The most sensational business event this week is the significant investment by Miniso (09896), focusing on interest consumption, in the traditional offline supermarket Yonghui Superstores.

According to Wisdom Financial APP, on the evening of September 23, Miniso announced on the Hong Kong Stock Exchange that it would acquire 29.4% of Yonghui Superstores for 6.27 billion RMB, including 21.1% held by Dairy Company and 8.3% held by jd.com. After the completion of this transaction, Miniso will become the largest shareholder of Yonghui Superstores. This also means that Miniso further expands and improves its offline retail layout, officially entering the trillion-dollar fresh retail track.

The news immediately set off a wave of excitement in the retail industry, investment circles, and the entire business sector, focusing on why Miniso wants to be the "white knight" of Yonghui Superstores. Can this almost audacious investment help Miniso's founder, Ye Guofu, realize his dream of creating the Chinese version of Sam's Club or Costco?

Perhaps these questions can all be answered by looking back to when Miniso was founded 11 years ago. For this moment, Ye Guofu waited a full 11 years.

The growth story from Guangzhou to Times Square.

First, let's briefly review the growth story of Miniso. In 2013, Miniso opened its first store in Huadu, Guangzhou. Over more than 10 years, Ye Guofu has turned Miniso into a 'super brand' with stores in over a hundred countries, renowned globally.

As of June 30, 2024, Miniso Group's global stores have exceeded 7,000, including 2,753 overseas stores. In May 2023, Miniso became the first Chinese new consumer brand to enter Times Square in New York. By the eve of the 2024 Paris Olympics, Miniso's largest flagship store in the world landed on the Champs-Elysées in Paris. Miniso bravely enters the top global business districts, becoming neighbors with top brands like LV, Chanel, Hermes, Dior, and Balenciaga.

Going back to 2013 when Miniso started, at that time, online e-commerce platforms like Taobao and JD.com were deeply involved, and mobile e-commerce was about to take off. The domestic physical retail industry was in dire straits. However, Miniso was still able to break through the strong siege of internet e-commerce and create a new retail business miracle.

Financial writer Dubochi once wrote a book 'Miniso Has No Secrets'. He praised Miniso on the cover as 'a dark horse in the economic winter, rising against the trend of store closures.' In the ups and downs of offline retail over the years, this is almost the highest praise for offline retail entities moving forward with determination.

Wu Xiaobo once analyzed the success factors of Miniso from six dimensions: direct sourcing of commodities, design control, fast turnover, franchise with investment, global thinking, and fan operation. These 6 points may not be groundbreaking, but they hit the key points of the retail industry. With resolute and efficient execution, Miniso has carved out a space in the chilly 'retail winter'.

According to the Wise Finance APP, a well-designed business model is just the surface of Miniso's lasting success. Inside, represented by Ye Guofu, industrialists with a firm belief in physical retail - they do not believe that physical retail will easily lose in the future.

According to the data from the National Bureau of Statistics, the total retail sales of consumer goods in the country amounted to approximately 31.25 trillion yuan from January to August 2024, of which online retail sales were 9.65 trillion yuan, accounting for about 30.8%. Offline physical retail still plays a crucial role in the national economy, with a constant stream of opportunities arising from its structural releases.

As a new generation entrepreneur who has fought his way through the retail battlefield, Ye Guofu, like entrepreneurs such as Cao Dewang, embraces the real economy and is bullish about the future of offline retail in China. This consistent entrepreneurial spirit has made Ye Guofu extremely bold in investment, daring to break the norm, seizing opportunities that outsiders may not understand, injecting new vitality into the market, and boosting industry confidence.

On the evening of announcing the acquisition of shares of Yonghui Superstores, Ye Guofu stated: "I continue to be bullish on China, invest in China, and as long as the retail industry continues to innovate, there will always be great opportunities."

This once again confirms that market innovation requires entrepreneurial leaders to lead the way. At this level, Ye Guofu's foray into commercial superstores, much like Lei Jun's entry into the auto industry, requires extraordinary courage. His commitment to offline retail and investment in China, like that of traditional entrepreneurs such as Cao Dewang, is rare in contemporary China and reflects a high sense of social responsibility as an industrialist.

Lay out the "must-have + optional consumption" and improve the layout of offline retail.

Returning to the question raised at the beginning of this article, the reason why Miniso dares to make a massive investment in Yonghui Superstores is fundamentally bullish on the development potential of offline supermarkets in China. Ye Guofu stated in a telephone conference on the evening of September 23 that at present, Chinese offline supermarkets are facing a once-in-a-20-year structural opportunity.

Ye Guofu recounted that his profound memory of buying roasted sweet potatoes at PandaMart, as well as his first-hand experiences in several readjusted Yonghui stores, have strengthened his belief in offline retail. Ye Guofu believes that it is not that offline retail is failing, but rather that traditional retail and traditional supermarket business models have issues. Now, a group of domestic supermarkets represented by Yonghui have initiated a revolution, reshaping the landscape of offline supermarkets in China. As a result of the hands-on guidance provided by PandaMart, Yonghui has enormous potential to stand out in this revolution.

Standing at the strategic layout height of Miniso, there are two dimensions in the current consumer market, optional consumption and necessary consumption. This is the direction guide for the Group to carry out its own architecture construction and further strategic layout, with the decision-making basis being a deep understanding and forward-looking layout of the multi-dimensional changes in the consumer market.

Miniso focuses on interest consumption, layout in the global market, providing global consumers with emotionally valuable 'optional products.' This strategy enables Miniso to take advantage in the 'optional consumption' dimension, with the brand embodying the expression of the new era consumer lifestyle, accumulating significant growth momentum in the global context of consumption upgrade.

Yonghui Superstores, with fresh retail as its feature, focuses on the domestic market, seizing the opportunity to transform from 'Pinduoduo' to create a Chinese version of Sam's Club, providing the public with featured 'must-have products' to maintain their daily lives. With its strong risk resistance and stability, it provides the group with the ability to weather cycles. Represented by US supermarket giants such as Costco, Sam's Club, and The Kroger, they are the best examples of this resilience.

With this innovative combination, Miniso has created a new picture for the retail industry in China: balancing 'must-have + optional consumption,' covering the 'China + global market.' As a result, Miniso's offline layout is more comprehensive, which will also become a strong support for coping with uncertainty, navigating economic cycles, and resisting business risks.

From a market perspective, this organic combination can help companies balance risks in an uncertain market environment and achieve a 'two-legged' approach. From a long-term strategic perspective, the combination of 'must-have + optional' brings dual enhancements of market breadth and depth for Miniso, enhancing both the brand's international visibility and influence, further consolidating the foundation of the domestic market, providing a solid insurance for coping with market fluctuations, and also promoting the transformation and upgrade of the retail industry in China.

An important opportunity to create a retail giant in China

To explore the effectiveness of this synergy, we need to focus on three companies that have been repeatedly mentioned: Miniso, Yonghui Superstores, and Pinduoduo. Whether they can form a good 'chemical reaction' between them depends first on the superiority of the 'Pinduoduo model,' and then on the replicability of the 'Pinduoduo model.'

From a results-oriented perspective, as a "phenomenal" supermarket that brings consumers back to offline, the superiority of Pandeng's business model does not need to be elaborated.

In Ye Guofu's view, "Pandeng's model is the only way out for Chinese supermarkets." The Pandeng model is similar to Costco and Sam's Club, emphasizing products but paying more attention to customer experience and respect for employees. Employee wages are higher than the industry average, and they provide good benefits and holidays. Pandeng emphasizes small-packaged products, which are more in line with Chinese household consumption habits.

In addition, Pandeng is also very attentive to service details, such as actively replacing problematic products for customers. The decline of traditional offline supermarkets is partly due to competition from e-commerce, but more importantly, it is due to their own problems. In the past, many supermarkets adopted a model focused solely on collecting shelf fees, barcode fees, etc., neglecting research on products and consumer needs, leading to a gradually disconnect from real consumer demands.

Pandeng's success also has no secret, just repeating the right things, doing them with care, and truly putting people first. Emphasizing consumer experience is the largest "common denominator" of physical retail, which harbors tremendous structural opportunities and is the fundamental reason why the "Pandeng model" can be widely replicated.

It is understood from the Wise Finance app that Yonghui Superstores has achieved significant results through the "Pandeng model" adjustment. For example, after adjustments, the first day turnover of the Zhengzhou Xinwan Plaza store reached 1.88 million yuan, 14 times higher than before the adjustment; the turnover of the Fuzhou store exceeded 1.1 million yuan, 6 times higher than before the adjustment; the daily sales of the Xi'an store reached 1.6 million yuan. These data indicate that Yonghui's reform model has the potential for national replication. It is believed that with the assistance of Pandeng, Yonghui Superstores will definitely be able to successfully transform and further meet customers' aspirations for a better life.

The strategic coordination between Miniso and Yonghui Superstores mainly manifests in channel upgrading and supply chain aspects. The Miniso management stated during a conference call that the company plans to leverage Yonghui's good locations nationwide to upgrade its channels, in order to enhance its coverage in commercial properties. In addition, Yonghui's expansion will help Miniso secure prime locations in more commercial properties, thereby enhancing brand influence and performance.

Furthermore, Miniso also plans to assist Yonghui in the innovation and development of its own products, using its experience to help Yonghui enhance product differentiation and gross margin. Miniso has rich experience and resources in this area, including over 1400 high-quality suppliers and more than 1000 product developers. Miniso's management believes that through cooperation, they can significantly enhance Yonghui's own brand and overall gross margin.

In the view of Zhixun Finance APP, Miniso's acquisition of Yonghui Superstores has further enhanced Ye Guofu's retail territory, providing Miniso with an important opportunity to transform into a retail giant.

Any transformation requires time to complete, and the ultimate results also need to be tested over time. From founding Miniso to leading it towards the world, Ye Guofu took 11 years. And in the next 11 years, can the Chinese retail market under Ye Guofu's leadership welcome its own Sam's Club, Costco? From Ye Guofu's determination, we also see confidence.