Long-term sustainable development is what retailers should truly prioritize. Yonghui Superstores Co.,Ltd. (601933.SH) is currently facing significant headaches, embroiled in a wave of store closures. Regarding the suspension of operations at its Beijing Hongkun Plaza store, the company issued a latest statement clarifying that the halt was due to the property owner, without effective communication or mutual agreement, unilaterally and repeatedly taking measures such as cutting off water and heating supplies starting January 15, 2026, thereby obstructing the store's normal business operations. The property owner's claim of an "unauthorized closure" is severely inconsistent with the facts. While the closure of this particular store might involve unique circumstances, Yonghui Superstores has been consistently shutting down locations over recent years. Based on an analysis of company announcements and public information, Yonghui operated 1,000 stores at the end of 2023. It then recorded a net closure of 225 stores in 2024, followed by 381 closures in 2025. By the end of 2025, the number of Yonghui Superstores had dwindled to approximately 400, which is less than half the number at its peak. The reasons for closing stores are straightforward, primarily stemming from losses and poor operational performance, although issues like the aforementioned property disputes also arise. After comprehensive evaluation, the decision is made to shut down. In fact, the logic behind physical retailers closing stores to stem losses is easily understandable; it is a rational strategy to retain profitable outlets and eliminate underperforming ones to control costs. However, the financial data does not paint a particularly optimistic picture. Yonghui Superstores projects a net loss attributable to shareholders of 2.14 billion yuan for 2025, with a core net loss of 2.94 billion yuan. Losses related to renovation-related suspensions of operations in 2025 reached 1.174 billion yuan. Calculations based on financial reports indicate that Yonghui has accumulated losses exceeding 11.6 billion yuan over five consecutive years. From an industry perspective, high operating costs, intense market competition, and significant operational pressures are identified as the core challenges.
It is noteworthy that Yonghui Superstores initiated the so-called "Pang Gaizao" or "Pangdonglai Makeover" in May 2024, essentially learning from and remodeling itself after the Pangdonglai supermarket model. Based on the author's field visit to Xuchang and interviews with industry insiders, the Pangdonglai supermarket chain, founded by Yu Donglai, enjoys considerable popularity in its local Xuchang market, possessing distinct advantages. These include affordable and high-quality private label products, exceptional customer service, high employee salaries and benefits, along with a series of consumer and employee welfare programs. Consequently, starting with Better Life (Wei Quan) and followed by Yonghui Superstores, the "Pang Gaizao" movement was launched. Yu Donglai has been somewhat crowned with a "retail guru" halo, creating an impression that merely associating with the Pangdonglai model could instantly "resurrect" a retailer. From the author's understanding, Pangdonglai's product offerings and service standards undoubtedly have merits worth emulating. Products are the fundamental core; supplying high-value, cost-effective goods is the very foundation of retailing. Furthermore, providing employees with better compensation and benefits can foster greater dedication to serving both the company and its customers, thereby enhancing the overall consumer experience. During the "Pang Gaizao" process, stores undergoing transformation see their shelves, merchandise, and services "Pangdonglai-fied"—reorganized by category and functional areas, introducing Pangdonglai's private brand products, alongside retraining staff and expanding service offerings. This approach seems sound in principle. However, it is crucial to note that Pangdonglai is a regional, small-scale retailer with only over ten stores. In contrast, giants like Yonghui Superstores or other major retailers operate hundreds to thousands of locations nationwide. Many of Pangdonglai's best-selling products may not suit all regional markets across China, and establishing a nationwide supply chain for some items can be extremely challenging. Therefore, achieving complete national uniformity is difficult and may not yield the expected results. Additionally, Pangdonglai can afford to offer relatively high salaries and substantial benefits to its employees. For a large-scale retailer like Yonghui Superstores, however, the employee count far surpasses that of Pangdonglai. Significantly raising wages and enhancing benefits across such a vast workforce would impose enormous costs on the enterprise—a major point of differentiation between small and large retailers. Moreover, Pangdonglai operates solely within a regional market where the brand holds a dominant position, enjoying high market share and strong brand recognition locally. Yonghui Superstores, as a national retail giant, faces established local competitors in every region. It is unlikely to command the highest market share everywhere, and competition among national retailers is exceptionally fierce. Thus, Pangdonglai's success in Xuchang does not necessarily guarantee that Yonghui or other large retailers can "take the lead" nationwide. Simultaneously, the "Pang Gaizao" itself incurs substantial costs. According to Yonghui's disclosures and public data, the transformation process generates losses from asset write-offs, lost revenue during renovation shutdowns, and one-time startup expenses. The combined impact of asset scrapping and one-time investments is approximately 910 million yuan on profits; estimated gross profit loss from store closures for renovation is around 300 million yuan. Can these losses be recouped after the "Pang Gaizao" is completed? Based on the author's observations, the answer is: not necessarily. Some stores of Better Life and Yonghui Superstores have indeed experienced improved foot traffic and revenue growth post-transformation. However, retail is a low-margin industry with a long payback period. Consequently, some stores may not demonstrate ideal results in the short term, and long-term market impact involves numerous factors, introducing significant uncertainty. Why, then, do numerous retailers still pursue the "Pang Gaizao"? The author speculates it relates to retail enterprises' need for "new concepts" and attracting capital attention. As retail competition intensifies, standing out becomes paramount. Perhaps some retailers view a "new concept" as crucial—something that makes investors more optimistic about future prospects and potentially leads to capital cooperation. In the author's view, whether it's Yonghui Superstores, Better Life, or other retailers, undertaking the "Pang Gaizao" and learning appropriate operational strategies is not inherently wrong. However, Pangdonglai's regional retail formula may not be suitable for all retail enterprises, especially large national chains. Yu Donglai is a successful founder of a regional retail business, but the halo effect should not be overstated. Retailers should clarify their own positioning, enhance their core competencies, and judiciously learn from the strengths of peers without blind imitation. Even if the goal is to create a "new concept," the effects are often temporary. Long-term, sustainable development is what retailers should truly prioritize.
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