The recent company-wide letter from Yonghui Superstores Co.,Ltd. CEO Wang Shoucheng has drawn significant attention. In the open letter, he not only apologized to all employees but also frankly admitted that operational missteps have led the company into a cycle of continuous losses. Data indicates that Yonghui is projected to incur a loss of 2.14 billion yuan in 2025, a 45.6% increase from the previous year. This marks the fifth consecutive year of losses, with cumulative losses exceeding 11.6 billion yuan.
In an effort to reverse this decline, Yonghui initiated a large-scale transformation starting in 2024, benchmarking itself against the Henan-based retailer Pang Donglai. This overhaul involved multiple dimensions, including store renovations, product upgrades, and supply chain adjustments. In 2025 alone, the company shuttered 381 underperforming stores and completely refurbished 315 existing locations, with a total renovation area surpassing 2 million square meters. However, this massive investment failed to yield the expected results. Instead, costs associated with asset write-offs and closures for renovations led to a gross profit loss of over 1.2 billion yuan.
The Pang Donglai model was once seen as a potential lifeline for Yonghui. This supermarket chain, deeply rooted in Henan, generates annual sales of 23.5 billion yuan from just 13 stores. Its private-label DL series has become a phenomenon, sparking buying frenzies for products ranging from cooking oil to milk. In March 2024, Pang Donglai assisted in renovating a store for competitor BBK, which saw its first-day sales surge to over 2.4 million yuan—a more than tenfold increase—further solidifying Yonghui's resolve to transform.
In July 2024, Yonghui officially launched its "Donglai-style Revamp" plan. This involved introducing 45 of Pang Donglai's best-selling items, expanding the prepared foods section from 5% to 30% of store area, and adding customer-friendly amenities like tea stations and pet boarding areas. Some stores even began live-streaming their kitchen operations via surveillance cameras. Initially, the revamp led to several-fold sales increases in some locations, and "Donglai-style stores" became a hot topic on social media. By the end of the third quarter of 2025, 222 stores had completed the renovation, covering core categories like fresh produce and bakery.
However, the growing pains of the transformation soon became apparent. Renovated stores switched from selling loose vegetables by weight to pre-packaged options, and prices for everyday essential goods generally rose, a stark departure from Yonghui's original "value-priced" positioning. Consumers complained, noting they now had to think twice about the price of a simple cabbage. More controversially, a clear contrast emerged between Yonghui's and Pang Donglai's treatment of employees, with a significant gap in base-level staff salaries. Although some Yonghui stores announced pay raises, these were coupled with stringent performance evaluation systems that often prevented any real increase in take-home pay.
The development of Yonghui's own private brands also hit obstacles. While products like NFC juice and American-style coffee achieved nearly 500 million yuan in sales in January 2026, consumer feedback indicated these items were seen as obvious imitations, lacking unique competitive appeal. More critically, by introducing Pang Donglai's own brands, Yonghui effectively turned a competitor into a supplier. This strategy failed to build a core advantage and risked diverting customers away.
The underlying issue lies in the difference in supply chain systems. Pang Donglai utilizes a joint purchasing model that reduces procurement costs by 30% to 50% and has invested 1.5 billion yuan in building its own supply chain base, creating a complete closed-loop system from industrial logistics to central kitchens. Yonghui's supply chain restructuring, however, has failed to make a similar breakthrough, resulting in persistently high costs. As a retail industry analyst pointed out, without the support of an efficient supply chain, any transformation is built on sand.
Confronted with ongoing losses, Yonghui has begun adjusting its strategic direction. In his company-wide letter, CEO Wang Shoucheng revealed that the focus for 2026 will be on three key areas: merchandise, stores, and organizational structure. The company plans to develop "100 best-selling items each with a reputation worth hundreds of millions" and advance refined store management. He also acknowledged that the prior pursuit of scale expansion had caused the company to deviate from its founding principles, stating that "ambition outstripped capability." Data shows that although Yonghui distributed nearly 50 million yuan in profit-sharing to employees in 2025 and achieved growth in both customer traffic and sales at comparable stores, a significant gap to profitability remains.
This transformation crisis serves as a warning for the entire retail industry. Established supermarket chains like RT-Mart and Renrenle face similar challenges, demonstrating that simply copying a successful model is rarely effective. As Wang Shoucheng reflected, "There are no shortcuts in retail; the Pang Donglai success story is the result of over two decades of deep cultivation." For Yonghui, balancing scale with profitability and transformation with original intent remains an unsolved puzzle.
Comments