Offline supermarkets collectively switch to outlets? What's going on with supermarkets becoming discount stores?

If you want to ask what kind of changes have occurred in the retail market in recent times, supermarket discounts have almost become a trend in the market, offline supermarkets have almost collectively switched to outlets, supermarkets have become discount stores, what is going on?

First, offline supermarkets collectively switch to outlets?

According to reports, Yonghui Supermarket said that after releasing the first batch of optimized store progress in August, it will add "genuine discount stores" in stores nationwide, and simultaneously add discount zones on online apps and mini programs to provide surprise discount prices for food and supplies.

"Discount stores are a big trend in the retail industry in the current market environment." The person in charge of Yonghui Supermarket said, "Discount stores can not only speed up the replacement efficiency of Yonghui products, break the difference between high and low prices in the marketing environment and daily environment, but also further enrich the types of goods and bring consumers more cost-effective choices." ”

Yonghui Supermarket is adding "genuine discount stores" to stores nationwide and synchronizing them online, and the price of goods will be 7%, 5% off and 3% off the original price. Wumart Supermarket has also launched a discount store experiment, and its "Meitao" discount store owner sells seasonal goods from the original store; In addition, Suning and Renrenle have also followed suit.

According to reports, in recent years, as consumers' willingness to spend has significantly tightened, retail companies need to adapt to challenging times of great change. For today's consumers, "low price and high quality" and "cost performance" have become the main keywords of their shopping choices.

Ms. Chen, a post-90s consumer in Beijing, told reporters that this year, many of the goods she used were discounted goods purchased, or directly went to discount stores such as Hao Sale and Hi Special Purchase. "In addition to the e-commerce promotion, daily shopping feels that the price of goods in offline discount stores is more favorable, and I am too lazy to go to the e-commerce platform to make up orders. But offline also have to pan for goods, let's focus on a price comparison at any time. ”

Another post-95 consumer, Ms. Su, is addicted to various supermarket discounts and advent sales. "I followed several professional bloggers on social media, mainly sharing overtime discount periods, discounted products, etc." She told reporters that in the past, she always felt that it was good to buy expensive ones, but now she feels that the quality of many discounted goods is not bad. "If it doesn't expire, it means it's okay, so why not buy a cheaper one?"

According to data, discount stores will be the fastest growing format in the next decade, with a compound growth rate of 5.6%, far higher than the 2.5% of hypermarkets and even higher than the 5.5% of convenience stores. From the perspective of commodity category composition, discount stores have a high degree of overlap with traditional offline supermarkets, "stealing" a lot of business.

According to the "2023-2028 China Discount Store Industry Competition Analysis and Development Prospect Forecast Report" released by the Puhua Industrial Research Institute of China Research Institute, the market size of the discount retail industry in mainland China will reach 1.62 trillion yuan in 2021, with a compound annual growth rate (compound annual growth rate) of 4% in the past five years, and it is currently in an expansion period. At the same time, Huachuang Securities related research reports estimate that it is expected that by 2025, the number of domestic snack collection stores (snack discount stores) can reach 30,000.

Second, what is the matter that supermarkets have become discount stores?

In recent years, we have found that more and more offline supermarkets have begun to switch to outlets, and some supermarkets have even directly become discount stores. This phenomenon is actually an inevitable choice for market development, how should we view this matter?

First of all, the switch to discount stores or outlets is the result of the supermarket format being forced down. From the direct appearance, in the current market environment, the collective switch of supermarkets to discount stores is actually an inevitable choice for market development. In recent years, with the rapid development of e-commerce, the supermarket format has suffered a huge impact. With its convenience, speed and price advantages, e-commerce has gradually changed consumers' shopping habits, making online shopping mainstream. Under such circumstances, the traditional supermarket format faces great challenges. To meet this challenge, supermarkets are looking for new ways to survive, and the discount store model is one of the options.

At the heart of the discount store model is price advantage. By purchasing a large number of goods, reducing operating costs, and providing lower prices to consumers, we attract consumers. This model has proven to be very successful in e-commerce, so supermarkets have also begun to experiment with this model, hoping to attract consumers and improve their competitiveness.

Secondly, discount stores are also a format that consumers are happy to see. From the consumer's point of view, the idea that the price is cheap on the front line and the price on the offline has become ingrained in everyone's mind. However, once the advantages of offline discount stores are more obvious, it can undoubtedly better motivate consumers to shop offline, and also bring consumers more choices.

For consumers, they are more concerned about the cost performance of goods. If an offline discount store can offer the same goods as online, but at a lower price, then there is no reason for consumers not to shop offline. Moreover, offline shopping also has advantages such as trying on and trying, which are incomparable to online shopping. Therefore, the discount store model is very attractive for consumers.

Under such circumstances, the forced choice of merchants and the preferred choice of consumers have formed a strong mutual integration characteristics, which has brought better market development prospects for the development of the entire market, and has also further promoted the choice of supermarkets to switch to discount stores.

Third, although supermarkets turn to discount stores, it is also a manifestation of consumption upgrades. In fact, from the perspective of deep economics, offline supermarkets turn to discount stores in fact, in line with the law of consumption development. With the development of China's economy, Chinese consumers have gradually become accustomed to the pace of consumption upgrading. However, this kind of consumption upgrade is not only the purchase of high-end goods, but also returns to the essence of goods, especially the use value, and the habit of pursuing use value rather than pursuing the so-called brand is gradually formed. This is just like the rapid rise of MUJI in Japan.

Specifically, with the rapid development of China's economy, the consumption level of consumers is also increasing. In the past, consumers paid more attention to the brand and appearance of goods, but now, consumers pay more attention to the use value and quality of goods. This process is evident from the development of MUJI before, which achieved unprecedented success in Japan in large part due to its cost-effective products and simple design concept. It does not offer famous brands, but practical, durable, and designed goods. This concept is also gradually gaining acceptance by consumers in China. Therefore, the discount store model is also in line with this consumption trend. What's more, the switch of offline supermarkets to discount stores is also in line with the law of consumption development. Discount stores can help supermarkets clear inventory, reduce waste, and save costs, which can provide customers with more affordable prices, while also allowing customers to better understand the quality of goods.

Fourth, switching to discount stores is easier said than done. From the perspective of long-term market development, switching to discounts is an inevitable choice for offline supermarkets to cope with market development. However, this requires higher cost control capabilities of supermarkets. Without strong cost control and supply chain management capabilities, discount stores are likely to incur large losses, specifically:

First, the discount store model requires supermarkets to have strong purchasing capabilities and be able to purchase goods at lower prices. This requires supermarkets to have strong supply chain management capabilities, be able to establish stable cooperative relations with suppliers, and obtain lower procurement prices. At the same time, supermarkets also need to have strong inventory management capabilities to avoid capital occupation and commodity loss caused by inventory backlog.

Second, the discount store model requires supermarkets to have efficient operational capabilities. Supermarkets need to reduce operating costs by optimizing operational processes to provide lower prices to consumers. This requires supermarkets to have strong operation and management capabilities, and be able to effectively manage human resources, material resources and time resources.

Third, the discount store model requires supermarkets to have good service capabilities. Although the price of goods in discount stores is low, if the quality of service is not high, it will also make consumers lose confidence. Therefore, supermarkets need to provide high-quality services, including pre-sales consultation, in-sale service and after-sales service, to attract and retain consumers.

To sum up, the collective switch of offline supermarkets to outlets is an inevitable choice for market development. However, this model also puts forward higher requirements for merchants' cost control capabilities and supply chain management capabilities, and in the fierce market competition, who can laugh to the end actually depends on who can really adapt to the changes in market trends.

(Jiang Han is a senior researcher at Pangu Think Tank)