The competitive landscape of new retail is quietly changing, and the number of players in offline retail is becoming increasingly diverse.
On March 20th, Dingdong Aolai, a community supermarket under Dingdong Maicai, opened in Wuxi. The location of this store is located on Changjiang North Road in Xinwu District, Wuxi City, and the surrounding area is mostly residential. Interface News observed that since March this year, the store has been recruiting store employees, including cashiers, store assistants, tally clerks, and so on.
Unlike the expansion of Hema's flagship store, Dingdong Ole's opening is relatively low-key. A person close to Dingdong Maicai told Interface News that Dingdong Aolai's business is in the trial stage and is still being explored internally.
The Olay model is a symbol of low price discounts and has been widely practiced in the retail industry. Last year, Hema and Olay successively launched discount strategies.
As a platform that has been doing online business for a long time, Dingdong Maicai only took its first offline attempt in November last year, opening its first store in China (Jiuliting Store) in Songjiang District, Shanghai. The store covers an area of approximately 500 square meters and has around 1000 SKUs. It mainly sells fresh products related to people's livelihoods, covering categories such as vegetables, fruits, meat, poultry, and eggs.
Regarding why the first store chose to open in Songjiang, Jia Yupeng, the Operations Director of Dingdong Aolai, stated that during the preliminary investigation, the company found that the demand for fresh products in Jiuliting Street is increasing year by year. In addition, the surrounding residential areas of the store are clustered, with a large number of residential communities, high population density, and a main force of fresh consumption, which are the main target customers of Dingdong.
During the offline visit to Interface News, it was observed that there are many small shops around the Jiuliting store, with a relatively dense pedestrian flow compared to other intersections. There are approximately 5 to 6 employees in the store, and the number of customers in the store is still acceptable. At present, the store is still continuously recruiting employees.
In addition to common products in ordinary supermarkets, there are also many Dingdong own brands on the shelves of this Dingdong Olay, such as multiple "Paul Workshop" products displayed in the baking area.
There are discounted products in various areas of the store, including fruits and vegetables, beverages, and baking, as well as small super discount areas. According to Interface News, this year the number of SKUs in the store will increase to 1500 to attract more young customers.
According to the partner "Yuanyi Category Management" of Dingdong Olai Jiuliting Store, before its establishment, Dingdong's senior management team visited discount supermarkets in many places around the world, such as Aldi, DIM in Türkiye, Little Ladybugs in Poland, etc., hoping to find the business type most suitable for the positioning of Dingdong Olai community supermarkets.
The newly opened store in Wuxi this time has the same area as the Shanghai store, and the main products in the store are fresh and people's livelihood products, with about 1500 categories and a direct procurement ratio of about 80%. Dingdong Aolai's positioning clearly points to "community supermarkets". From the perspective of site selection and store settings, both community supermarkets mentioned above are located in non city center areas, concentrated in residential areas, and their decoration styles are relatively simple.
Although Dingdong Maicai focuses on online fresh produce, in the post pandemic era, it faces a more complex competitive environment, making it difficult to sustain long-term development solely online. Extending offline is beneficial for the platform to directly reach consumers and deepen the penetration rate of its own brand. In the fourth quarter of last year, the proportion of self owned brand products in Dingdong Maicai's GMV (total transaction volume) exceeded 20% for the first time.
Chinese food industry analyst Zhu Danpeng told Interface News that the integration of online and offline operations in China's retail industry is a medium to long-term strategy and a necessary path for every consumer enterprise to achieve complementarity between online and offline shortcomings.
Positioning "Aolai" is also an important step for Dingdong Maicai to participate in discounted competition. The research report released by Guotai Junan points out that discount retail is essentially a competition of efficiency, requiring more efficient operation, return of product value, and provision of inventory digestion. Previously, the high loss rate of fresh e-commerce was often criticized by the industry.
In fact, the company has been adhering to a contraction strategy. Last year, its GMV was 21.97 billion yuan, a decrease from the previous year. The total revenue in the fourth quarter was 4.994 billion yuan, also lower than the 6.201 billion yuan in the same period of 2022. The explanation given by Dingdong Maicai is that it is mainly affected by the epidemic and the suspension of operations in some cities and stations.
Exploring new development directions has become one of the important measures for Dingdong Maicai to achieve growth. At the latest financial report conference call, Dingdong Maicai executives stated that the company has the ability, energy, and resources to return to the growth track this year, and continuously achieve non US GAAP profits for the entire year based on this foundation.
However, the discount battle in offline supermarkets is surrounded by enemies. According to data calculated by Caitong Securities, the expected size of the discount retail industry in 2025 is 2.28 trillion yuan, with a CAGR (compound annual growth rate) of 11.0% from 2022 to 2025. In addition to Hema Aolai and Aoleqi, retail enterprises such as Jiajiayue, Yonghui Supermarket, Chongqing Department Store, and Zhongbai Group have also laid out discount tracks, and it is not easy for Dingdong Maicai to grasp the differentiation advantage in it.