Chongqing - Chongqing Yonghui Superstores officially announced that its Nanping Wanda Plaza store will close on October 8 for a comprehensive renovation. The store aims to adopt the operational model of the successful retailer Pangdonglai and is expected to reopen by mid-November.

This transformation marks a bold move in the ongoing efforts by traditional supermarkets in Chongqing to adapt to the evolving retail landscape driven by the rise of e-commerce and new consumer demands.

At the entrance of Chongqing Yonghui's Nanping Wanda Plaza store, a banner reads, "The only shortcut to learning from Pangdonglai is through our genuine sincerity." (Photo/Qiu Xiaoya, Chongqing Daily)

The rise and fall of Yonghui Superstores

Once considered one of China's most promising supermarket chains, Yonghui Superstores initially thrived by focusing on fresh produce, a challenging area largely overlooked by international competitors like Walmart and Carrefour. Through direct sourcing strategies, Yonghui quickly expanded its market presence, going public in 2010 as the first "Fresh Produce Supermarket Stock" in China. Major investments from JD.com and Tencent in 2015 and 2017 further boosted its growth, with the company reaching a market value of over 100 billion RMB by 2018.

However, the rise of new retail trends such as online shopping, community group buying, and same-city delivery significantly impacted Yonghui's performance. From 2021 to 2023, the company's revenue steadily declined. Over the same period, Yonghui accumulated a net loss of over 8 billion RMB. In the first half of 2024, the company’s revenue dropped by 10.11% compared to the previous year.

Learning from Pangdonglai's success

In response to the mounting pressures, Yonghui has looked to Pangdonglai, a regional retail chain based in Henan, as a model for rejuvenation. Known for its customer-focused approach and high-quality offerings, Pangdonglai has garnered widespread acclaim in recent years. With only 13 stores, it has become a viral sensation, frequently likened to a "6A-rated tourist attraction" due to its impeccable service, transparency in product information, and unmatched shopping experience.

Customers queue outside the tea section of Pangdonglai’s Times Square store. (Photo/Liu Zhenkun, Xinhua)

Pangdonglai’s success can be attributed to its strict product quality control, transparency, and consumer trust. The company goes the extra mile by offering free returns for unsatisfactory products and generous after-sales support. Additionally, Pangdonglai stands out for its employee-centric policies, such as high salaries, a “Tuesday Closure” day, and its famous "Injustice Compensation" initiative. These factors have helped Pangdonglai build a loyal customer base and a stellar reputation in the retail industry.

Chongqing Yonghui's next steps

As the first Chongqing store to undergo this strategic overhaul, the Nanping Wanda Plaza store will serve as a testing ground for Yonghui Superstores’ transformation. According to a Yonghui representative, the renovation will focus on upgrading product quality, adjusting pricing, enhancing store layout, and improving employee benefits.

Product-wise, the store will prioritize meeting local consumer needs by refining its selection and retaining well-known brands. The store aims to match Pangdonglai’s model by selecting high-quality, reliable goods.

In terms of pricing, Yonghui plans to optimize its supply chain and ensure fair pricing to maximize customer satisfaction. Store layout changes will also be implemented, including expanding fresh food sections and improving checkout efficiency. To provide a better shopping experience, Yonghui will increase its convenient service areas and create a safer and more comfortable environment for its customers. Moreover, Yonghui will focus on enhancing employee welfare by reducing working hours, raising salaries, and offering more vacation days.

Yonghui has already sent three batches of nearly 100 employees to Pangdonglai stores in Henan for training. They spent 30 days learning about Pangdonglai’s cultural philosophy and operational expertise. This strategic overhaul is expected to gradually roll out to other Yonghui stores in Chongqing.

New path for traditional retail

Industry experts believe that the transformation of Chongqing Yonghui Superstores is essential in adapting to the new retail landscape. With increasing consumer demands for personalized experiences and quality products, traditional retail models are becoming outdated. Yonghui's bold move to follow Pangdonglai’s model could not only revitalize its own business but also provide a valuable blueprint for the broader retail sector in Chongqing and beyond.

As Yonghui Superstores embark on this transformation journey, the results of this initiative could determine the future trajectory of traditional retail in the city. This initiative offers a potential lifeline for supermarkets struggling to keep up with the rapidly changing market.

(The Chinese version of this report was contributed by Huang Guanghong and Qiu Xiaoya, reporters from Chongqing Daily.)