Reduce the price! Reduce the price! Offline Supermarket Price War Begins

E-commerce is not only competing for prices, but the "war" of low prices has now spread to offline supermarkets.Recently, Yonghui Supermarket announced that it will establish a "genuine discount store" in its stores nationwide, and simultaneously add a discount zone for online apps/mini programs to provide surprise discount prices for food and supplies

E-commerce is not only competing for prices, but the "war" of low prices has now spread to offline supermarkets.

Recently, Yonghui Supermarket announced that it will establish a "genuine discount store" in its stores nationwide, and simultaneously add a discount zone for online apps/mini programs to provide surprise discount prices for food and supplies. Coincidentally, since the launch of the "Moving Mountain Price", Hema announced on October 13th the comprehensive launch of the supply chain optimization project. Hema Fresh's offline stores have lowered the prices of over 5000 products and set up a "Offline Exclusive Price" zone in their stores.

It is reported that the actions of Yonghui Supermarket and Hema are not just short-term promotions, but long-term actions. Faced with survival pressure, is the "low price era" coming for supermarkets?

Offline supermarkets have started a price war. (Photographed by Ran Longnan, a journalist from China Business Daily)

Supermarkets roll up at low prices

On October 12th, a reporter from China Business Daily saw the so-called "genuine discount store" at the Beijing Lugu store of Yonghui Supermarket.

Compared to regular independent discount stores, Lugu Store's "authentic discount store" is set up inside the supermarket, belonging to the "store in store" model. However, in Lugu store, this area is not called a "genuine discount store", but rather a "limited quantity flash sale area".

Yonghui Supermarket is located in the "limited edition rush buying area" of Beijing Lugu Store. (Photographed by Ran Longnan, a journalist from China Business Daily)

'Authentic discount store' is just a general term for the functions of this area within our store, and it does not mean that every store in this area is called by this name. 'Regarding the different names, the person in charge of Yonghui explained to the reporter.

Entering the area, slogans such as "limited quantity flash sale" and "always new" can be seen everywhere, attracting attention. A reporter from China Business Daily noticed that there are a variety of product categories in the region, ranging from rice, flour, grain and oil, daily necessities, to beauty and skincare, snacks and beverages, but the quantity of each category is not large. And most of the products are not on time special offers, and the production date is relatively new, attracting many customers to stop.

Consumers are currently selecting products in the 'limited quantity flash sale area'. (Photographed by Ran Longnan, a journalist from China Business Daily)

In terms of price, the reporter randomly selected several products and found that some of them had lower prices than online e-commerce sales. For example, "Johnson&Johnson Baby Milk Mild Facial Moisturizing Cream 25g" has a discounted price of 15.9 yuan in a certain e-commerce channel, while it only costs 8.4 yuan in this area and is valid until December 12, 2025; The price of the "Jiaoxia Capsule Series 50 fold Umbrella (Zhongxia Powder)" in a certain e-commerce channel is 139 yuan after the discount, while in the region it only costs 59.7 yuan.

Some products are cheaper than online e-commerce channels. (Photographed by Ran Longnan, a journalist from China Business Daily)

I feel it's quite cost-effective, "a customer told reporters that she recently noticed the newly established" limited quantity flash sale area "in Lugu store and would come to search for goods when she had time. Because the products are different every day and change at any time, and things are not on schedule, I feel more at ease. "She taught the reporter her own" leak detection "experience - there will also be discounts on fresh products in this area at night.

Coincidentally, Hema Fresh Store has also started to set up a "offline exclusive price" zone, focusing on low-priced and high-quality products. A bottle of Thai elephant soda worth 2.4 yuan is now 1.9 yuan, and a domestic beef brisket with a market price of 45.9 yuan per kilogram is now 39.9 yuan. The Knoppers milk hazelnut chocolate wafer biscuit, which used to cost 39.9 yuan, is only 29.9 yuan... "A consumer told reporters that they can feel a significant price reduction. When you enter the store, you must go around this area first. It's actually more convenient to buy it offline than waiting for the express delivery

The prices of thousands of products at Hema Fresh Store have been reduced. (Image provided by the surveyed enterprise)

The reporter learned from Hema that on October 13th, Hema began implementing a new procurement model and launching a "discount based" transformation. For consumers, the most intuitive feeling is that products are generally becoming cheaper - Hema sets "offline exclusive prices" for various categories of products, including dairy products, biscuits, instant food, water drinks, washing and care products, frozen meat and poultry, frozen aquatic products, and so on, with prices generally dropping by 20%.

Hema stated that currently, the discount transformation has started with Hema Fresh's offline stores and will expand to online stores in the future, ultimately making all Hema products more competitive in price.

What does' low price and high quality 'mean

From the information currently released, it is evident that both Yonghui Supermarket and Hema are prepared to adopt low prices and high-quality products as their long-term strategies.

Discount stores are a major trend in the retail industry in the current market environment. They can not only improve the efficiency of Yonghui's product replacement, break the high and low price difference between the marketing environment and the daily environment, but also further enrich the variety of products and bring consumers more cost-effective choices. According to the relevant person in charge of Yonghui, setting up "genuine discount stores", It is part of the store optimization strategy currently being implemented by Yonghui Supermarket.

The person in charge stated that choosing the "store in store" model not only provides customers with a premium shopping experience, but also facilitates one-stop shopping for customers; On the other hand, we select authentic brands and rely on Yonghui's supply chain advantages to achieve the ultimate cost-effectiveness of our products. At present, 'genuine discount stores' will be promoted in Yonghui Supermarket stores across the country. Depending on the size of the stores, the size of the discount stores will also vary, with SKUs basically maintained at 500-1000 units

In addition to the 'genuine discount store', Yonghui Supermarket is also continuing to promote other daily promotional products. (Photographed by Ran Longnan, a journalist from China Business Daily)

The reporter from China Business Daily learned that the discount products of Yonghui Supermarket's "genuine discount store" are relatively independent of daily promotional products. The above person in charge stated that in terms of selecting discounted products, Yonghui is different from the traditional operational logic of discounted prices for temporary goods. Yonghui focuses on improving product efficiency and scientifically evaluates product performance through digital means such as its own supplier system and YHDOS digital system. At the same time, based on the product data under the digital sales dashboard, Yonghui will select a portion of new products, popular online products, and regular products from the discount product pool every day, and sell them at 70%, 50%, and 30% off of their original price according to the specific situation.

Similar to Yonghui, Hema's confidence in actively reducing prices also stems from supply chain innovation. Hema CEO Hou Yi previously stated that Hema's self transformation refers to a discounted transformation centered on supply chain optimization. In Hema's view, "discounting" is not selling cheap goods, but through the construction of a vertical supply chain to sell good goods cheap, ultimately achieving "upward movement in product quality and downward movement in product prices".

Before fully implementing the discounting reform, the success of Hema's "moving the mountain price" clearly marked the "front line battle".

The "moving price" for Hema's launch. (Photographed by Ran Longnan, a journalist from China Business Daily)

At the end of July and beginning of August this year, Hema launched "mountain moving prices" in 15 cities including Shanghai and Beijing, proposing to use the spirit of Yugong moving mountains to shorten the gap with world leading retail enterprises. The competitiveness of many "mountain moving price" products is on par with the brands of well-known overseas member stores, and the affordable prices have also attracted many new and old users. The sales of the popular product durian thousand layer cake in Shanghai increased 26 times year-on-year, and the sales of "mountain moving price" products have increased several times, resulting in a significant increase in user activity. Some industry observers believe that the success of the "mountain price move" has shown Hema that selling good goods at a lower price is a measure that is both popular with consumers and in line with the long-term interests of the supply chain.

Prior to the "Mountain Moving Price", Hema opened its first Olay store in December 2021, and as of June this year, it had reached 68 stores.

It is reported that in the future, Hema's fresh products department (including aquatic products, meat, poultry, eggs, fruits, vegetables, etc.) and finished products department (including some food, non food, pre made vegetables, etc.) will all carry out vertical supply chain construction. Among them, the fresh product department will be centered around the base, and the finished product department will be centered around the factory.

Everyone loves the 'discount zone'

The reason why supermarkets are "rolling up" low prices is due to the current changes in people's consumption habits and willingness.

In recent years, as consumers' willingness to consume has significantly tightened, retail enterprises need to adapt to the challenging era of great change. For today's consumers, "low price, high-quality" and "cost-effectiveness" have become the main keywords of their shopping choices.

Ms. Chen, a consumer born in the 1990s in Beijing, told reporters that this year, many of the products she used were discounted products she purchased, or she directly went to discount stores such as Good Special and Hi Special. In addition to the promotion of e-commerce, I feel that the prices of products in offline discount stores are more favorable in daily shopping, and I am too lazy to go to e-commerce platforms to chip in. However, offline shopping is also necessary, so we focus on comparing prices at any time

Another post-95s consumer, Ms. Su, is addicted to various supermarket discounts and last-minute specials. She has followed several professional bloggers on social media, mainly sharing overtime discount periods, and offering new discounted products. She told reporters that she used to think that buying expensive products was good, but now she feels that the quality of many discounted products is not bad. If it doesn't expire, it means there's no problem. Why not buy something cheaper

Data shows that discount stores will be the fastest-growing business format in the next decade, with a compound growth rate of 5.6%, far higher than the 2.5% of supermarkets and even higher than the 5.5% of convenience stores. From the perspective of product category composition, the overlap between discount stores and traditional offline supermarkets is extremely high, taking away a lot of business.

Traditional supermarkets are also aware of the potential of discount stores, and many supermarkets are already testing this business model. In October 2021, Jiajiayue opened its first discount store at Shouguang Wanda Plaza in Weifang, where the prices of its products were 10-15% lower than those of regular stores. On June 20 of this year, it launched a new discount store format called "Haohuixing Haohuo Discount Store". Last June, the "wholesale market" of Pangdong Lai opened, which also belongs to the "store in store" model. In the second half of last year, Wumart opened a discount store called "Meitao" in a shopping mall in Mentougou District, Beijing.

The entry of Yonghui and Hema has caused new waves in the "discount war" among supermarkets. The reporter noticed that compared to always emphasizing online discounts in the past, supermarkets are now offering more exclusive offline discounts. Like Yonghui's "genuine discount store", although there is also a similar "clearance zone" online, the product categories in the online zone are far less than those in the offline zone. Although Hema's "Mountain Moving Price" is available both online and offline, this time it directly focuses on the "Offline Exclusive Price" section.

The emergence of offline exclusive discounts will bring more customer flow to traditional supermarkets. (Photographed by Ran Longnan, a journalist from China Business Daily)

Some industry insiders believe that the emergence of offline exclusive discounts will bring more customer flow to offline stores, thereby further driving the sales of other products in the store. Although discounts are important, product quality and service cannot be discounted. If service quality can keep up, it may bring new opportunities to offline supermarkets

However, for consumers, enjoying real benefits is the most important thing. As long as it's not a price increase followed by a discount, which is a real benefit, I will definitely be willing to browse more. "A consumer said," After all, who can't love discount zones

(Reporter Ran Longnan from China Business Daily)

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