Yuanchu Food is a sample that studies private brands and community retail.

As a regional community retail supermarket, Yuanchu's private brand sales account for 60%, with nearly a thousand SKUs, more than 2,000 cooperative suppliers and 3 product research and development centers around the world.

In comparison, the average proportion of private brands in the top 100 supermarkets in 2019 was only 4.1%, and the industry average was less than 3%.

The lack of in-depth research on products and experience in supply chain quality management is an important reason why most domestic retailers find it difficult to build their own brands.

After paying high upfront costs for the development of private-label products, back-end sales guarantees and inventory risk resolution also pose practical problems for retail channel operators.

However, the innate international trade gene of the early Yuan Dynasty turned these difficulties into its own advantages.

The predecessor of Yuanchu is Xiamen Tianhou Import and Export Co., Ltd. established in 2001. Through cooperation with many international and domestic high-quality food manufacturers, it exports thousands of products to North America, Europe, Australia, Japan and other countries and regions.

Since it is necessary to ensure that goods meet the different food safety standards of different countries in the import and export trade, Tianhou participated in all aspects of product development early and consciously implanted its own brand to enhance its bargaining power.

For private label products, sales scale can also be ensured by leveraging the international supply chain.

After deciding to build its own domestic retail channels, Yuanchu opened its first store in Xiamen in 2011.

Influenced by innate genes and layout location, Yuanchu regards itself as a "provider of healthy meals" and positions itself as a community-selected supermarket. The products sold "adhere to the greatest degree of originality, less processing, and less additions."

As of April 2021, the number of community stores in Yuanchu has reached 140, as well as 27 convenience stores and 6 front-end warehouses, with daily customer flow of more than 60,000 people.

In addition to its Xiamen base camp, Yuanchu's regional layout has also extended to Shenzhen, Dalian, Quanzhou and Vancouver, Canada, and provides family-like customer service as one of the main ways to build channel trust.

Due to the insistence on not charging channel fees and entry fees from suppliers, Yuanchu achieved breakeven after a difficult start-up period.

According to data from Yuanchu’s last 2017 annual report before it was delisted from the New Third Board, Yuanchu, which had 33 stores in Xiamen at that time, had a revenue scale of 550 million yuan and a gross sales profit margin of 28.32%.

This gross profit margin figure is lower than other outstanding domestic retailers, but it is also the outstanding feature of supermarkets with a high proportion of private brands: they pursue high gross profit rather than high gross profit margin.

At the end of 2019, Yuanchu received RMB 100 million in equity financing from Maixing Investment, and plans to invest the funds in private brand development, supply chain deepening, retail system technology development, overseas market expansion and store opening, as well as exploring the integration of new business formats such as front-end warehouses.

Many aspects.

Building a self-owned technology company was also an important decision made at the beginning of Yuan Dynasty in the digital transformation of retail, and has achieved online sales accounting for more than 20% of total sales and an average daily sales of 10,000 orders.

After operating the technology company independently, Yuanchu also teamed up with Tencent to export order-related technical solutions to other retailers.

Although it is at the forefront of various experiments, Yuanchu, as a community retailer deeply involved in the region, has always maintained a low profile and pragmatism. It has neither participated in the noisy private label selections in the country, nor can it be seen from business reports.

The whole picture.

Since the development of domestic retail channels, whether it is the turmoil and reshuffle of offline retail, or the counterattack and accelerated penetration of offline e-commerce platforms relying on data advantages and cost-effective advantages, in the more intense channel competition, private brands have served as an important moat.

, has become a core business that cannot be ignored by every company.

For example, Hema continues to increase its efforts in developing its own brands and building membership stores, while Sam and Costco, representatives of U.S. warehouse membership stores, are also accelerating their domestic layout.

In order to explore the private label methodology of Yuanchu Food, we recently conducted an exclusive interview with Jin Xing, Vice President of Yuanchu Food, and Wen Zhiqiang, Director of Commodity Center, trying to systematically review Yuanchu’s retail logic.

01 From trade to retail As the predecessor of food in the early Yuan Dynasty, the imprint left by Tianhou is still obvious.

Tianhou is an import and export trading company positioned as "Asia's food procurement expert."

On the one hand, Tianyou needs to find excellent food suppliers from all over Asia to represent brands and purchase products. On the other hand, Tianyou will hand over the purchased goods to large importers and wholesalers in overseas markets, who will further transport them to local retailers.

Terminals (such as Chinese supermarkets and other large supermarket chains) complete sales.

The particularity of import and export trade requires Tianhou to have a deeper understanding of commodities and their quality.

On the one hand, since imported and exported goods need to meet the quality and safety standards, food hygiene standards, and food quality standards of the place of export, these requirements in overseas developed markets are often more stringent. There are many details to check in the production process, technology, and quality, which are in line with

The number of high-quality suppliers with limited conditions is inherently limited; on the other hand, the products purchased by Tianxue need to adapt to changes in consumption habits and consumption environment in foreign markets, which often require feedback from middlemen such as Tianxue and continuous research and development by suppliers.

and adjustments.

Therefore, compared with ordinary traders in a one-sided market, under the premise of strict quality control, Tianhui's dependence on suppliers is more obvious.