Low prices, discounts, and a posture of devouring everything have suddenly become the keywords of 2023. Whether it is a good sale or a special purchase that started as a snack in the expiration date, or a snack that is very busy as a snack wholesaler, Zhao Yiming is shouting the slogan of "breaking down the bottom price", with 12 yuan of C'estbon, 3Oriental leaves of 5 yuan swept the streets and alleys. "Cheap" seems to have become an alluring good business overnight. Even the little-known discount MAMA instantly ignited the whole network because of Liu Run's New Year's Eve speech. "2,500 stores, a team of 70 people, 17 revenues and 32% gross profit margin" fully mobilized the enthusiasm of netizens across the country to fight counterfeiting. Major supermarkets have also begun to "reduce their prices", and Hema directly cut a knife, announcing a 20% offline price reduction of 5,000 products;Gome does not accept the old, and also wants to open a discount store like a snack mass merchandiser;Yonghui also began to build a "discount product pool" in its own stores. All of a sudden, it seems that Pinduoduo is everywhere. But the question is, how many can make money?In the past three years, the discount stores that have held high the banner of "consumption downgrade" can be roughly divided into these three categories: one is the "hard discount" represented by ALDI, Costco, Sam's, etc., and their low-price strategy stems from the cost of ** chain;The first type is the "soft discount" represented by good sales and hi special purchases, and its low prices mainly come from inventory and tail goods. In the past two years, the snack stores that have dominated the county have found a third way between soft and hard discounts: a small number of standard products and big-name tail goods are used to drain traffic, such as cola, sparkling water, potato chips, etc., but it is those unknown brands that are "directly supplied by manufacturers" that actually carry the banner of revenue. When wallet assassins such as Zhong Xuegao and Hua Xizi were criticized by consumers and their reputation collapsed, the snack mass merchandisers that broke through in reverse turned into offline Pinduoduo and impressed everyone with low prices. Big Brother Snacks is very busy, and once opened 1,000 stores in 4 months at the rate of one store in 3 hours;Zhao Yiming Snacks had only 84 stores at the beginning of 2022, and now there are more than 2,300;Even the less well-known "Snack Youming" is developing rapidly at a pace of adding 100 new stores every month. In the eyes of the capital, snack stores are a good track for the next 10,000-store brand. Since 2021, the consumer industry has encountered a "cold winter" of investment and financing, but snack mass merchandisers have not felt the cold [2]: snacks are very busy and Shen Nanpeng has taken a fancy to them4 small goals;Black Ant Capital is not far behind, and quickly joined hands with BESTORE to help Zhao Yiming complete 1500 million Series A financing. 
The influx of capital has given enough fuel for the expansion of snack stores. A large number of shops that urgently need to be rented out and small owners who have nothing to do have become the flywheel of the rapid expansion of snack stores. In 2022, snacks were busy and received a total of 390,000 batches of intention to join the application, and finally successfully opened more than 300 stores, and the success rate of joining is only 083%[3]。Even if the pass rate is so low, it can't stop the franchisees from squeezing their heads. There are more wealthy franchisees who do not hesitate to send "tea fees" in order to grab the franchise quota. When conducting project research, some investors found that in order to grab the same high-traffic spot, the two snack wholesale brands were willing to pay an additional 10,000 yuan for "tea fees" on top of the rent [4]. Small bosses rush to join, nothing more than because of high gross profit and short payback cycle. According to Huachuang**'s estimates, the "factory direct supply" products in the busy snack industry contribute half of the profits, and their gross profit margin is between 30% and 35% [5], and the payback period is only 1 to 2 years [4]. Consumers are also looking for "cheap". The snack store in the town is very busy, and at eight o'clock in the morning, the queue has been pulled out of the door [4];The good sale of Sanlitun has become the first choice for white-collar workers to take a walk during their lunch break. Compared with supermarkets and convenience stores, discount stores for the same goods only need 2-5% off, and it is difficult for the vast majority of consumers to refuse this attraction [6]. "Low price and good goods" have gradually replaced "you get what you pay for" and have become the latest consumer philosophy. It is not only the snack stores that have eaten this dividend, but also the outlets on the outskirts of the city. From January to February 2023, the average daily sales of Capital Outlet exceeded 36 million, an increase of 25%, and the stores in Beijing hit a new high in the past ten years with sales of 700 million yuan. If the snack store is the hot town Pinduoduo, then the outlet is the middle-class Pinduoduo in the big city. In the past, the noble supermarkets also began to "become Pinduoduo" from questioning Pinduoduo. Hema saw the right time, and began to turn the knife inward, and comprehensively launched the discount reform, and the store normalized 5000+ products with 20% off. As a faithful believer in consumption upgrades, Boston lobster and Russian king crab have all been stars in the box area. But now, the original leaf tea, which was originally priced at 79 yuan, is priced at 39The ** of 98 yuan is placed on the shelves of Hema, next to the slogan of "low prices every day, explosive models". Yonghui Supermarket, which is struggling to survive, has also begun to demarcate low-price areas to open "shop-in-shop";RT-Mart launched the "Honest People Don't Speculate on Prices" activity, and selected more than 1,000 hot-selling products to directly reduce prices. 
If you summarize the changes that have taken place in offline retail channels in one sentence, it is to incarnate offline Pinduoduo and cut yourself with a knife. In fact, the offline channel business, which focuses on "low prices", is nothing new. As early as 2003, Dia, a Spanish snack discount brand, opened stores in China and opened hundreds of stores at one time [7]. But for more than a decade, these discounters have been tepid, a minor player in the retail industry that no one cares about. Until after 2020, good sales and snacks have risen one after another, and "discount stores" have jumped to the C position. Discount stores can thrive, and they first have to kowtow to "inventory". After 2020, the sudden epidemic forced a large number of offline stores to close. Dynamic sales have been blocked, and snack inventories in traditional distribution channels are high. For example, Want Want's dealers once revealed to ** that the inventory has increased exponentially, and the inventory of dealers in some counties is as high as 1.8 million, and "the growth is in the dealer's warehouse" [8]. Instead, these inventories have become nutrients for snack discount stores, providing them with a large supply of goods to sell at low prices, and the snack discount market has begun to flourish. If the total output value of China's snack industry in 2020 is 3 trillion yuan, and every 1% increase in inventory precipitation rate will increase the market size of discount snacks by 30 billion yuan. On the one hand, there is a lot of urgencyClearanceOn the one hand, there are consumers who are eager for low-cost and good goods. Discount stores have become a two-pronged business that attractsA large number of greedy onesPlayersRace to get in. During this period, the temporary discount stores represented by the good sale took advantage of the inventory to soar, and in just one year, the total sales of the stores jumped from 1 billion yuan to 10 billion yuan, a full 10-fold increase [9]. But in 2023, the hidden worries of expiring discount stores began to emerge - expiring discount stores usually sell what is left, and failed to establish a voice on the ** chain. And as the inventory dividend fades and competition intensifies, such as 25 yuan of Evian mineral water, 1 yuan of Lay's, these drainage products are not enough to sell. Different from passive discount stores, snack mass stores represented by snacks are very busy, and they choose to go one step further and use "factory direct supply" to solve the first problem: either sell white label goods, or use the scale to reduce prices upstream, in short, to knock down the **. 
Snack stores that don't have a supply of goods are overwhelmed. In 2022, snacks are very busy, adding 1,200 new stores, and sales have also come to 644.5 billion, a year-on-year increase of 1397%[10]。With the growing scale, brands that were originally worried about indiscriminate prices began to take the initiative to invest in snack discount stores. For example, snacks are very busy, and they have surpassed Wal-Mart and become the largest customer of Yanjin store. In May last year, Gan Yuan cooperated on the opening of combing products and snack discount systemsWeilong and Qiaqia established a new business department this year to specialize in docking snack discount channels. Discount stores waiting for a good day, take the opportunity to ** crossroads and major commercial plazas. In the past, the unit price of products was low, and discount stores were highly cost sensitive, and their stores would usually take the initiative to sacrifice ** volume and curl up in the corner location with a lower rent in the same location. In the past three years, a large number of merchants have closed, and the vacancy rate of commercial real estate in first-tier cities such as Beijing, Shanghai and Guangzhou has reached as high as 34%[11]. In Zhengzhou, snacks were very busy and opened their stores at the crossroads of the downtown area of Zhengdong New District;The good sale even opened a store near SOHO Plaza in Beijing. Low rents and high inventories have made today's discount stores just as Vipshop was yesterday. In 2008, the financial crisis broke out, and "inventory" became a problem for the entire clothing industry, with Nike and Adi inventory as high as 24$3.8 billion and $28US$1.9 billion, an increase of 15% and 18% year-on-year. In the name of solving the inventory, Vipshop took advantage of the situation to get the opportunity to cooperate with these big brands. On the other hand, consumers are also happy to hear about it and have gone online to pick up cheap. In the first half of 2012, the total backlog of inventory of 42 well-known garment companies in the country reached an astonishing 48.3 billion yuan, but Vipshop sold better and better, and its revenue rushed to 43500 million yuan, a threefold increase year-on-year. By 2014, the revenue of Vipshop, the hero of sales, exceeded 20 billion, and the stock price jumped to $170 shares, becoming the "third pole of e-commerce" outside Jingdong. In the past decade, many vertical e-commerce companies have been born and died quickly, but the "small but beautiful" Vipshop has been able to make profits continuously. Will the same myth befall today's discount stores?In 2019, Chen Liping, a professor at Capital University of Economics and Business, predicted that discount stores would rise in China. At that time, Zhao Yiming Snacks had just been established, and the number of stores that were very busy with snacks was less than a quarter of the current one, and Hema was still trying its best to call for consumption upgrades. Four years have passed in a blink of an eye, Zhao Yiming and Snacks are very busy and began to join forces to impact 10,000 stores, and Hema also announced a "comprehensive discount". Just as his prediction was being fulfilled step by step, Professor Chen Liping said in an interview: China's discount stores are going in the wrong direction, and discount stores are not cheap stores. In Chen Liping's view, the difference between the two is that discount stores jointly achieve the low price goal by transforming the production process, and the whole industry chain is mutually beneficial and win-winHowever, low-cost stores rely on exploiting ** merchants or burning money to subsidize them in exchange for ** advantages [12]. In other words, "low price" is an end, not a means. For consumers, low prices are just one result. For merchants, whether they eat honey or take arsenic at a low price depends on the way to achieve "low price". Not at the cost of blood loss on the platform and the upstream ** chain, such a low price is honey;Burning money subsidies, consumers get wool and finally add it to the head of the brand, or become a waste of social resources, such a low price is arsenic. Taking Hema as an example, it has now announced a 20% drop in the number of more than 5,000 products, but only for offline stores. The reason for this is that "the cost of online distribution is very high, and it is reasonable that the offline ** is lower than the online". But in 2015, when Hema was first established, online was the "best depression". In 2015, on Double 11, Tmall GMV alone rushed to 91.2 billion yuanIn 2016, a number of "Tao brands" that have risen rapidly in e-commerce with low prices and low thresholds have submitted their forms and sought to be listed. In the context of e-commerce frenzy, the three squirrels born in 2012 were in the limelight for a while. At the beginning of its launch, it only invested 600,000 streams, and it took 65 days to win the first place in Tmall nut snacks. The popularity of Three Squirrels is due to the fact that it not only successfully "branded" the non-standard category of nut snacks, but also achieved relatively low prices. At that time, the ** sold snacks, the traffic was cheap and there was no middleman to make the difference, and the price was much lower than offline. But after 2020, trapped by increasingly scattered and expensive online traffic, the performance of the three squirrels has declined year after year, and the net profit is only 1700 million. 
In the world of e-commerce,gmvis a more stakeholder metric than short-term earnings. The three squirrels were far more than the three squirrels who were injured. This year's Double 11 beauty brands collectively stalled, and some brands even **60%. Some people analyzed that the ** war crippled the international big names [13]. In the early days, brands sacrificed profits in exchange for the "lowest price" in the live broadcast room because they were optimistic about future repurchases. After 2023, low prices will be reduced from nuclear ** to commonplace, brand differentiation will be eliminated, and competition will only be left in the dimension of "**", and the advantages of big brands will no longer exist. Whether it is self-operated e-commerce, online supermarkets, or content e-commerce based on live streaming, they have joined the involution of low prices, and "the lowest price on the whole network" has become the only slogan. The platform did not suffer a loss, the anchor earned the pit fee, and the consumer bought a bargain. Merchants are miserable: "It seems that platform subsidies and anchor discounts are actually paid by merchants" [14]. Nowadays, brands are living in traffic, and the battlefield has shifted from online to offline, which is essentially the same as the "all in online" initiative of the past. When "low price" becomes the only direction of involution, the offline battlefield is also full of corpses: snack discount stores that are in the limelight, in the fierce competition, the living space has shrunk sharply. Some franchisees lose money with a daily income of 5,000, and some stores have been closed for less than two months from opening. Most of Zhao Yiming's stores are located in the sinking market, with low rent and manpower, but under the first war, the comprehensive gross profit margin of his stores is only 18%, which is less than the gross profit of 24% of BESTORE's e-commerce business. The "low price" that does not sacrifice profits is simple to say, but it is actually an all-round test of enterprise operation and management. Sam is the best of them. Its procurement is low, and the gross profit space left for the first merchant is not large, but it is better than the quantity. Backed by Walmart's global ** chain, Sam's star products such as member's mark vannamei shrimp and black cod nuggets have annual sales of hundreds of tons[15]. Being able to get high-quality goods with the lowest ** is exactly what Walmart is capable of. Returning to the question raised by Chen Liping, his ideal discount store model is exactly like Sam's - to achieve low prices on the basis of mutual benefit and win-win results in the whole industry chain, rather than shouting slogans and squeezing brands and first-class merchants can easily achieve it. In short,KudosPinduoduo has no problem,But whether it can become a money-making Pinduoduo is the real question. 
References
1] Channel reform leads the growth of enterprises, and the chain discount store format has broad prospects and is open source**.
2] In-depth analysis丨Why the "Pinduoduo" in the snack industry has become the new favorite of the brand, Yibang Power.
3] The pass rate is only 083%, snacks are very busy, adhere to long-termism, strictly control franchise stores, and consume news.
4] The county snack shop, how to open more and more, daily people.
5] Snacks are very busy "all the way to the sky": low-price drainage, 6 stores per day, franchisees say that the profit is ** bulk products, Sohu Finance.
6] When Expiring Discounts Rise: Good Deals and Competitors, Interface News.
7] ALDI's first store in China opened, a financial and business observer.
8] Wang Tsai milk has resumed growthDistributors: Millions of products are in the warehouse, FMCG.
9] How big can the expiring discount store business of good special sale be, Bohu Finance.
10] "Snacks are busy" announced its 2022 financial data: achieving revenue of 644.5 billion, Global Finance Network.
11] Ding Zuyu: The highest vacancy rate of commercial real estate in Shanghai has reached 34%, Hexun.com.
12] Chen Liping: Discount stores are not cheap stores, China's discount format has gone astray, and the third eye is retail.
13] Estee Lauder met ruthless people in China, the city boundary.
14] Merchants trapped in low prices in the live broadcast room, China Entrepreneur Magazine.
15] Sam's frozen seafood accounts for more than 70%, imports and private brands double, PR Newswire.
Author: Yan Zhangpan
Editor: Hu Xiaoqi
Drafting: Yan Zhangpan.
Design: Shu Rui
Editor in charge: Hu Xiaoqi.
I would also like to thank Xi Wang Xin for his support of this article
Kunpeng Project