Can Pangdonglai save Yonghui Supermarket?

Pang Donglai has become popular due to its high-quality services and has become an Internet celebrity supermarket. It also plans to help old supermarkets such as Yonghui Supermarket, which has attracted market attention. What is going on? Let's take a look at this article to find out.

1. Pangdonglai helps Yonghui Supermarket

The internet-famous supermarket Pang Donglai has become a hot topic again.

"Xinpinlue Finance" noticed that on April 8, the topic "Pang Donglai will start to support Yonghui Supermarket" became a hot search, which soon attracted market attention and heated discussions. This Internet celebrity brand is getting busier and busier.

According to media reports such as Dingdian News and Yingxiang.com, on May 7, Yu Donglai, chairman of Pangdonglai, visited four Yonghui supermarkets in Zhengzhou, Henan. Yu Donglai is also a big internet celebrity. When he arrived at the mall, he was greeted by customers and many consumers took photos with him.

Yu Donglai was very serious. During the visit, he communicated with store managers, employees and customers. After the visit, he also held a closed-door meeting. Yu Donglai decided to start supporting and adjusting Yonghui Supermarket.

The media also confirmed the news, including learning from multiple sources including industry insiders close to Yonghui Supermarket that Pang Donglai has started to support Yonghui Supermarket, starting with two stores.

Earlier media reports said that Yonghui Supermarket Chairman Zhang Xuansong, CEO Li Songfeng and other management had visited Pang Donglai in Xuchang, Henan to learn about Pang Donglai's store management system.

Other media reported that Yonghui Supermarket attaches great importance to this cooperation. Zhang Xuansong, chairman of Yonghui Supermarket, will personally stay in Zhengzhou and select elites from across the country to form a "Yonghui Supermarket Adjustment and Reform Group" to cooperate with Pang Donglai in on-site adjustments. The adjustment and reform work will naturally be mainly carried out by the Pang Donglai team.

Pang Donglai, a well-known online celebrity brand from Xuchang, Henan. Yonghui Supermarket, a long-established supermarket giant.

Pang Donglai’s assistance to Yonghui Supermarket is like a younger brother coming to save the industry’s big brother, which in itself is a very popular topic.

Yonghui Supermarket is not the first target of support from Pangdonglai. In June 2023, Pangdonglai decided to support Jiangxi supermarket chain brand Jiabai Le. In April 2024, Pangdonglai extended a helping hand to Hunan supermarket leader Bubugao.

Pang Donglai has carried out a systematic transformation of these two supermarket brands, optimizing employee management, store planning, product supply chain management, and service quality improvement.

The effect of Pang Donglai's support for Bubugao is obvious. Before the adjustment, Bubugao Changsha Meixihu store had an average daily sales of about 150,000 yuan and an average daily customer flow of about 2,000 people. On the first day of the May Day holiday, the store's sales reached 2.4 million yuan and the customer flow reached a record high of 17,700 people. Changsha netizens jokingly called it the "new 5A-level scenic spot."

Obviously, Yonghui Supermarket has also seen that Pang Donglai’s support for the first two supermarket brands has achieved results, so it has entered into in-depth cooperation with Pang Donglai.

The news that Pangdonglai was helping Yonghui Supermarket was quickly transmitted to the capital market. On the morning of May 8, Yonghui Supermarket's stock price rose sharply to the daily limit.

2. Savior, Fat Donglai

Pang Donglai is helping Yonghui Supermarket. This was completely impossible in the past business era, but it is happening now.

Let’s first look at the overall background of the industry. Traditional supermarkets have been in a state of retreat in recent years, with a wave of store closures taking place. No traditional supermarket player, including Yonghui Supermarket, has been spared.

According to incomplete statistics from the Retail Research Center of Lianshang.com, more than 680 supermarket stores were closed in 2022, and the supermarket closure trend accelerated in 2023. For example, Bubugao in Hunan closed 113 stores last year. Renrenle lost nearly 500 million yuan last year and closed 22 stores.

After entering 2024, the wave of traditional supermarket store closures is still continuing. In April this year, Shanghai City Super closed all its stores in Shanghai. Since the beginning of this year, China Resources Vanguard has closed stores in many parts of the country. According to a rough estimate by Jiemian News, China Resources Vanguard has closed more than 8 stores since entering 2024.

Walmart has long been closing hypermarkets in China. In one year, Walmart has closed at least 19 stores, 15 of which were more than 10 years old. Not to mention Carrefour China, which was acquired by Suning.

Yonghui Supermarket, which was helped this time, is also having a hard time. Yonghui Supermarket's financial report shows that its revenue in 2023 was 78.6 billion yuan and its loss was 1.33 billion yuan. It can be seen that Yonghui Supermarket is very anxious.

In contrast, Pang Donglai, which is in the forefront of the Internet celebrity trend, is experiencing a different scene. Yu Donglai publicly revealed in April that Pang Donglai, which originally planned to make a profit of 20 million yuan in 2023, actually achieved a net profit of 140 million yuan at the end of the year, far exceeding expectations. This news also became a hot topic at the time.

From the perspective of performance, the performance of Pangdonglai, a non-listed company, has exceeded that of many listed retail companies.

Pang Donglai was originally a well-known local enterprise in Xuchang, Henan Province. After 2022, Pang Donglai became popular on social platforms because of its high-quality services and self-operated products, and became a check-in spot for many tourists. In this way, Pang Donglai quickly became popular on the entire Internet.

Nowadays, traffic has become one of the main driving forces of Pang Donglai's performance. For example, in December 2023, the urban rail from Zhengzhou to Xuchang was opened, which further brought traffic to Pang Donglai. During the New Year's Day holiday in 2024, Pang Donglai's 7 stores received a total of 318,000 tourists, of which 75% were from other places.

Pang Donglai became an instant hit online, and a wave of purchasing Pang Donglai products on behalf of others was triggered. Scalpers flocked to Pang Donglai to purchase products on behalf of others, which once caused controversy. Some media commented at the time that scalpers’ purchasing on behalf of others were destroying Pang Donglai.

Pang Donglai has many labels, including high welfare and high wages for employees, continuous optimization of store layout and traffic flow design, emphasis on quality in product selection and optimization of prices, and especially good service, which is very similar to Haidilao.

Yu Donglai once emphasized in his book "The Road to a Better Future" that Pang Donglai's culture and system are superior to many internationally renowned retail companies.

In sharp contrast, Pang Donglai, which is at the forefront of the Internet celebrity trend, and Yonghui Supermarket, which is constantly losing and anxious, are in very different situations under the same business environment.

Overall, Pangdonglai's rapid development and popularity are mainly due to its product selection capabilities, refined management and high employee quality.

From the perspective of industry attributes and models, Pang Donglai is not much different from other traditional supermarket players. It’s just that Pang Donglai is more distinctive and refined, which other players have not achieved.

In other words, Pang Donglai operates more attentively, continuously improving the traditional supermarket services to the extreme, forming the Pang Donglai characteristics.

Pang Donglai helps traditional supermarket brands and exports its management system and experience. Pang Donglai's local business experience has also begun to be explored nationwide, which is conducive to future development.

Yonghui Supermarkets has learned from Pang Donglai, introduced new concepts and internet celebrity gameplay, injected fresh blood, brought new changes, and is also an exploration of the localization of supermarket operations.

Whether for Pang Donglai or Yonghui Supermarket, this is a win-win and multi-win cooperation.

Obviously, Pang Donglai is a case worthy of learning and research by Yonghui Supermarket, and Pang Donglai is their savior.

3. Can Pangdonglai save Yonghui Supermarket?

Internet celebrity Pang Donglai is very popular, but Yonghui Supermarkets are anxious. So, can Pang Donglai really save Yonghui Supermarkets?

In the view of "New Product Finance", we need to have in-depth insights from different angles and aspects, and look at it in the context of the entire industry and the national market, perhaps to find the answer.

First of all, the consumer markets in different regions, cities, and even small areas across the country are very obvious regional characteristics, and local consumers naturally have different consumption concepts and behaviors.

For example, in third- and fourth-tier cities, people go to supermarkets and shopping malls as a lifestyle, to kill time and shop leisurely, but in first- and second-tier cities, especially fast-paced cities like Shenzhen, people pursue efficiency in shopping.

Secondly, the business models of different regional markets are different, and the degree of competition is different.

The business forms in different regions and cities are different and there are obvious differences. In first-tier cities where shopping malls are everywhere and shopping is very convenient, although shopping malls are highly homogenized, consumers will choose nearby shopping malls or go to well-known shopping malls for check-in style consumption.

For example, in Shenzhen, the core area has its own large shopping malls, one next to the other. For example, the flagship shopping mall, Luohu MixC, is still very popular.

For example, Wanda Plaza, which is very popular in second- and third-tier cities, is completely unable to compete with local large-scale shopping malls in Shenzhen and is generally opened in remote areas.

The degree of market competition in different regions is completely different. Often, the more economically developed a city is, the more intense the business competition will be.

At the same time, a wave of warehouse-style membership supermarkets is sweeping first- and second-tier cities. Sam's Club is opening stores like crazy, and Costco is following closely behind. Warehouse-style membership supermarkets can better meet the needs of local consumers.

"Xinpinlue Finance" now also likes the warehouse-style shopping model. Going to Sam's Club once a month or two months and buying large-packaged goods can meet the needs. Daily shopping only requires a small shopping mall near home.

Third, different brand players have different corporate genes, their own characteristics, and are also accelerating innovation.

In the era of traditional supermarkets, whether it was international brands such as Walmart and Carrefour, national retail brands such as CR Vanguard, or even regional brands such as Renrenle and BBK, all enjoyed the dividends of that era.

As the business environment changes, some of these brand players are actively adjusting, while others are declining and disappearing. For example, Walmart is closing its hypermarkets in China while frantically opening Sam's Club supermarkets.

For example, China Resources Vanguard, which is accelerating its store closures, is also upgrading its stores, upgrading the original China Resources Vanguard supermarkets into blts and starting to adopt a boutique model.

Some shopping malls have also launched their own supermarket brands. For example, Shenzhen Mission Hills MH MALL, which has annual sales of 1.35 billion yuan, also has its own boutique supermarket brand Badio.

Fourth, consumption is constantly updated and iterated, and consumers will change accordingly.

As the business environment continues to change, consumers' consumption concepts and behaviors will naturally change as well, and will be directly affected by the overall business environment.

More importantly, all consumers are willing to try new things and have a sense of freshness about a brand, but daily shopping consumption is normalized. After a long time, the novelty will wear off and everything will return to normal.

Therefore, from a comprehensive analysis, the currently popular Pang Donglai has its own characteristics and a lot of traffic, but the Pang Donglai model is not suitable for all regions.

From another perspective, Pang Donglai has achieved good results in supporting the two brand supermarkets, Jiabai Le and Bubugao. Some industry insiders said that the Pang Donglai model is not impossible to replicate.

IV. Conclusion

Pang Donglai, a local supermarket brand from Xuchang, Henan Province, has become an Internet celebrity thanks to its many features. The traffic from Internet celebrities has added a new driving force to Pang Donglai.

"Xinpinlue Finance" believes that Pang Donglai is a good company worthy of praise, but under the traffic of internet celebrities, Pang Donglai has been over-mythologized, just like Haidilao, which was previously mythologized because of its service.

Many of Pangdonglai’s experiences and special services are indeed worthy of reference and learning by Yonghui Supermarket, but more importantly, a supermarket should keep pace with the times, and positive change is the most important thing.

Although Pangdonglai’s support can bring some changes to Yonghui Supermarkets, ultimately: only Yonghui Supermarkets can save itself.

‍‍‍‍‍

Author: Wu Wenwu

WeChat public account: Xinpinlue Finance