Compact Stores and At-home Delivery Spark Daily Sales in Fresh Foods

About

Zhe Zeng
IGA DP
Jiayuguan Western Horizon Commerce and Trad Co., Ltd, Jiayu Guan, China
Annual sales: $100 million
Difficulty: Medium

Strategy

Northwest China’s cook-at-home tradition, compact refrigerators, and a desire for fresh vegetables mean most people have to shop for groceries daily, but clustered neighborhoods, narrow roads, and limited parking spaces make daily driving to big supermarkets difficult. Jiayuguan Western Horizon Commerce and Trade Co. came up with a two-part strategy to make grocery shopping easier for these communities: 1. They built compact stores within five-minutes walking distance; and 2. utilized the public app, WeChat, so customers could avoid travel altogether, and instead place an order through the app for delivery within 15 minutes. Even though the stores themselves are small—at just 900 square-feet—Jiayuguan Western Horizon Commerce and Trade Co. is able to use their larger stores as a distribution hub and contracts with a network of local growers to stock the stores with over 60 percent of SKUs in fresh, meaning they have the fresh products their shoppers want and they are not limited by the physical size of the store.

Under 900 sq ft in floor area
3-minute walk from your doorstep
>60% SKUs are fresh perishables
15-minute door-to-door delivery promised
30% gain in traffic & 20% in profitability

Why it Works

For our Shoppers

Convenience plus freshness
For small families living in close knit high-rise condos, which are usually clustered into a neighborhood of 2,000 households, daily shopping can mean an easy stroll before lunch for meat and vegetables, and another after-dinner walk for fresh fruits and snacks for the evening. A store located next to the gate of the neighborhood is the ideal destination. Working parents can place orders through our public WeChat channel and get 15-minute delivery from the store in their neighborhood without any surcharges.

Better variety at a decent price
When choosing between hypermarkets that are far and troublesome to get to and the roadside vendors that are limited in choices and risky in food safety, shoppers won’t take long to find what they want here: a balance of quality, variety, and price at their doorsteps. With over 60 percent of SKUs in perishables and a network of contracted growers across the country, more varieties of great products can find their way to our shelves and eventually our shoppers’ kitchens. 

Job opportunities and service station
For those who need an hourly job close to home with flexible working shifts that enable them to take care of their families, our stores offer a wonderful option. Shoppers can also find free extra services here, such as parcel collection, utility bill payment, and dry-cleaning pickup—anything that help makes life easier and enjoyable.

For our Store

Great customer loyalty and traffic
Staff recruited from the local community, quality perishables offered conveniently at competitive prices, and a shopper-friendly shelving and merchandising style is a powerful combination. In some stores, we have recorded a 30 percent gain in traffic and a 20 percent increase in profitability. 

Higher efficiency and ROI
The compact size and fine selection of SKUs and a cut in staffing costs bring higher efficiency and return on investment. 

Know community and customers better
Usually positioned at the main entrance of the neighborhood, the store practically becomes a waterhole for local community, providing us with more opportunities to read the needs and trends among the local consumers.

Tactics

1. Compact community stores need support from a coordinated network of logistics and bigger stores serving as hubs.
2. Add pre-packed items to reduce cost and staffing efforts in the stores.
3. The 60/40 combination is not bullet proof. Category analysis is needed.
4. Present the fruits and vegetables upfront, identify your strengths, and maximize the traffic.
5. Introduce private label products in non-food categories to achieve profitability and price competitiveness.
6. Use social-network channels to interact with shoppers and take orders that can be fulfilled by 15-minute door-to-door delivery.

Pricing

Pricing in community stores is usually more competitive than in hypermarkets, but competition, market shares, and demographic factors should also be considered.

Pro Tips

• Recruit hourly staff from the neighborhood.
• Be flexible in opening hours, staffing, shift scheduling, and shelving.
• Have daily deals on a handful of items to create and sustain shopper’s interest.
• Create an intimate environment with unique décor to identify with your shoppers and differentiate from the competition.