Core Insights - The founder of Hema, Hou Yi, announced the closure of all offline stores of his pet food brand, Paitexiansheng, by mid-December, retaining only online operations due to high costs and low profitability of small-scale physical stores [1][2] Group 1: Company Overview - Paitexiansheng was established in 2024, focusing on a "freshly made" pet food retail model, with 18 stores opened by November 19, 2023, of which 7 have already closed [1] - The brand aimed to expand rapidly, with a goal of opening 100 stores in Shanghai by 2025, and raised $25 million in angel funding, setting a record in the domestic pet industry [1][3] Group 2: Challenges Faced - The failure of Paitexiansheng is attributed to two main issues: the discount store model not resonating with consumers who prefer established industrial brands, and difficulties in promoting fresh food products due to higher pricing compared to competitors [2] - The operational challenges include the need for cold chain logistics for fresh food, short shelf life, and a lack of unified industry standards, making large-scale offline stores less viable [2][3] Group 3: Industry Context - The pet food market in China is projected to exceed 811.4 billion yuan by 2025, with pet food being a crucial segment [3] - The global fresh pet food market is expected to surpass $4.5 billion by 2025, with a compound annual growth rate of 21.3%, indicating a growing trend despite Paitexiansheng's exit [3] - The penetration rate of fresh food feeding in China remains below 5%, significantly lower than the 36% in the U.S., suggesting room for growth in this segment [3] Group 4: Future Directions - Hou Yi reflected on the need for deeper understanding of the pet food industry, indicating a potential return to familiar territory in the fresh food sector for future ventures [4]

Core Insights - The former CEO of Hema, Hou Yi, has announced the suspension of the "100-store" plan for his new venture, Pet Fresh, due to ongoing operational pressures on physical stores [1] - Pet Fresh plans to close all 18 physical stores by mid-December 2025 and will shift its focus to online operations [1] - The company had previously aimed to open 100 stores in Shanghai by 2025, but has now faced significant challenges in the physical retail space [1][2] Company Summary - Pet Fresh was founded in February this year, focusing on fresh pet food, refrigerated food, and innovative snacks, with over 300 types of pet snacks and products from leading brands [1] - The company raised $25 million in angel funding in May, marking a record high for the pet industry [1] - Following the announcement of store closures, Hou Yi addressed market concerns through a live broadcast, stating the decision to exit the physical pet store market was approved by the board [1] Operational Challenges - Hou Yi highlighted challenges faced by the physical retail model, including significant price competition from established brands, with Pet Fresh's fresh food priced at approximately 11-12 RMB per 100 grams compared to as low as 4 RMB for competitors during promotional events [2] - The initial strategy of operating discount stores did not succeed, as consumers preferred established brand products, making it difficult for new brands to compete on scale [2] - The reliance on snacks for sales in physical stores resulted in low overall repurchase rates, leading to substantial losses [2] Market Context - The pet food market in China is growing, with a reported market size of 300.2 billion RMB in urban areas, reflecting a year-on-year growth of 7.5% [3] - The pet food retail landscape is characterized by specialized, personalized small stores, which poses challenges for large-scale chain operations in terms of supply chain and management capabilities [3] - In response to the shift away from physical stores, Pet Fresh launched an online brand focused on pet fresh food called "Pet Tian Tian," aiming to leverage its supply chain and collaborate with pet nutritionists for product development [3]

Core Viewpoint - The article discusses the significant business adjustments of the pet fresh food retail project "Paiteshengsheng," founded by Hou Yi, highlighting the closure of all physical stores while retaining online operations due to market challenges and consumer behavior [2][4][12]. Business Adjustments - Paiteshengsheng plans to close all physical stores by mid-December 2023, focusing on online sales instead [2][4]. - The project, which initially aimed to open 100 stores in Shanghai, is now undergoing a major restructuring after less than a year of operation [3][12]. Market Challenges - Hou Yi stated that the pet fresh food market is not currently favorable, with a small market size and limited consumer interest in switching from traditional pet food [4][20]. - The fresh food products require thawing, making them less convenient for consumers, which has impacted the competitiveness of physical stores [4][20]. Consumer Behavior - The article notes that while the concept of fresh pet food is appealing, actual consumer adoption is slow, requiring time for market education [20][22]. - There are concerns among pet owners regarding the safety and quality of the fresh food products, with some reports of adverse reactions from pets consuming these products [24][25]. Financial Aspects - Paiteshengsheng raised $25 million in angel funding earlier in the year, which is the highest amount for a front-end brand in the domestic pet industry this year [11][28]. - The business model faces challenges in balancing costs and profitability, particularly with the commitment to low pricing leading to low profit margins [25][26]. Future Outlook - Despite the current setbacks, the article suggests that the adjustments made by Paiteshengsheng do not signify the end of the pet fresh food market, but rather a necessary evolution [29][30]. - Hou Yi remains optimistic about future ventures in the retail sector, emphasizing the importance of product quality over sales channels [5][30].

Core Viewpoint - The article discusses the launch and rapid expansion of "Paiteshengsheng," a new pet fresh food brand founded by Hou Yi, the creator of Hema, highlighting its innovative approach and potential challenges in the pet food market [2][4][30]. Company Overview - "Paiteshengsheng" opened its first store in Shanghai in February 2024, attracting significant attention and foot traffic due to its fresh food offerings and instant delivery service [2][4]. - The brand completed a record-breaking $25 million (approximately 181 million RMB) angel round financing within six months of its establishment, showcasing its strong fundraising capability [4]. Market Strategy - The store features a 200-square-meter layout divided into three main areas: fresh food preparation, pet supplies, and a social interaction space for pet owners, enhancing customer experience [5][7]. - The brand offers a wide range of products, with over 50% being its own brand, and employs a low-price strategy, with fresh pet food priced at 24.9 RMB for 500 grams, significantly lower than competitors [7][16]. Expansion Plans - Hou Yi aims to open 100 stores in Shanghai by 2025, with rapid expansion already underway, having opened 12 stores by mid-May 2024 [12][14]. - The brand's growth is supported by a highly efficient supply chain, leveraging Hema's logistics to reduce costs and maintain high profit margins [14][20]. Consumer Engagement - The service model focuses on "human-pet synergy, in-store experience, and instant satisfaction," catering to the emotional needs of young pet owners [12][24]. - The brand has achieved a 45% repurchase rate and an average transaction value exceeding 200 RMB, indicating strong customer loyalty [12]. Industry Context - The pet food market is experiencing growth, with a projected market size of 300 billion RMB and a 7.5% annual growth rate in 2024, although fresh pet food currently represents only 5% of the market [26][30]. - The traditional pet food market is dominated by dry food brands, presenting a challenge for new entrants like "Paiteshengsheng" to shift consumer preferences towards fresh food [27][29]. Competitive Landscape - The brand faces competition from established dry food brands and must overcome consumer inertia towards existing products [27]. - The unique selling proposition of fresh food may be difficult to sustain as competitors may replicate the supply chain advantages and pricing strategies [29].

Group 1 - The pet fresh food new retail sector has seen a significant development with the announcement of a $25 million angel round financing for the brand "Pait Fresh," founded by Hou Yi, which sets a new record for financing in the pet industry [1][3] - The funds will be primarily used to advance three core strategies: product innovation through big data customization, building an efficient supply chain to ensure product freshness and quality, and refined operation and expansion of stores to strengthen market position [3] - Pait Fresh was officially established at the end of 2024, with a clear equity structure where Hou Yi holds 51% and Huang Hualong, the founder and chairman of pet product manufacturer NAIWEIK, holds the remaining 49% [3] Group 2 - The first store of Pait Fresh opened for trial operation in Shanghai on February 22, 2024, quickly attracting attention from pet owners due to its unique fresh food concept, leading to the opening of 9 additional stores shortly after [3] - Pait Fresh has introduced three differentiated store types to cater to various regions and consumer groups: pet-friendly stores, mall stores, and community stores [3] - Hou Yi emphasized the focus on new retail physical stores while achieving seamless online and offline integration, stating that the pet food market is largely untapped compared to human food [3]