China’s Brick-and-Mortar Supermarkets Seek a New Path (AI Translation)
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文｜财新周刊 孙嫣然
By Sun Yanran, Caixin Weekly
美国关税贸易战之下，正在大力推进门店和供应链调改的中国最大本土连锁超市永辉，顺势将外贸供应链纳入视野。
Amid the U.S.-China trade war, Yonghui, China’s largest domestic supermarket chain, which is vigorously advancing adjustments to its stores and supply chain, is now also turning its attention to the foreign trade supply chain.
4月7日，永辉超市针对外贸企业开通“15天极速上架”绿色通道，提供品牌推广，并与优质供应链企业共同开发新品。截至4月22日已与超过300家供应链企业采购洽谈，其中包括向开市客（Costco）、沃尔玛旗下高端超市山姆会员店供货的供应商。
On April 7, Yonghui Superstores launched a "15-day expedited shelf-opening" fast-track service for foreign trade companies, providing brand promotion and partnering with top supply chain firms to co-develop new products. As of April 22, Yonghui had conducted procurement negotiations with more than 300 supply chain enterprises, including suppliers to warehouse retail giants Costco and Walmart's premium chain, Sam's Club.
在此之前，永辉刚刚完成管理权易主。2024年9月，连锁零售品牌名创优品（09896.HK）62.70亿元收购永辉两大股东香港牛奶公司和京东（NASDAQ：JD/09618.HK）各自持有的21.1%、8.3%的股权，成为持股29.4%的第一大股东。
Prior to this, Yonghui had just undergone a change in management control. In September 2024, the chain retail brand Miniso (09896.HK) acquired a combined 29.4% stake in Yonghui Superstores by purchasing 21.1% of shares from Hong Kong Dairy Company and 8.3% of shares from JD.com (NASDAQ: JD/09618.HK) for a total of 6.27 billion yuan, thus becoming Yonghui’s largest shareholder.
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- Miniso acquired a 29.4% stake in Yonghui Superstores in September 2024, with founder Ye Guofu leading major reforms, including supply chain streamlining, private-label expansion, and store remodels based on Pang Donglai’s model.
- Yonghui aims to lift private label sales to 40% by 2029, close 250–350 stores, and increase profitability, following years of losses totaling 8.04 billion yuan (2021–2023) and a 2024 net loss of 1.47 billion yuan.
- Changes include abolishing distributor fees, centralized procurement, and targeting younger consumers, while recent pilot stores showed sales growth, and Yonghui’s share price rose nearly 240% after Miniso’s entry.
Summary
Amidst the ongoing U.S.-China trade war and a challenging environment for China's brick-and-mortar supermarkets, Yonghui Superstores—China’s largest domestic supermarket chain—has undertaken a sweeping transformation under new leadership, catalyzed by shifts in ownership and strategic direction led by Miniso’s Ye Guofu [para. 1][para. 2][para. 3]. In April 2024, Yonghui introduced a "15-day expedited shelf-opening" service for foreign trade companies, engaging in procurement negotiations with over 300 supply chain enterprises, further indicating its ambition to rejuvenate both domestic and international retail operations [para. 1].
Ownership and Management Changes: In September 2024, Miniso acquired a 29.4% stake in Yonghui for 6.27 billion yuan, becoming the largest shareholder [para. 2]. This led to dramatic changes in governance, confirmed at the March 2025 shareholder meeting, where Ye Guofu joined the board and took charge of the Reform Leadership Group, which assumed CEO responsibilities on an acting basis [para. 3]. The board now reflects equal representation between Yonghui’s founders and Miniso, ending years of governance gridlock. Key previous executives have departed and a global search for a new CEO is underway, entrenching Miniso’s operational influence [para. 3].
Strategic and Operational Overhaul: Ye Guofu’s reforms have focused on streamlining Yonghui’s internal structure, trimming the supply chain, and introducing retail best practices inspired by Pang Donglai, a successful boutique supermarket. Key changes include: implementing “naked pricing” with no hidden fees, moving to direct sourcing, launching new private-label brands, and transitioning away from the Key Account (KA) distribution model [para. 4][para. 5][para. 6]. This is designed to lower costs, cut out intermediaries, and enhance Yonghui’s competitiveness as traditional supermarkets face declines—nearly 60% posted year-on-year sales drops in 2024, with collective industry revenue falling from 979.2 billion yuan in 2019 to 868 billion yuan in 2023 [para. 6].
Financial Performance and Market Reception: Yonghui has struggled with losses since 2021, totaling 8.04 billion yuan by 2023, including a net loss of 1.47 billion yuan in 2024. However, in Q1 2025, Yonghui posted a 148 million yuan profit, reflecting early signs of a turnaround [para. 7]. The share price, after declining 80% since April 2020, surged nearly 240% within three months of Miniso’s takeover, before retracting by half [para. 8].
Store Remodeling and Closures: Store transformation is central to the turnaround, with 62 stores remodeled as of early 2025 following the Pang Donglai model, aiming for 200 more within the year—and planning to close 250-350 underperforming locations, over 30% of the total [para. 55]. These remodels involve significant investment (6-10 million yuan per store), product mix overhaul, and enhanced employee benefits. Initial results show substantial improvements in foot traffic and sales—some stores generating fivefold increases post-remodel [para. 55][para. 56].
Supply Chain Reform: Miniso has transferred its procurement model to Yonghui, emphasizing direct sourcing, shorter payment cycles, and elimination of back-end supplier fees [para. 41][para. 42][para. 43]. This includes abolishing traditional returns and promotion charges, while focusing on fewer, higher-performing SKUs and nurturing blockbuster private-label products. Supplier relationships are now based on strategic partnerships rather than transactional negotiations, with 200 core suppliers identified to drive product innovation [para. 48][para. 49][para. 50].
Private Label Initiatives: Yonghui’s private-label sales, currently 5-15% at remodeled stores, are targeted to reach 40% by 2029, with ambitions to develop hundreds of products reaching threshold sales milestones [para. 37][para. 38].
Outlook: Analysts foresee ongoing challenges, notably the short-term cost burden of rapid remodeling, store closures, and tighter profit margins due to pricing reforms. However, by closing loss-makers, optimizing expenses, and focusing on supply chain efficiency, profitability is expected to recover. Yonghui ended 2024 with 3.83 billion yuan in cash, and major government and financial institutions continue to back its restructuring [para. 61][para. 68]. [Entire summary covers paragraphs 1-71]
- Yonghui Superstores
永辉超市 - Yonghui Superstores is China’s largest domestic supermarket chain. Facing losses and declining sales, Yonghui underwent a major transformation in 2025 after Miniso’s founder Ye Guofu became the leading shareholder and reform leader. The company is now streamlining its supply chain, cutting costs, emphasizing own brands, and learning from “Panda Mart” Fat Donglai’s model. Yonghui is also closing unprofitable stores and aiming to attract younger consumers and improve operational efficiency.
- MINISO
名创优品 - MINISO (名创优品) is a Chinese retail brand founded by Ye Guofu. It focuses on affordable, high-quality daily goods and has achieved strong global expansion. In 2024, MINISO’s overseas revenue grew by 41.9% to 6.675 billion RMB, accounting for nearly 40% of group revenue. MINISO acquired a major stake in Yonghui Superstores and is now actively driving reforms there, leveraging its product development and supply chain strengths.
- The Dairy Farm Company, Limited
香港牛奶公司 - The Dairy Farm Company, Limited, also known as Hong Kong Dairy Farm, was previously one of the major shareholders of Yonghui Superstores. In September 2024, the company sold its 21.1% stake in Yonghui to Miniso (09896.HK) for RMB 6.27 billion. This transaction contributed to Miniso becoming Yonghui's largest single shareholder, marking a significant shift in ownership and management of the Chinese supermarket chain.
- JD.com
京东 - According to the article, JD.com (京东, NASDAQ: JD/09618.HK) previously held an 8.3% stake in Yonghui Superstores. In September 2024, JD.com sold its shares to Miniso (名创优品) for 6.27 billion yuan, making Miniso the largest shareholder of Yonghui. This divestment was part of JD.com's strategy to sell non-core assets, similar to the broader trend among Chinese e-commerce companies.
- Costco
开市客 - According to the article, Costco is mentioned as one of the major retailers supplied by high-quality supply chain companies that are now also in procurement discussions with Yonghui Superstores. Specifically, some suppliers engaged by Yonghui are already providing goods to Costco and Sam’s Club (Walmart’s high-end supermarket chain), indicating Yonghui's intention to work with established export-oriented suppliers in the wake of its ongoing reforms.
- Walmart
沃尔玛 - The article mentions Walmart in the context of China’s retail sector. In 2023, Yonghui Superstores had an operating scale of 85.55 billion yuan, second only to Walmart China. Additionally, some vendors supplying Yonghui also supply Sam’s Club, Walmart’s high-end supermarket chain. The article highlights competitive pressures from both Walmart and other modern retail models in China.
- Sam's Club
山姆会员店 - According to the article, Sam's Club is a high-end supermarket chain owned by Walmart. Some suppliers that provide products to Sam's Club are also in procurement talks with Yonghui. The article positions Sam's Club as catering to large families and the middle class, in contrast to Yonghui's strategy of targeting mainstream Chinese households.
- Alibaba
阿里 - The article mentions that, following JD.com's sale of Yonghui shares to Miniso, Alibaba also sold its stakes in RT-Mart at a discount in early 2025. DCP Capital acquired RT-Mart for HK$13.138 billion. This reflects a broader trend of e-commerce giants like Alibaba divesting offline supermarket assets, as valuations have bottomed out and large-scale mergers and acquisitions have emerged in China's retail sector.
- RT-Mart
大润发 - According to the article, at the beginning of 2025, Alibaba sold RT-Mart (大润发) at a discount, with DCP Capital acquiring it for HKD 13.138 billion. This transaction is mentioned as an example of the recent wave of large-scale mergers and restructuring in China's offline supermarket sector amid declining valuations and increased competition from online retailers.
- DCP Capital
德弘资本 - DCP Capital (德弘资本) is mentioned in the article as the firm that acquired RT-Mart from Alibaba at a discounted price for HKD 13.138 billion in early 2025, after JD.com sold its stake in Yonghui to Miniso. DCP Capital is a private equity firm known for engaging in large-scale mergers and acquisitions in the Chinese retail sector.
- Zhongbai Holdings Group
中百集团 - According to the article, Yonghui has been reducing its offline retail assets, including divesting its holdings in Zhongbai Holdings Group (中百集团, 000759.SZ). In December 2024, Yonghui sold all its shares in Zhongbai, a traditional department store enterprise, for approximately 440 million yuan, resulting in an investment loss of about 46 million yuan. This was part of Yonghui’s broader asset optimization and cash recovery efforts.
- Hongqi Chain
红旗连锁 - According to the article, Yonghui Superstores is reducing its stake in various offline retail assets, including Hongqi Chain (红旗连锁, stock code 002697.SZ). In December 2023, Hongqi Chain announced it would be acquired by Sichuan state-owned capital, and Yonghui sold part of its shares to Shangtou Investment for a total transfer price of about 800 million yuan.
- Pang Dong Lai
胖东来 - Pang Dong Lai is a high-end regional supermarket chain in Henan, China, known for its quality-focused model. In 2024, it operated only 14 stores, generating sales of nearly 17 billion yuan and profits over 800 million yuan, with an average sales per store of 1.2 billion yuan. Its innovative practices, employee welfare, and efficient store management have become a benchmark, inspiring other Chinese supermarkets, including Yonghui, to adopt its successful "reform" strategies.
- Wumart
物美 - According to the article, Wumart is mentioned as one of the traditional supermarkets in China. The founder of the oral care brand BOP, Liu Bin, noted he did not choose to enter Carrefour or Wumart due to their declining status, preferring Yonghui for its ongoing transformation. No further operational or financial details about Wumart are provided in the article.
- Carrefour
家乐福 - Carrefour is mentioned in the article as an example of a traditional supermarket in China that the founder of the BOP oral care brand chose not to enter, citing its declining prospects. The article notes that the traditional "KA" (key account) retail model represented by Carrefour is losing its appeal, while newer retail models like Yonghui's ongoing transformation are seen as more promising by emerging brands.
- Dingdong Maicai
叮咚买菜 - According to the article, around 2017, Dingdong Maicai was among the online supermarkets using a front-warehouse model to enter the fresh food market in China. This new model, along with others like Meituan Xiaoxiang Supermarket and the now-bankrupt Missfresh, intensified competition and further pressured traditional supermarkets' survival.
- Meituan
美团 - According to the article, Meituan is mentioned as a source of management talent for Yonghui’s recent reforms. Specifically, Yonghui has recruited managers from Meituan to oversee certain product categories, such as fresh produce and 3R (ready-to-cook, ready-to-heat, ready-to-eat) goods, as part of its supply chain restructuring efforts under the new leadership.
- Missfresh
每日优鲜 - Missfresh was a Chinese online fresh grocery platform that adopted a front-warehouse model and entered the fresh food market around 2017, along with Dingdong Maicai and Meituan Xiaoxiang Supermarket. However, Missfresh has since gone bankrupt, as noted in the article, reflecting the challenges faced by online-first supermarkets in the highly competitive Chinese retail landscape.
- ALDI
奥乐齐 - According to the article, ALDI (奥乐齐) is described as a cross-national, selected, low-price supermarket that entered the Chinese market around 2017. Its entry, along with other players like Costco, increased competition and put further pressure on traditional Chinese supermarkets by offering new retail formats and business models, accelerating the decline of the older "KA" (key account) supermarket approach.
- New Species Research Institute
新物种研究所 - The New Species Research Institute is founded by Zhang Su, who commented to Caixin that under Ye Guofu's leadership, Yonghui is evolving from a traditional merchandise trading model to a consumer- and region-focused product solution provider, aiming to meet consumer needs more precisely and with greater differentiation, emphasizing the advantages of sourcing directly from manufacturing and reducing intermediary costs.
- Jiabai Le Supermarket
嘉百乐超市 - Jiabai Le Supermarket is mentioned as a regional supermarket in Shangrao, Jiangxi Province, China. It was one of the enterprises helped by Fat Donglai (Pangdonglai) to reform its operations, along with others like Bubugao. Fat Donglai’s assistance involved cost-price supply of private label products and operational improvement.
- Bubugao Supermarket Group
步步高商超集团 - Bubugao Supermarket Group, based in Hunan, China, was mentioned as one of the retailers receiving operational support from Pangdonglai, a highly regarded regional supermarket operator. Pangdonglai assisted Bubugao, among others, in implementing reforms and improvements. This was part of Pangdonglai’s broader initiative to help domestic supermarkets enhance their business models and competitiveness.
- Wanda Commercial Management Group
万达商管 - According to the article, in December 2023, Yonghui sold its 1.43% stake in Wanda Commercial Management Group for RMB 4.53 billion, with the agreement that payments would be made in eight installments. However, Wanda failed to pay as scheduled, so Yonghui has filed for arbitration with the Shanghai International Economic and Trade Arbitration Commission.
- Shangtou Investment
商投投资 - According to the article, Shangtou Investment purchased a portion of shares in Hongqi Chain (红旗连锁) from Yonghui Superstores after Hongqi Chain announced it would "sell itself" to Sichuan state-owned assets. Yonghui, the former second-largest shareholder of Hongqi Chain, sold some of its shares to Shangtou Investment for a total transfer price of approximately 800 million yuan.
- BOP Oral Care
BOP波普专研 - BOP Oral Care is a Chinese oral care brand whose founder, Liu Bin, stated that the company chose to enter Yonghui after the retailer shifted away from the traditional key account (KA) model. BOP saw the “de-KA” approach as beneficial for brands, allowing them to reduce costs by bypassing distributors, positioning Yonghui as a promising offline channel to reach more consumers compared to declining traditional supermarkets.
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