Core Viewpoint - Traditional supermarkets are struggling to adapt to changing consumer behaviors and competition from e-commerce, leading to a decline in their market presence and sales [5][9][49]. Group 1: Current State of Supermarkets - Many traditional supermarkets are experiencing a significant drop in foot traffic and sales, with a projected net closure of 687 stores in 2024, a 23.6% increase from 2023 [5][21]. - The market for supermarkets is not shrinking overall, as the total sales are expected to grow by 2.7% in 2024, indicating a market share shift rather than an industry decline [21][22]. - The decline is particularly pronounced among traditional large-format stores, which are caught in a vicious cycle of poor business performance leading to further declines in quality and sales [22][41]. Group 2: Factors Contributing to Decline - Traditional supermarkets are losing their competitive advantages in channels, convenience, and business models due to the rise of e-commerce and instant retail [9][10]. - The shift in consumer preferences towards online shopping and instant delivery services has diminished the appeal of physical supermarkets [12][14]. - Complaints regarding poor service, product quality, and shopping experience have further alienated consumers from traditional supermarkets [16][18]. Group 3: Successful Adaptation Strategies - Membership warehouse models are gaining traction, focusing on quality and efficiency, with Sam's Club achieving a net sales figure of 100.5 billion RMB in 2024, a growth of over 20% [23][24]. - Online transformation into "cloud supermarkets" is being adopted, emphasizing efficiency and reduced operational costs through smaller warehouse setups [26][27]. - The "Pang Donglai" model emphasizes emotional value through superior product offerings and customer service, with significant sales increases reported after adopting this approach [28][31]. - Hard discount models are emerging, focusing on a limited selection of essential products at lower prices, appealing to cost-conscious consumers [32][34]. Group 4: Challenges in Transformation - Significant restructuring efforts can lead to short-term financial pain, as seen with Yonghui's revenue decline of 20% after closing unprofitable stores [41][42]. - The cost advantages of traditional supermarkets are eroding, making it difficult to compete with more agile online models [44][45]. - The transition to an integrated store-warehouse model presents logistical challenges and high operational costs, complicating the adaptation process for traditional supermarkets [42][44]. Group 5: Future Outlook - The future of retail may not hinge on low prices but rather on providing value that justifies higher costs, reflecting a shift in consumer expectations [49][50]. - The evolution of consumer preferences towards quality and emotional value suggests that traditional supermarkets must innovate to remain relevant in a rapidly changing market [49][50].