 150,000, with an overarching market scale ranging from RMB 600 billion to RMB 900 billion.
Yet, the survival of supermarkets has faced hurdles in the past yearsData from Euromonitor International indicates a staggering reduction of nearly 1.38 million comprehensive retail stores over the past decade, with over 930,000 closures occurring in just the last three years
Notably, established brands like Yonghui, Wumart, Carrefour, and Walmart have collectively shut down more than 500 locations.
Moreover, traditional supermarket entities like Yonghui and Bubugao continue to endure losses, with Xinxin Retail (operating RT-Mart) reporting a turnaround to profitability albeit with a decline in revenue.
From Zhou Peng’s perspective, founder of Laiyoupin, traditional supermarkets exhibit three core deficiencies: inability to increase turnover, low resilience to risks, and poor sustained profitabilityHe emphasizes that customer demand for cost-saving solutions represents an effective opportunity in the market, where established big-box retailers like Sam’s Club focus predominantly on upper-middle-class consumers while vast segments of the mass market remain untapped.
Despite the growth and widespread establishment of snack retail brands in the supermarket space, many experts caution against premature conclusions about their success
Li Shuyu remains reserved about making firm predictions regarding his wholesale supermarket model's trajectoryMeanwhile, Zhang Guoqing states, “We are still in the modeling phase.”
Experts such as Wen Zhihong note that community supermarkets necessitate addressing local residents' basic needs, with essential food and fresh produce as focal pointsVarious e-commerce giants, including Alibaba and JD.com, are innovating in the community supermarket model, experiencing commendable results.
However, the intricate demands of fresh produce mean elevated requirements for supply chains, presenting challenges for large-scale nationwide expansionThe venture into comprehensive supermarket formats will hinge significantly on establishing strong supply chains, particularly in categories requiring high maintenance, posing formidable obstaclesAs Li Weihua mentioned, diverging from snack retail practices, multi-category supermarkets place weightier demands on supply chains, rendering it more challenging for brands to secure lowest pricing across all items