On November 10, 2023, leading Chinese snack mass retail stores Busy for You and Super Ming officially announced a strategic merger. Merely one month later, the newly merged group acquired investments of CNY 700 million and CNY 350 million from food brands Haoxiangni and Yanjin Shop, respectively. The considerable investments are resulted from the soaring development of the distinctive offline snack retail channel in China, where a wide variety of snack food products from diverse brands are sold at relatively lower prices. According to Euromonitor, the sales value of this retail channel in 2022 was CNY 41.9 billion and estimated to continue growing with a compound annual growth rate (CAGR) of 46%-68% in the following three years. Additionally, the number of this type of offline stores reached 13,000 in 2022 and was projected to reach 30,000-45,000 in 2025. [1]
Reasons Behind the Flourishing Development
The popularity of the snack retail channel is closely associated to its multiple product categories, cost-effective commodity, as well as comfortable and convenient consumption experience. Generally, this range of store offers at least 1,000 stock keeping units (SKU) and updates 10-20% of the products monthly to provide diverse choices for consumers. For example, Busy for You has approximately 2,000 SKUs and updates/adjusts products from three to five times per month. Super Ming also has about 2,000 SKUs and introduces more than 100 new commodities monthly.
Super Ming Snack Retail Store
Meanwhile, the prices of products in these stores are 20%-40% cheaper than those in supermarkets, [1] which precisely caters to consumers’ current consumption concept. After COVID-19, product cost-effectiveness is one of the prioritised concerns of Chinese consumer when they make purchasing decisions. [2] Taking Oreo’s sandwich cookie as an example, a 116g pack in the snack mass retail store costs CNY 4.9-5.5, while priced at CNY 6-7 in the supermarket. The price gap arises because snack mass retail stores skip distributors and source products directly from snack food enterprises at lower prices.
Moreover, these stores are mostly located adjacent to residential communities and well-decorated with eye-catching signs and warm lighting. The commodities in the stores are also displayed orderly on the shelves within an area of over 100 square metres. Due to the stores' layout and design, consumers can purchase the snacks on their way home and choose products freely in a comfortable environment, which also contributes to their favour to this store type.
Lingshiyouxuan Snack Retail Store
Current Competitive Landscape and Coverage Area
Amid the rapid growth of the offline snack retail channel, major players are continuously enlarging their store number to grab more market share. A notable example is Busy for You, which has experienced a remarkable increase in its offline store count, jumping from 300 in August 2020 to 4,000 by October 2023. In the first half of 2023 alone, the company opened 1,000 new stores, averaging six new stores per day. Currently, the landscape of the sector can be described as “two superpowers and several major powers”. Haoxianglai and Busy for You are the top team of this sector, each accounting for approximately 18% of the market share. The middle tier consists of Super Ming and Yummy Snack, both of which have surpassed 2,000 stores as of August 2023.
The intense competition within the sector has prompted a trend of consolidation among players, aiming to strengthen their market position. As previously mentioned, Busy for You and Super Ming merged, but they are not the only ones pursuing this strategy. Vanchen, for instance, integrated its four snack mass retail store brands—Luxiaochan, Laiyoupin, Haoxianglai, and Yadiyadi—into a single unified brand named Haoxianglai. Similarly, Snack Joy, a prominent snack mass retail store in South China, strategically integrated with another brand, Snack Meme, resulting in their combined store count exceeding 600.
At present, these stores are mainly situated in lower-tier cities of China. On the one hand, the rent costs in these cities are more affordable than in large cities, enabling the stores to maintain lower prices of their products. On the other hand, in some lower-tier cities, purchasing snacks online is not as convenient as in these stores nearby the community on account of less efficient logistics. According to Euromonitor, currently, this snack retail channel achieves a high penetration rate in lower-tier cities in southern, southwestern, and eastern China. In the future, Euromonitor estimates that this channel has significant untapped market potential in the central, northern, and northwestern regions of China.
ChemLinked Insights
Snack mass retail store represents a distinctive offline channel in China for snack food and takes up an increasingly significant proportion. For instance, Busy for You was the largest customer of Yanjin Shop in 2022, occupying 7.31% of its sales value, far surpassing the traditional supermarket channel Walmart. Benefiting from the expansion of this store type, in H1 2023, Yanjin Shop harvested the greatest half-year financial results in 2019-2023. [3] Therefore, snack food brands may consider exploring the opportunities in this rapidly developing channel, so as to increase sales and expand market reach.
Disclaimer: All pictures used in the article are from the Internet.
