Core Viewpoint - The retail industry is undergoing a transformation towards "food-enhanced supermarkets," focusing on increasing the proportion and professionalism of food categories, particularly ready-to-eat and semi-finished products, in response to changing consumer habits and preferences [8][10][21]. Group 1: Industry Trends - Many traditional supermarkets are transitioning to "food-enhanced supermarkets," significantly increasing the share of food categories while optimizing non-food displays [8][9]. - According to the China Chain Store & Franchise Association, the sales proportion of food items in supermarkets is expected to reach 68.2% in 2024, up from 59.4% in 2019, with fresh food's share increasing from 22.1% to 28.5% [8][9]. - The trend is evident as companies like Metro and Yonghui Supermarket are actively renovating stores to enhance food offerings, with Metro's first renovated store opening in August 2023 [9][10]. Group 2: Consumer Behavior Changes - Consumers are shifting towards high-frequency, small-quantity purchases, favoring convenience and ready-to-eat options over traditional grocery shopping [7][8]. - A case study of a consumer in Beijing illustrates this shift, as she now frequently purchases ready-to-eat meals and baked goods instead of raw ingredients [7][8]. - The demand for convenience is driving supermarkets to adapt, as younger consumers prefer spending more on ready-made meals rather than investing time in meal preparation [9][10]. Group 3: Challenges Faced by Supermarkets - Traditional supermarkets are facing significant challenges, including continuous losses and store closures, as seen with Yonghui Supermarket, which reported a cumulative loss of over 9.5 billion yuan from 2021 to 2024 [11][12][13]. - The transformation efforts are often met with difficulties, such as high operational costs and the need for skilled labor in food processing, which can hinder profitability [17][18]. - The restructuring of supply chains and the need for substantial investment in equipment and training pose additional challenges for supermarkets attempting to enhance their food offerings [17][18]. Group 4: Future Outlook - The ongoing transformation in the retail sector reflects a broader market trend, with traditional supermarkets needing to innovate or risk obsolescence [20][21]. - Despite the potential for growth in food-enhanced supermarkets, the path to success is fraught with challenges, including high costs, insufficient customer traffic, and the need for standardized products across locations [18][21]. - The retail landscape is expected to continue evolving, with a potential reshuffling of market players as companies adapt to changing consumer demands and competitive pressures [21].

Core Insights - The retail industry is undergoing a transformation towards "food-focused" supermarkets, emphasizing fresh, prepared, and semi-prepared food items to meet changing consumer demands [5][7][12] - The shift in consumer behavior, particularly among younger demographics, is driving supermarkets to adapt their offerings and shopping experiences [7][23] Industry Trends - The proportion of food sales in supermarkets is projected to reach 68.2% by 2024, up from 59.4% in 2019, with fresh food and prepared meals seeing significant increases in market share [5] - Major retailers like Metro and Yonghui are actively remodeling stores to enhance food offerings, with Metro's first remodeled store opening in August 2023 [5][8] Company Challenges - Yonghui Supermarket has faced continuous losses over four years, totaling over 9.5 billion yuan, prompting a need for significant restructuring [8][10] - The traditional retail sector is struggling against e-commerce and changing consumer preferences, leading to a need for self-reform and innovation [10][12] Operational Difficulties - The transition to food-focused supermarkets presents challenges such as high operational costs, staffing issues, and the need for supply chain restructuring [15][17] - Many supermarkets are experiencing difficulties in achieving profitability in their food processing areas, with daily sales often insufficient to cover labor costs [15][18] Consumer Behavior - Consumers are increasingly favoring convenience and are willing to pay more for ready-to-eat and semi-prepared meals, impacting traditional grocery sales [7][12] - Feedback from consumers indicates that while the remodeled stores are cleaner and more organized, there is a perceived loss of value in fresh produce offerings [21][23]