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]