“I used to buy daily necessities here often, why did it suddenly close?” Ms. Zhang, a resident of Shanghai, pointed to the nearby discount supermarket Biyide.
Just recently, the Biyide chain discount supermarket, known for its low prices, suddenly closed. According to the announcement released, Biyide Supermarket suspended its business operations from December 22, 2023.
A reporter from Yicai visited some Biyide stores in Shanghai and observed that these stores were already closed. However, December’s promotional advertisements were still posted on the doors, and many nearby residents were peering through the windows, glimpsing some remaining products inside.
Public information indicates that Biyide was founded in 2017 by Philipp Spangenberg, a German, as a discount store brand in China. During its rapid growth phase, Biyide opened over 200 stores in Shanghai and Jiangsu. Biyide mostly chose locations in communities, emphasizing affordability and convenience. In April 2021, Biyide launched an online platform, offering home delivery services. It had two dedicated logistics and distribution centers in the north and south of Shanghai, each serving about 140 stores. In September 2021, Biyide secured exclusive investment from Argan Capital, a private equity fund focusing on acquiring medium-sized companies in the European market.
According to on-site observations by reporters and information from various interviews, Biyide’s store sizes mostly ranged from 200 to 300 square meters, with each store having 500 to 600 SKUs. They deliberately increased items like fresh vegetables to attract consumers.
“In fact, Biyide basically copied the model of ALDI, the founder originally coming from ALDI. ALDI is a German discount store, focusing on cost-effective products, and it’s a small store with a concept of flat pricing. Biyide did well at the beginning and had over 200 direct-operated stores, so the investment was quite significant,” said an informed source to Yicai.
According to official data from Biyide, its compound annual growth rate from 2017 to 2021 was 120%, and own-brand products accounted for about 40% of total sales. Biyide expressed its ambition to have 800 stores by 2025.
An insider revealed that Biyide currently has 158 stores in Shanghai and Kunshan. The announcement stated the closure would begin on December 22, but in reality, it started on December 23.
“Since November, some stores couldn’t afford the rent, and there were delays in some payments to suppliers. Specific solutions haven’t been seen yet. Biyide has temporarily entrusted subsequent matters to a law firm, and business operators and employees are waiting for the law firm to propose a solution,” the insider told Yicai.
So, why did the discount supermarket, operational for seven years, suddenly announce closure?
Some insiders mentioned that Biyide’s investment model was quite heavy, mainly consisting of direct-operated stores. Despite being small, street-facing stores with high rent, being direct-operated meant full capital investment, posing a high-cost model for a thin-margin, flat-price retailer.
“Moreover, Biyide had too few product categories; each store only had 500 to 600 SKUs, offering customers very limited choices. In terms of operations and management, discount stores face challenges in supply chain and price control. The pandemic has also brought certain impacts to the retail industry,” an insider told Yicai.
Of course, intense market competition is also a contributing factor. An internal source at Biyide revealed that seven years ago, the market for discount stores was relatively open, but now, low-price competition has become more intense. The expansion of stores like Hema Xiansheng (Box Horse Fresh), for example, has significantly impacted Biyide, exacerbating its challenges.
In recent years, rising costs and intensified competition have presented similar challenges to membership stores, supermarkets, and large retailers. Carrefour has previously faced closure, and the competition in the membership store sector can be described as a “red ocean,” with low-price competition like “Mountain Moving Prices” emerging this year. All of these factors have presented even greater challenges to retailers.