According to the Financial Associated Press | New Consumption Daily on January 10 (Researcher Liang Youyun), this morning (10th), the first 'Pang Dong Lai' remodeled store of Yonghui Superstores in Jinshan District, Shanghai officially opened for business, and many residents around the store had lined up early to enter.

Reporters learned that on January 10, a total of five remodeled Yonghui Superstores opened simultaneously across the country. In addition to Jinshan, Shanghai, stores in Dongli, Tianjin, Yubei, Chongqing, Baoan, Shenzhen, and Binjiang, Chengdu have also reopened. Among them, some stores are the second remodeled store in the region.

Wang Shoucheng, Vice President of Yonghui Superstores and head of the nationwide remodeling project team, stated in an interview that the requirement for this store (Jinshan store) is simply not to lose money in the first few months. 'Because the staff is currently less capable and the efficiency is not high, if we can avoid losses, the revenue will come once the staff capabilities improve.'

At this stage, the store has not set sales revenue or other KPIs. If the customer traffic becomes too overwhelming, considering the staff's ability to serve, the store may close early.

In addition, the nationwide store remodeling plan for Yonghui Superstores in 2025 is currently under evaluation, and the first half of the remodeling plan is expected to be announced around the Spring Festival 2025, with the second half expected to be released around May. According to reports, after the simultaneous opening of these five stores nationwide, five more remodeled stores, including Chengdu Yintai, Fuzhou Olympic Sports Center, Fuyang Commercial Center, and Zhengzhou University Road, will open in January.

Since mid-2024, Yonghui Superstores officially announced it would learn from the Pang Dong Lai model, increasing the total number of remodeled stores nationwide to 36, with many stores seeing significant improvements in revenue and customer traffic. However, under the new management strategy and departure from the KA supply chain model, Yonghui Superstores still has a lot of work to do.

Raise wages and transform! The 'Pang Dong Lai' model lands in Shanghai.

There are a total of 19 Yonghui Superstores in Shanghai, mostly located in suburban commercial centers and residential areas around the outer ring, often surrounded by many similar mature supermarket brands and membership supermarkets. The Jinshan Wanda store in Shanghai has been in operation for 9 years since its opening, performing well in sales data as a leading store in the Shanghai area, with high recognition from nearby residents and a well-equipped business circle, but in recent years its revenue has been gradually declining.

Regarding the choice of Shanghai's first revamped Pandonglai store, Wang Shoucheng stated that the core remains the assessment of the operational team's capabilities. This store's team is relatively strong in Shanghai, with stable employees, and is expected to take on the independent operational pressure after the company's guidance and revamp.

It is revealed that the biggest changes for the Jinshan store team are in salary treatment and reward mechanisms. After the revamp, employees at the Jinshan Wanda store will see an average salary increase of about 30%, with frontline employees' base salary rising to around 6000 yuan, reaching a mid-to-high level in the regional industry. Additionally, to ensure employees work an average of 8 hours, more reserve personnel have also been provided.

Yonghui Superstores' Jinshan location has also adjusted benefits for employees, including paid annual leave, free work meals, and relaxation rooms. It is reported that as the store's operational performance grows in the future, employees will also enjoy store commission bonuses ranging from 500 to 1000 yuan.

"The efficiency of Pandonglai is more than twice that of ours. In fact, the salary increase for our employees right now is just about 30% to 40%. If they can achieve a doubling of efficiency, it should be enough to cover labor costs." Wang Shoucheng stated that this requires a conversion of concepts, and one cannot demand a pay rise today and expect employee efficiency to be high tomorrow. The company needs to cultivate more relevant store management talents internally, and the execution process must not become deformed. The status of employees is closely tied to the store's operational conditions and consumer experiences.

The New Consumer Daily observed at Yonghui Superstores' Shanghai Jinshan revamped store that the biggest changes in the store were in product categories, traffic flow layout, and several convenient designs.

Staff at the Yonghui Superstores Jinshan Wanda store stated that a significant number of adjustments were made to store products, with 9418 individual items removed, representing a removal ratio of 71%. The proportion of newly added products in the store exceeds 63%. The adjusted store product structure is close to 80% of Pandonglai's product structure, with imported products accounting for 20%.

However, the staff also pointed out that not all products are consistent with Renrenle, but are set up in imitation of its SKU types. The supermarket has also added a Yonghui selected commodities area and a special brand area from Renrenle, introducing several trendy products from Renrenle, including the hot-selling DL Oats Futures, DL mixed fruit juice, DL laundry detergent, and DL Free Love Baijiu(Chinese Liquor).

In addition, to accommodate the preferences of consumers in Shanghai, Yonghui Superstores has expanded its bakery and deli area, making this store the one with the most new bakery products nationwide.

It is worth noting that after some adjustments, certain stores have seen Renrenle products selling well while sales of other brand products have declined relatively; the details of subsequent sales growth are still worth monitoring.

Yonghui Superstores' adjustments are still in the initial phase.

In the past six months, Yonghui Superstores has actively followed the KA model and learned from Renrenle's supply chain capabilities. Wang Shoucheng revealed that Yonghui Superstores had been attempting the KA model as early as 2019 to 2020, but due to insufficient internal will and significant external brand resistance, it had not been well implemented. With the advancement of adjustments, the Renrenle model has accelerated this process.

Wang Shoucheng also admitted that Yonghui Superstores has received considerable support from suppliers for the KA model, but still faces considerable resistance from brand suppliers, and there are still deficiencies in the development of its own brands.

From an operational model perspective, the KA model requires supermarkets to have more product innovation and design instead of relying on products provided by brands. Compared to Renrenle, Sam's Club, and others who proactively develop and schedule production according to consumer demand trends, Yonghui Superstores currently still lacks relevant capabilities, focusing primarily on replicating Renrenle's supply chain and related product experience.

In the sales area, many of Yonghui Superstores' own products are placed in prominent positions. However, it has been revealed that some of Yonghui's private label products, despite different labels, come from the same supplier and manufacturer as those of Pang Donglai. In most cases, Yonghui Superstores actively coordinates production capacity with Pang Donglai, while in a few cases, Yonghui will seek other production suppliers according to the "Pang Donglai Standards."

With the ongoing adjustments and support, Pang Donglai hopes to enhance the product development capabilities and supply chain capabilities of Yonghui Superstores. Yonghui Superstores, in turn, calls for more supermarkets to adopt the KA model, which could promote a market thriving on demand driven by buyer consumers.

Recently, Pang Donglai, which serves as a learning model for many domestic supermarkets, disclosed its revenue results. Founder Yu Donglai stated on his social media that in 2024, Pang Donglai Group's overall revenue was nearly 17 billion yuan, with over 0.6 billion yuan in taxes, a profit of 0.8 billion yuan, and an average monthly salary for employees exceeding 9,000 yuan.

According to regional sales data, Pang Donglai Supermarket in Xuchang achieved a sales amount of 5.945 billion yuan, while Xinxiang recorded 2.148 billion yuan. Additionally, in the Xuchang area, sales of jewelry, department store, and electrical goods reached 1.546 billion yuan, 1.51 billion yuan, and 1.431 billion yuan respectively. Among them, the Times Square store achieved the highest overall revenue, reaching 4.413 billion yuan.

Comparing the current performance of several listed retail companies in A-shares, Pang Donglai's revenue level has surpassed that of Zhongbai Holdings Group, Chengdu Hongqi Chain, Sanjiang Shopping Club, Bubugao, and Renrenle Commercial Group for the entire year of 2023, only falling behind Yonghui Superstores, Shanghai Yuyuan Tourist Mart, Shanghai Bailian Group, Jiajiayue Group, and Chongqing Department Store.

In contrast to Pang Donglai's positive performance display, Yonghui Superstores faced a decline in both revenue and net income in the first quarter of implementing the Pang Donglai adjustment model. Earnings Reports show that in the third quarter of 2024, Yonghui Superstores realized revenue of 16.77 billion yuan, a year-on-year decline of 16.4%, while the net profit for the same period was a loss of 0.374 billion yuan, a year-on-year increase in losses of 9.21%.

In response, Yonghui Superstores stated in its Earnings Reports that, on one hand, competition in the retail industry is fierce, and changes in consumer spending habits, along with higher demands for shopping experiences and product quality, have led to a decline in customer flow and transaction volume; on the other hand, the company is proactively optimizing and adjusting its stores, closing some underperforming stores while renovating potential ones, which has resulted in a reduced overall store scale.

Changes in the KA model have also brought greater transformation pressure to Yonghui Superstores, with a gross margin of 19.19% in the third quarter of 2024, a year-on-year decrease of 1.69 percentage points. It is reported that during the store adjustments, the company actively optimized its product structure and procurement model, pushing the strategy of eliminating old products and introducing new ones, alongside promoting naked prices and controlling the backend, which are the main reasons for the decline in gross margin. However, Yonghui Superstores also emphasized that this belongs to the short-term impact during the transformation process.

The New Consumer Daily observed that across from the Yonghui Superstores Jingshan store is the largest store of the discount supermarket Auchan in Shanghai. In the face of intense competition in the Shanghai supermarket market, Wang Shoucheng believes that, "After making adjustments, we find that this market is very open, and we hope more partners will join us to learn and make changes together."