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 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 launch of a new pet food retail brand "Paiteshengsheng" by Hou Yi, the founder of Hema Fresh, focusing on the potential and challenges in the pet food market in China [2][5]. Group 1: Company Overview - "Paiteshengsheng" aims to open 100 stores in Shanghai by 2025, with 10 stores planned to be operational by March 2025 and over 20 more in the signing process [2][6]. - The brand's product offerings include fresh pet food, refrigerated food, and over 300 types of snacks, aiming to meet immediate retail needs within a 3-kilometer radius [2][5]. - The business model is inspired by Hema Fresh, with a focus on fresh ingredients and a variety of pet food products, including human-grade options [2][5]. Group 2: Market Potential - The pet economy in China is growing, with a projected increase in pet numbers to 124 million by 2024, a 2.1% rise from 2023 [5]. - The urban pet consumption market is expected to grow by 7.5% in 2024, reaching 300.2 billion yuan, with dog and cat markets growing by 4.6% and 10.7% respectively [5]. - Government initiatives in cities like Shanghai and Shenzhen are promoting the pet economy, indicating a favorable environment for growth [5]. Group 3: Challenges and Competition - The article highlights that pet fresh food is not a necessity but a personalized product, which may limit the appeal of "Paiteshengsheng" to pet owners [3][4]. - There is significant product homogeneity in the pet food market, making it difficult for "Paiteshengsheng" to differentiate itself from existing pet stores [3][10]. - Customer feedback indicates that the variety and quality of fresh food offerings at "Paiteshengsheng" may not meet expectations, with concerns about freshness and product knowledge among staff [9][10]. Group 4: Business Strategy - "Paiteshengsheng" plans to adopt a franchise model after establishing its initial stores, aiming for a balanced approach to expansion without excessive cash burn [6][8]. - The company intends to leverage a supply chain to reduce operational costs by 30%, offering competitive pricing on its private label products [8]. - Despite the low pricing strategy, the article notes that price is not the primary factor influencing consumer behavior in the pet food market, particularly for fresh food [8][11].