The life and death situation of traditional retail in the digital age: What lesson did the "breakout battle" of Pangdonglai and Yonghui teach the industry?

Store adjustments are no longer simple renovation upgrades, but a systematic reform that reconstructs the "people-goods-place" relationship around consumer needs. This article analyzes the "breakout battles" of retail giants such as Pangdonglai and Yonghui, and deeply explores how retail companies can achieve a gorgeous transformation from traditional retail to digital retail through the genetic reshaping of organizational management, deep coordination of the supply chain, scene revolution of digital experience, and reconstruction of profit models.

Since 2004, store adjustments in the retail industry have become a trend, but store adjustments are no longer simple "renovation upgrades". In essence, they are centered around consumer needs, reconstructing the "people-goods-place" relationship, and promoting systematic changes in the entire chain, including organizational management, supply chain collaboration, and digital capabilities. Let's take a look at the following case.

“At 3:15 a.m., the AI ​​shelf monitoring system of a supermarket pilot store suddenly issued a red light warning: the maturity curve of the banana display area will exceed the threshold in 5 hours!

Based on the real-time analysis of peel spots, softness and hardness by the deep learning model, the system simultaneously triggers a three-level emergency response - automatically generating discount plans, deploying instant delivery riders, and pushing limited-time coupons for "banana milkshake packages" to members within 3 kilometers... This "banana blitzkrieg" led by the algorithm completed the digestion of 87% of the expiring inventory before sunrise.

This is a real case that happened in the digital age. The above case is not just about technological change, but more importantly, organizational change.

As a practitioner who has personally experienced the "digital transformation" of the Internet and traditional industries, I personally believe that retail reform is not about installing Tesla motors on old carriages, but about reconstructing the underlying logic of the entire track. I remember when we were doing O2O projects in Internet companies, we often dealt with companies in traditional industries. At that time, we joked that "XX traditional companies lack BAT in their DNA." From today's perspective, this "genetic defect" is essentially a mismatch between the pyramid organization and flat decision-making, which means that the organization is backward.

1. Key points to break the impasse: Organizational management, genetic reshaping from “control” to “empowerment”

The entire retail industry is currently experiencing a transition from "human brain experience driven" to "intelligent data driven". If retail companies want to successfully navigate this cycle of the digital era, they need to use AI algorithms to empower organizational efficiency and transform the genes of traditional retail.

1.1 Employee Motivation and Capacity Upgrading

The success of Pangdonglai proves that employee happiness is the underlying logic of service quality. It uses 50% of its net profit for employee dividends, with salaries 30% higher than the industry average and working hours shortened to 8 hours.

After Yonghui’s remodeled stores followed this model, the service initiative of employees was significantly improved, driving more than 25,000 customers on the first day. This “partnership thinking” breaks the traditional tree-like organization and transforms employees from executors to a community of interests.

1.2 Agile organizational structure adjustment

I participated in a convenience store digitalization project. Through the three-pronged approach of "business transformation + management transformation + organizational transformation", I built a digital collaboration platform covering 100,000 employees and 30,000 stores, realizing end-to-end closed-loop management of the process.

In addition, during its transformation towards discounting, Hema NB has adopted a three-level linkage mechanism of “headquarters – region – store” to quickly respond to market changes, such as the real-time adjustment of the supply chain during the price war of durian thousand-layer cake.

1.3 AI capabilities and technologies integrated into the organization

Technology penetration ≠ IT tool stacking. The AI ​​replenishment system of a well-known international convenience store can compress logistics response to 10 hours. The core of the system is not the complexity of the algorithm, but the conversion of the store manager experience of 2,000 stores into dynamic experience factors.

Based on large models such as ChatGPT and DeepSeek, and through more than 4 million real cases, AI can understand excellent regional localized business experience such as "the display area of ​​hot drinks in northern winter needs to be increased by 15%".

1.4 AI capabilities serve business scenarios

An internationally renowned convenience store uses the AI ​​system to encapsulate the capabilities of excellent store managers into AI intelligent entities, allowing new employees to reach decision-making levels comparable to those of five-year veteran employees. This is the scalpel of genetic recombination.

All of the above are cases I have personally participated in.

2. Supply Chain: From “Zero-Sum Game” to “Symbiotic Network”

2.1 Hard discount model with deep collaboration among suppliers

Aldi achieves direct sourcing and cost control through a strategy of owning over 90% of its products. The price of a 1-liter bottle of 100% orange juice is as low as 9.9 yuan, which is only 87% of the price of Sam's Club's product of the same quality.

HEMA optimized the circulation efficiency of near-expiry goods through a "discount-only channel", reducing the loss rate from 8% to 1.2%, driving a 26-fold increase in daily sales of mango cakes.

The above model requires building a flexible supply chain with suppliers and even sharing data prediction models.

2.2 Building regional supply chain resilience

Bubugao has implemented the "direct supply from local farmers + pre-prepared meals in the central kitchen" model in the Hunan market, reducing the fresh food loss rate by 40% and increasing the SKU overlap with Pangdonglai by more than 90%.

Costco uses the "global product selection + regional customization" strategy to ensure economies of scale while meeting local needs. For example, its Shenzhen store introduced a fresh seafood section that caters to the dietary preferences of southern China.

Hema's "data naked streaking" experiment

Open real-time sales heat maps to core suppliers, and even allow access to AI prediction systems: A pastry factory adjusted the sweetness according to regional taste differences, and the regional repurchase rate increased by 90%. Fresh food suppliers changed to pre-prepared dishes in advance through "slow-selling warning", and the loss rate dropped from 15% to 2%. Cost: must accept AI audits of production costs, and 17% of suppliers withdrew from cooperation due to data transparency;

Pangdonglai "joint research and development" gambling agreement

Signed an exclusive product development military order with suppliers: free channel fees in the first year, but the formula patent must be shared. Sales of more than 30 million will be rebated at 5%, and if it is less than 30 million, R&D expenses will be compensated. Performance: the proportion of own brands reached 35%, and the average customer price was 42% higher than that of competitors.

3. Digital experience: from “tool application” to “scenario revolution”

3.1 Omni-channel integrated intelligent services

A convenience store introduced digital clerks and AI customer service "Xiaojia", and achieved 24-hour multi-language service through a large model. The response time was only 14 seconds. After SKU optimization, the average customer spending increased by 15%.

Through the "online express delivery + offline experience store" model, Sam's Club's online orders account for over 30%, and its forward warehouse network covers 47 cities.

3.2 Data-driven precision operations

Yonghui’s modified stores used digital tools to analyze consumer behavior, with a SKU replacement rate of 60%-70%, the proportion of imported goods increased to 20%, and sales of baked products increased by 520% ​​year-on-year.

HEMA monitors inventory in real time through smart shelves, reducing the out-of-stock rate to below 3%, and the proportion of fresh online SKUs reaching 40%.

4. Reconstruction of profit model: from “price difference dependence” to “value sharing”

In the traditional business environment, the profit model of an enterprise is highly dependent on the price difference between the buying and selling of products or services.

This model is out of date. Consumers' demand for goods is no longer simply pragmatic. Whether it is the channels through which users purchase goods, the media through which they obtain product information, or the decision-making factors for purchasing goods, they are all completely different from the previous store shelf sales model. What users need is empathy, not a simple buying and selling relationship.

"Value sharing" requires creating and sharing value with all links in the supply chain, customers and other stakeholders to achieve more sustainable and mutually beneficial development. Let's take a look at some cases.

4.1 Membership system and tiered operations

Costco screens high-value users by charging an annual fee of RMB 258 and reduces the SKUs to 3,000, but the sales per square meter of a single store is four times that of a traditional supermarket.

Sam's Club has launched a "member price + exclusive product" combination. For example, Member's Mark egg yolk crisps have annual sales of over 100 million pieces and a repurchase rate of 65%.

This model forces companies and suppliers to work together to hone their product strengths.

4.2 Innovation of profit sharing mechanism

Aldi signed long-term cooperation agreements with suppliers, feeding back 20% of the logistics cost savings to partners, forming a stable profit chain. Pangdonglai shared sales data with suppliers through the "daily clearance + weekly elimination" mechanism, and the product turnover rate increased to 95%, far exceeding the industry average of 60%.

5. Underlying Logic: User Operation is not about “cutting leeks” but “planting crops”

The case of Oriental Selection proves that when the user pool accumulates beyond the critical point (usually millions of DAU), even if encountering negative public opinion, the basic base can still maintain stability through the dual-wheel drive of "new additions + retention".

But the real moat lies in upgrading the user value from a single transaction to a lifelong service. I have shared this many times in my previous articles, so I will not repeat it here.

6. Appendix: Breaking down the growth strategy in stages: Practical sharing of the growth model

6.1 Newcomer period: conversion design to break the “traffic illusion”

Precise Reach

• Active APP users → Push + in-site message combination (open rate increased by 37%)
• Mini Program users → Template messages + social fission (conversion costs reduced by 52%)
• Third-party diversion users → SMS + AI outbound calls (verification rate increased by 28%)

Low threshold hook

• 9.9 yuan trial package + free shipping for orders over 39 yuan (the conversion rate of the first order increased by 63%)
• Exclusive "tiered discounts" for new customers (20% off for the second order, 30% off for the third order)

Case: A fresh food platform achieved a 78% retention rate for new users in the first month through the combination of “new users buy eggs for 1 yuan + next-day delivery”, which is much higher than the industry average of 45%.

6.2 Growth Stage: The “Golden 72 Hours Rule” for In-store Fulfillment

Fulfillment Reminder

• Send verification QR code within 5 minutes of order placement (reduce order loss by 15%)
• Trigger LBS push 3 hours before fulfillment (increase in store visit rate by 41%)

Scene Binding

• “Buy a steak and get a free wine decanter” (related purchases increase customer spending by 32%)
• “Weekend parent-child baking class + pre-sale of food package” (repurchase cycle shortened to 14 days) Data insights: After the user completes 3 fulfillment, the LTV (user lifetime value) reaches 6.2 times that of the first-order user.

6.3 Maturity: From “Transactional Relationship” to “Emotional Account”

Tiered Operation

• Ordinary members → Monthly consumption list incentives (TOP10% users contribute 52% of GMV)
• High net worth users → exclusive butler 1V1 service (ARPU value increased by 290%)

Memory point manufacturing

• Free custom cake decorating service on birthday (NPS increased by 38 points)
• Pet membership card is bound to the pet’s birthday (repurchase rate of related categories is 89%)

Counterintuitive: The operating cost of mature users is 64% lower than that of new users, but their contribution to profits reaches 81%.

6.4 Loss period: recall is not "harassment" but "rebuilding trust"

Early warning mechanism

• No consumption in 15 days triggers the exclusive coupon for WeChat Enterprise (interception success rate 61%)
• Initiate a follow-up call if the user has not logged in for 30 days (the cost of recalling the user is 53% lower than that of attracting new users)

Emotional Cards

• "Old Friend Return Gift Pack" (including handwritten thank you card + new product trial pack)
• “List of Missed Hot Products” H5 (click-through rate exceeded the industry average by 2.7 times)

Lesson learned from pain and suffering: A beauty brand once used mass coupon recall, but it instead led to the permanent loss of 23% of its users - accuracy is more important than the strength of the discount.

6.5 Application of the “Peak-End Rule” of User Care

Peak Experience

• Push notification of "Free Ginger Tea" on rainy days (the store visit rate increased by 19% on the same day)
• The “Contactless Shopping Guide” was launched during the epidemic period (favorability increased by 74%)

Final value design

• Free seed blind box at checkout (social sharing rate increased by 56%)
• Trigger service evaluation + lucky draw opportunity after leaving the hotel (negative review interception rate 82%)

The above is my personal sharing, I hope it can provide you with some valuable reference.