Core Insights - The recent closure of all physical stores by Pet Fresh, a pet fresh food brand founded by former Hema founder Hou Yi, has raised questions about the viability of the pet fresh food market [1][2] - Pet Fresh aimed to create a new retail model similar to Hema but faced significant operational challenges leading to its decision to focus solely on online sales [1][3] Company Overview - Pet Fresh offered a variety of products including fresh pet food, refrigerated food, and over 300 types of snacks, utilizing an integrated online and offline retail model [2] - The company initially opened its first store in Shanghai in February and completed a $25 million angel round of financing in May, aiming to expand to 100 stores by the end of the year [1][2] Market Challenges - The closure of Pet Fresh's stores is attributed to high operational costs, including rent and labor, as well as the need for specialized kitchen equipment and cold chain logistics [2][3] - The pet fresh food market has a lower purchase frequency compared to traditional grocery shopping, making it difficult for physical stores to maintain consistent customer traffic [3][4] Competitive Landscape - Other players in the pet fresh food market, such as "Duke is Here," have also faced challenges but have managed to survive by building a loyal customer base and integrating online sales [4][5] - New entrants like "Pure Paw Pet Bakery" are attempting to navigate the market by focusing on high-quality ingredients and local customer bases [5][6] Cost Structure - The operational costs for pet fresh food businesses are high, with significant expenses related to rent, utilities, and quality ingredients, making profitability challenging [6][8] - The price sensitivity of consumers often leads them to choose cheaper options like traditional pet food, limiting the market for premium fresh food products [9][10] Regulatory Environment - There is currently no unified safety standard for pet fresh food in China, leading to consumer concerns about product quality and safety [11][12] - Existing regulations primarily cover pet feed but do not extend to fresh food, creating a regulatory gap that could impact market growth and consumer trust [12][13] Future Outlook - The pet economy in China is projected to reach a market size of 1.15 trillion yuan by 2028, indicating potential growth opportunities despite current challenges [14] - Experts suggest the need for a multi-tiered standard system to ensure product safety and quality in the pet fresh food sector [15][16]

Core Viewpoint - The recent closure of all physical stores by Pet Fresh, a pet fresh food brand, has raised concerns about the viability of the pet fresh food market, highlighting the challenges faced by companies in this segment [1][3]. Company Overview - Pet Fresh, founded by former Hema founder Hou Yi, aimed to create a pet food retail brand similar to Hema, launching its first store in Shanghai in February and raising $25 million in angel funding by May [3][4]. - The company planned to open 100 stores by the end of the year but has now decided to close all physical locations due to operational pressures, retaining only its online business [3][4]. Market Dynamics - The pet fresh food market has attracted numerous entrants as the pet economy expands, but Pet Fresh's rapid expansion and subsequent closure raise questions about the sustainability of such business models [3][5]. - The operational model of Pet Fresh, which included high overhead costs associated with physical stores and specialized kitchen equipment, proved incompatible with the market's characteristics [4][5]. Financial Challenges - The high costs of rent, labor, and cold chain logistics, which account for about one-third of total costs, have made profitability difficult for Pet Fresh, especially given the lower margins of fresh pet food compared to traditional dry food [4][10]. - The average monthly costs for a pet fresh food store can reach approximately 40,000 yuan for rent and utilities, with additional costs for equipment and ingredients [7]. Consumer Behavior - Pet owners typically purchase pet food infrequently, averaging only 1-2 times per month, which limits the effectiveness of physical store models that rely on high foot traffic and immediate delivery [5][9]. - The price sensitivity of consumers also plays a significant role, as many opt for cheaper dry food options over more expensive fresh food, which can cost significantly more per meal [9][10]. Regulatory Environment - The lack of established safety standards for pet fresh food in China has led to consumer concerns regarding product quality and safety, with many brands operating under unclear guidelines [11][12]. - Current regulations primarily cover pet feed but do not extend to fresh food, creating a regulatory gap that could impact market growth and consumer trust [12][14]. Recommendations for the Industry - Experts suggest the need for a multi-tiered standard system to establish clear guidelines for pet fresh food, including ingredient quality, microbial standards, and cold chain requirements [14][15]. - There is a call for industry associations to develop group standards that can eventually evolve into national standards, ensuring better regulation and consumer protection [14][15].