Core Viewpoint - Discounting is not merely a business model or format, but a management philosophy aimed at achieving high operational efficiency while maintaining low prices, which is essential for the value reconstruction of physical retail stores [1] Group 1: Preparation for Discounting - The traditional retail system is likened to a body with inflammation, where the decision to use antibiotics (discounting) must be carefully evaluated for its potential benefits and drawbacks [2][3] - The CEO of a discounting company emphasizes that a unified commitment from the entire organization is crucial for successful transformation [5] Group 2: Four Levels of Discounting - Discounting is fundamentally about enhancing the perception of affordability among customers, and achieving lower prices than competitors requires several strategic improvements [6][7] - **1. Improve Capital Efficiency**: Sufficient capital reserves are necessary, and the efficiency of capital usage must be maximized to ensure profitability [8] - **2. Enhance Operational Efficiency**: All departments must operate efficiently, with a focus on inventory turnover and management responsibilities shifting to stores [9][10] - **3. Improve Procurement Levels**: Understanding customer needs and managing procurement effectively is critical to avoid excess inventory and financial losses [11] - **4. Lower Selling Prices**: A discount store must adopt a pricing strategy that undercuts competitors while maintaining operational efficiency [12][13] Group 3: Challenges in Discounting - The term "naked procurement" has become negative as some retailers exploit discounting as a pretext to pressure suppliers for lower prices, which can lead to unsustainable practices [14][15] - A focus on maintaining commitments and contractual integrity with suppliers is essential for long-term success [15] Group 4: Reference Targets for Discount Stores - Employee wages should not exceed one day's sales, with a target of 140,000 in daily sales for a store with 40 employees earning 3,500 each [18] - Overall expense rates should not exceed 12% of sales, encompassing all fixed and variable costs [19] - The overall gross margin should be kept below 15%, with specific categories like fresh produce having even lower margins to maintain competitive pricing [20] - Fresh products should not exceed 40% of total sales to ensure profitability, emphasizing the importance of standard product sales [21][22] Group 5: Conclusion - In a competitive environment, the transition to discounting is viewed as a strategic gamble, where efficiency becomes the key to survival and success [23]