Core Viewpoint - Major retailers are increasingly focusing on the "front warehouse" model as a strategy to address market pressures and enhance their operational efficiency in the face of declining foot traffic and sales [3][9][22]. Group 1: Industry Trends - Retail giants like Yonghui Supermarket and RT-Mart are accelerating the establishment of front warehouses to prevent further loss of market share in areas with many store closures [3][9]. - JD.com is shifting its strategy by integrating JD Seven Fresh and JD Grocery, moving away from the store-warehouse model to focus on front warehouses [3][9]. - Metro is also expanding its front warehouse capabilities, with new openings planned in Changchun to enhance its instant delivery capabilities [3][9]. Group 2: Business Model Transition - Yonghui Supermarket is transitioning from a "store-warehouse integration" model to a more independent front warehouse model, separating inventory between the front and back of stores [5][11]. - The success of Sam's Club, which operates nearly 500 front warehouses and achieves over 50% of its e-commerce sales through efficient delivery services, has influenced this shift in strategy among traditional retailers [5][7]. Group 3: Challenges and Considerations - The front warehouse model is seen as a response to the ongoing pressure on physical retail, with traditional stores facing competition from e-commerce, community group buying, and discount stores [9][11]. - Despite the potential benefits, the front warehouse model requires significant investment in infrastructure, including cold chain logistics and digital systems, with costs ranging from 500,000 to 3 million yuan per warehouse [11][13]. - The operational challenges include maintaining high order density and efficient inventory management, which many traditional retailers struggle with due to their existing supply chain structures [15][20]. Group 4: Profitability Concerns - High fulfillment costs remain a significant concern for the front warehouse model, with limited examples of profitability in the industry [16][22]. - Successful cases like Pupu and Dingdong Maicai highlight the importance of regional focus and high-density networks for achieving profitability, which may not be easily replicable on a national scale [16][18]. - Traditional supermarkets face difficulties in adapting their product offerings and supply chain management to meet the demands of the front warehouse model, which requires a shift towards high-turnover, high-margin products [20][22].