Core Insights - Yonghui's Lugu store will undergo a major renovation and reopen on August 26, with over 50% of its products being replaced [1] - The store will move to the second floor, featuring a complete restructuring of shelf layouts and an increase in the proportion of imported goods to nearly 20% [1] - The renovation aims to enhance customer experience by introducing complementary commercial services and improving accessibility [1] Company Strategy - The store will adopt a model similar to "Pang Donglai," focusing on "quality and affordability" with new products from both Pang Donglai and Yonghui's private label [1] - The main aisle will be widened to 3 meters, and shelf heights will be standardized to improve shopping convenience [1] Community Engagement - A new "Love Station" will be established to provide free drinking water, emergency medicines, and resting spaces for local sanitation workers and delivery personnel [1] - The renovated store will introduce over 30 convenience services, including free tea and ice packs, to better serve the local community [1] Expansion Plans - Yonghui has already renovated over 160 stores nationwide, with plans to reach 12 renovated stores in Beijing soon [1] - Additional stores in Langfang and Daxing are set to undergo renovations and reopen on August 28 and September 12, respectively [1]

Group 1 - The core viewpoint of the report is that Dongwu Securities has given a "buy" rating to Yonghui Supermarket (601933.SH) with a latest price of 4.97 yuan [2] - The reasons for the rating include short-term pressure on expense and profit margins due to adjustments [2] - Accelerated store closures have led to a decline in revenue, but this is beneficial for long-term loss reduction [2] - The adjustment process is progressing rapidly, with 162 adjusted stores currently opened [2] - Improvements in supply chain and private brand capabilities have been noted [2]

Core Viewpoint - The retail industry is undergoing a critical "adjustment period," emphasizing the importance of focusing on the intrinsic needs and values of "people" rather than merely adjusting processes and models [1][2]. Group 1: Current State of the Retail Industry - The supermarket industry has entered a "period of adjustment," shedding the illusion of stability and facing significant challenges as many companies struggle and lose consumer support [2]. - Many retailers are superficially imitating the successful strategies of companies like Pang Donglai without understanding the core principles behind their success [5]. Group 2: Importance of Human Relationships - The true issue plaguing traditional supermarkets lies in their relationship with "people," particularly employees [6]. - Retailers must prioritize understanding and improving relationships with employees, as neglecting this leads to high turnover and poor service quality [9][10]. - Companies should view employees as "core assets" rather than mere "labor costs" to foster a positive work environment [8][10]. Group 3: Employee Engagement and Empowerment - To improve employee satisfaction, companies should provide fair compensation, clear career paths, and training opportunities, fostering a culture of respect and care [13][14][15]. - Empowering frontline employees to make decisions enhances their sense of responsibility and improves customer service [14]. Group 4: Consumer Relationships - Retailers often treat consumers merely as transactional entities, focusing on metrics like "traffic" and "average transaction value" rather than building trust [16][17]. - Successful companies like Pang Donglai have established strong trust with consumers through transparency, quality assurance, and genuine service [18][20]. Group 5: Partnerships with Suppliers - Traditional relationships between supermarkets and suppliers often resemble zero-sum games, leading to mutual distrust and inefficiency [25][26]. - Establishing clear, transparent agreements and fostering long-term partnerships can enhance cooperation and ultimately benefit both parties [28][30][31]. Group 6: Conclusion on Retail Strategy - The essence of retail is not merely transactional but fundamentally about "people," emphasizing the need for genuine care and understanding in all business relationships [32][35]. - A successful retail strategy must prioritize human connections, as the right mindset and approach will lead to sustainable growth and customer loyalty [36].

Core Insights - The opening of the first "Pang Dong Lai" guided reform store in Xinjiang by Huijia Times achieved significant sales, with over 2.44 million yuan on the first day, a 286% increase year-on-year [2] - The store's sales reached 4.69 million yuan within the first 48 hours, marking a 275% year-on-year growth [2] - The store features an optimized product structure, focusing on first-line and selected specialty brands, with over 90% of the product structure aligned with Pang Dong Lai's standards [2] Sales Performance - The Urumqi Huijia Times supermarket's opening led to a 126% year-on-year increase in overall foot traffic and a 23.4% increase in sales for the Beijing Road shopping center [3] - The introduction of popular products from the DL brand, such as DL juice and DL cooking oil, contributed to the store's successful launch [2] Employee Welfare - The reform includes enhancements in employee welfare, such as increased salaries, reduced working hours, and additional holiday benefits [3] - The company aims to improve employee satisfaction and service quality through these initiatives [3] Future Outlook - The actual controller of Huijia Times, Pan Jinhai, indicated that the reform is just beginning, with significant room for further optimization [3] - The company's efforts align with national policies aimed at building a better Xinjiang, which is expected to drive new growth and profitability [3]

Core Viewpoint - Metro's first "Fat Reform" store in China, located in Beijing's Haidian District, marks a significant shift towards enhancing its to C business and local adaptation, following the model of successful competitors [1][11]. Group 1: Store Renovation and Offerings - The Four Seasons Qing store underwent minor renovations, maintaining its original style while introducing a dedicated area for popular products and a significant upgrade in the toy section, including trendy collectibles [3][4]. - The store's product count was streamlined to approximately 8,000 SKUs, with a 55% replacement rate, significantly increasing the variety of baked goods and ready-to-eat items by nearly six times compared to before the renovation [6][11]. - A new live seafood section was introduced, responding to consumer demand, which was previously limited to seasonal offerings [4][6]. Group 2: Customer Experience and Services - The store has enhanced customer service, including free meat slicing and on-site seafood processing, which has been well-received by customers [7][10]. - Additional convenience services such as ice, packaging materials, and health monitoring facilities have been implemented, improving the overall shopping experience [10][11]. - The store has adopted an "uninterrupted shopping" policy, eliminating promotional noise to create a more immersive shopping environment [10]. Group 3: Strategic Direction and Market Positioning - Metro's shift towards a more consumer-oriented approach reflects a broader trend in the retail industry, where competition is intensifying [11][12]. - The company aims to attract younger consumers by introducing trendy products and collaborating with popular brands, enhancing its appeal in a competitive market [12][14]. - The successful implementation of the "Fat Reform" model in the Four Seasons Qing store is seen as a critical milestone for Metro's ongoing localization and innovation efforts [14].

Core Insights - Yonghui Supermarket has reopened its Beijing Jiugong store after 49 days of extensive renovations, marking its 11th store in Beijing and the 4th in Daxing District [1] - The redesigned store features a new layout that eliminates forced traffic flow, widens main aisles to 3 meters, and lowers shelf heights to 1.6 meters, enhancing customer experience [1] - The product structure has been significantly restructured, with nearly half of the products replaced, achieving 80% alignment with the product structure of the successful brand Pang Dong Lai [1] Store Features - The store has increased the number of cash registers to 33, significantly reducing peak hour wait times [1] - Fresh food offerings have been enhanced, with a notable increase in the proportion of baked and prepared food items, and the introduction of over 30 customer service features including a rest area and pet temporary accommodation [1] - The seafood section now includes fresh products like live crabs and oysters, with a focus on freshness management and customer service [1] Product Offerings - The ready-to-eat section has expanded to include over a hundred new items such as spicy beef strips and freshly baked pizzas, catering to family needs [2] - The bakery section features new products like mountain camellia spring water toast and various pastries, while local flavors are freshly made daily [2] - Following the Jiugong store, additional stores in Shijingshan, Yanjiao, and Daxing are set to complete renovations by September, with a total of 156 stores undergoing transformation nationwide [2]

Core Viewpoint - Yonghui Supermarket (601933) aims to complete the renovation of 200 stores nationwide by September 30 this year, focusing on employee training and product structure enhancement [1] Group 1: Renovation Progress - The renovation has accelerated, with the 100th renovated store opening in mid-June, nearly one year after the initiative began in May of last year [1] - The next 100 store renovations are expected to be completed in the third quarter, with an average of one renovated store opening daily during this period [1] - The number of renovated stores will reach 126 within the week [1] Group 2: Focus Areas - The renovation will enhance employee skills training and income, as well as strengthen the development of proprietary brand products to achieve billion-level single product sales [1] - The product structure aims to reach 80% of the standards set by a competitor, "Pang Donglai" [1]

Core Insights - The current trend in supermarkets is focused on "transformation," with many traditional supermarkets looking to the successful model of "Fat Donglai" to boost their sales [1][2] - The success of Fat Donglai has brought new vitality to traditional supermarkets, evidenced by increased foot traffic and sales performance [1] - However, simply replicating successful models is not a sustainable solution; supermarkets must adapt to local consumer needs for long-term success [1][2] Group 1 - Hardware upgrades are only the foundational work of transformation; understanding local consumer demands is crucial [1] - Many traditional supermarkets have entered the transformation trend with the mindset that change is necessary for survival, but some have faced challenges due to missteps in their strategies [1] - The root cause of these challenges often lies in blindly copying others and losing their unique operational characteristics [1] Group 2 - Transformation is a long-term endeavor, and the success of Fat Donglai is a result of years of dedication to service and quality [2] - Successful supermarket transformations, such as those by Aeon and Sam's Club, have taken years to evolve from large stores to community service providers, integrating deeply into consumers' lives [2] - The shift in traditional supermarkets from focusing on products to prioritizing consumers is becoming increasingly evident, highlighting the need for a balance between refined management and scaled operations [2]

Group 1 - Traditional supermarkets are increasingly adopting an "online + offline" model to enhance revenue and improve customer engagement through instant retail and social e-commerce [1][2] - High Xin Retail reported a significant turnaround in profitability for the fiscal year ending March 31, 2025, with a profit of 386 million and a revenue of 71.552 billion, despite a slight revenue decline of 1.4% [2] - The same-store sales for High Xin Retail grew from 0.3% in the first half of the fiscal year to 0.6% for the full year, driven by improved pricing competitiveness and product optimization [2] Group 2 - The online business of Da Run Fa covers over 20,000 SKUs, offering delivery services within 5 kilometers, with innovations like satellite warehouses to meet consumer demand [3] - Yonghui Supermarket reported online revenue of 14.6 billion, accounting for 21.7% of total revenue, with a gross margin improvement attributed to better product structure [4] - Red Flag Chain has increased collaboration with social e-commerce platforms, achieving over 1 billion in sales through frequent operations on platforms like Douyin [5] Group 3 - The supermarket industry is undergoing a transformation, with 48.9% of supermarkets reporting online sales growth, particularly in second and third-tier markets [5] - Experts suggest that instant retail is a key area for supermarkets to focus on, emphasizing the importance of product and brand integration [5][8] - The trend of closing underperforming stores is prevalent, with High Xin Retail closing 8 large stores and Yonghui closing 232 stores in 2024 [7][8] Group 4 - The restructuring of store formats is gaining momentum, with 86% of categories seeing positive growth post-restructuring, and fresh produce playing a crucial role in driving sales [9] - Yonghui plans to expand its restructuring efforts, targeting 150 stores by the end of July 2025, while other companies like Wumart are also focusing on store upgrades [10] - The industry is seeing a diversification of store formats, with companies like High Xin Retail and Wumart exploring new community store models to cater to local needs [11][12]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [7][13]. Core Insights - The report highlights that the company has completed its restructuring, resulting in a healthier balance sheet. The company is expected to see significant profit growth as it completes its store renovations, with sales and customer traffic exceeding expectations [2][15]. - The restructuring has led to a reduction in debt levels, with the debt-to-asset ratio decreasing from 86.8% in 2023 to 62.1% by Q1 2025. The company is projected to have cash and equivalents exceeding 1 billion yuan by the end of 2024 [2][41]. - The report anticipates that the company will complete all supermarket renovations by 2025, with sales per store expected to increase significantly post-renovation [2][65]. Summary by Sections Restructuring and Financial Health - The company has successfully restructured, becoming a non-controlling entity with the introduction of industrial investors who enhance its supply chain and digital capabilities. The management team has also undergone changes to improve efficiency [2][32][33]. - The restructuring plan includes cash settlements for debts under 100,000 yuan and equity swaps for larger debts, extending remaining debts to a 10-year term [2][39]. - The company’s cash flow situation has improved significantly, with cash and equivalents projected to return to pre-2018 levels by the end of 2024 [2][36]. Supermarket Renovation Success - The report notes that the company has already renovated 17 out of 27 supermarkets, with sales and customer traffic increasing dramatically post-renovation. The average daily sales have reportedly increased sixfold, and customer traffic has tripled [2][65]. - The renovation strategy has led to a significant change in product offerings and store environments, enhancing customer experience and employee satisfaction [2][14]. Department Store Transformation - The company is set to initiate a comprehensive renovation of its department stores in May 2024, focusing on improving employee experience and customer service [3][15]. - The department store segment is expected to contribute significantly to the company's revenue, with a projected recovery in gross margins [3][12]. Profit Forecast and Valuation - The company is expected to achieve net profits of 184 million yuan in 2025, with projections of 402 million yuan and 674 million yuan in the following years, reflecting a rapid profit release phase [4][12]. - The report provides a valuation based on comparable companies, indicating that the company is currently undervalued relative to its peers in the supermarket sector [4][12].