Today I passed by Yonghui Supermarket and saw that Panggedai has really screwed over Yonghui Supermarket. Pang Donglai attributes its success to sincerity and love, which is the biggest lie in business; Yonghui Supermarket learned this set and was truly fooled. Yonghui's customer flow is pitifully low, so what’s the point of offering quality service? It only increases costs without any way to recover them.

The essence of Pang Donglai is a non-typical retail complex with extremely high product turnover, very low loss rates, and regional monopoly pricing power. Its success has never been due to warmth.
Traditional supermarket gross profit margins are usually around 20%. Pang Donglai’s reported gross profit margin does not significantly surpass the industry average. What really makes it earn big money is its far superior capital efficiency compared to peers.
Relying on high turnover and low inventory, the essence of retail is a game of capital efficiency. Standard products in traditional supermarkets sit on shelves for 30 to 45 days before selling, incurring very high capital costs. Pang Donglai, with huge customer flow, has extremely short product turnover days, with many hot-selling items turning over daily or even hourly.
Assuming both have a gross profit margin of 20%, Yonghui’s capital turns over 6 times a year, while Pang Donglai turns over 20 times. The same principal, Pang Donglai can generate a total gross profit of 400% in a year, while peers only 120%. With a large cash flow source, cash direct procurement lowers prices.
High turnover → low purchase price → high wages → high service → more customer flow
Pang Donglai’s DL series, craft beer, baked goods, juice. Contribute 30% of sales but far more than 30% of profit. Cutting out middlemen and adding trust premiums, these private brands have gross profit margins higher than 20%.
So its business logic has never been about sincerity for market share, but trust = premium + high turnover = capital efficiency crushing competitors.
Why Yonghui can’t learn
By 2025, Yonghui will lose 2.55 billion yuan, with a five-year cumulative loss approaching 12 billion yuan, and an asset-liability ratio of 88.96%. It’s not that they aren’t trying; they’ve adjusted 284 stores and closed 381, with significant effort.
But no matter what, they can’t use the gross profit from vegetable markets to bear the service costs of luxury goods.
Core commercial districts in first-tier cities have rents 5 to 8 times higher than in Xuchang. Pang Donglai owns its properties, but its customer flow density is far lower than Pang Donglai’s. Just this cost difference is tenfold; reaching break-even requires ten times the effort. Slow turnover leads to increased fresh produce loss; higher loss eats into net profit. Yonghui is stuck in a quagmire of slow turnover + high loss + high rent.
Even more brutal is that it learned the surface—high wages, shortened operating hours, no-reason returns and exchanges—
but didn’t learn the core—low rent + ultra-high customer flow-driven rapid turnover + trust premiums supporting private brand pricing power. Forcibly increasing labor and service costs outside of financial models will inevitably cause cash flow to dry up instantly.
Yonghui’s dilemma isn’t a lack of sincerity; it’s fundamentally incompatible with its financial model.