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In late January 2026, Yonghui Supermarket's pre-loss announcement sent shockwaves through the retail industry. The company forecasts a net loss attributable to shareholders of 2.14 billion yuan for 2025, with a non-GAAP loss soaring as high as 2.94 billion yuan. This marks the fifth consecutive year that the former "China's top supermarket chain" has been mired in losses.

The snowball of losses keeps growing, and Yonghui's explanation is straightforward. Throughout the year, it conducted deep renovations at 315 stores and closed 381 non-compliant outlets. Asset write-offs, losses from business suspensions, and compensation for store closures alone devoured over 1.2 billion yuan in profits. Supply chain reforms led to short-term stockouts and a decline in gross margin. Overseas investments shrank by 236 million yuan, and long-term asset impairments added another 162 million yuan.

This list of cost items reads more like a passive financial explanation than an active plan for a breakthrough. However, what truly worries the market is why the nearly two-year-long "Pangdonglai-style reform" ("Pang Gai") has failed to stem the bleeding.

Looking back, Yonghui was once a legend in the supermarket industry. Starting in Fujian in 2000, it carved open the market with fresh produce as its weapon. Relying on its "direct farm-to-supermarket procurement" model, it kept fresh produce spoilage rates at industry lows. Using freshness and cost-effectiveness, it grew from a regional chain into a national giant. After its IPO in 2010, Yonghui stores proliferated. By 2018, fresh produce accounted for nearly 40% of its revenue, solidifying its position as the "supermarket leader."

The turning point came in the second half of 2020. As community group buying wars intensified, Meituan Select and Duoduo Grocery used low-price, pre-sale models to capture nearly 30% of Yonghui's fresh produce market share. With its price advantage gone and customer traffic diverted, Yonghui recorded its first loss since going public 11 years earlier in 2021. A staggering loss of 3.944 billion yuan dealt a heavy blow to the giant.

To save itself, Yonghui embarked on its "Pang Gai" path in May 2024. Its founder led a team to visit Pangdonglai, directly copying its service philosophy and store model, attempting to win back customers with warm service.

In September 2025, Wang Shoucheng took over as CEO, proclaiming a goal to "cross the life-or-death line in 2 to 3 years" and stating that the restructuring was expected to conclude by 2026.

On the surface, the reforms seemed effective. Yonghui claimed that renovated stores saw an average 80% increase in foot traffic, and over 60% of stabilized stores exceeded their profit peaks from the previous five years. However, beneath this appearance of profit growth lies massive investment support and the evasion of core issues.

For consumers, the perception of "Pang Gai" mostly stops at store renovations and improved service attitudes. But these positives are ultimately outweighed by shortcomings in product strength.

In the second half of 2025, Yonghui was hit by successive quality scandals: a consumer in Quanzhou bought tofu with a production date set for the next day ("time-travel tofu"); a customer in Hubei found pork mixed in with beef ribs; sweet potatoes at a Chongqing store were found to exceed pesticide residue limits in a spot check.

These issues exposed the core blind spot of Yonghui's "Pang Gai." Pangdonglai's success was never built on renovations and smiling service alone. Its foundation is extreme quality control, transparent pricing, and a supply chain system that creates win-win situations with suppliers.

Consumers are willing to pay for Pangdonglai because they trust the quality of every single product—a trust built on end-to-end control from procurement to shelf.

Yonghui learned Pangdonglai's form but not its essence. It launched "Yonghui Customized" and private label products, trying to create blockbuster items generating hundreds of millions in revenue. Yet compared to similar products, neither cost-effectiveness nor quality shows a clear advantage.

Supply chain reform has been touted for years, but Yonghui still can't shake off the inefficiencies plaguing traditional supermarkets. Stockouts occur frequently, and gross margin remains under constant pressure. More crucially, Pangdonglai's steady strategy of deep regional focus and strict scale control clashes with the heavy debt burden left by Yonghui's earlier blind expansion.

Today's Yonghui is already trapped in the pitfall of "diseconomies of scale." Its asset-liability ratio is as high as 88.96%, with a current ratio of only 0.63. Financial risks remain persistently high, and the strain on its cash flow is hard to alleviate. Large-scale store closures may provide short-term relief, but they also mean losing market share and eroding brand trust.

Industry experts bluntly state that Yonghui's primary problem is its products. Previously, product pricing was inflated; only after "Pang Gai" and price cuts did it barely manage to attract customers. Its complex product mix leads to high procurement costs and makes consumer choice difficult. Merely copying surface-level formats without restructuring the supply chain and product mix naturally results in a low return on investment.

This prompts reflection: What is the essence of retail?

Concepts are intangible; products are tangible. Customer repurchases are never driven by a few greetings or help carrying bags. They come from feeling reassured by every product bought and feeling that every purchase delivers value for money. Pangdonglai's reputation is built upon countless reliable products. Yonghui's predicament is the accumulated result of lacking product strength.

2026 is the final year of "Pang Gai" and a critical test of survival for Yonghui. To truly cross the life-or-death line, the urgent task is to stop blindly imitating, deeply cultivate the supply chain, strictly control product quality, and solidify every single item on its shelves.

The retail industry has no shortcuts. The so-called "life-or-death line" is never determined by restructuring timelines, but by every product placed on the shelf. If Yonghui consistently fails to grasp this core of product strength, even if the restructuring ends in 2026, it will likely continue struggling in the mire of losses.

After all, any transformation detached from the product itself is like water without a source or a tree without roots. This is not only a lesson for Yonghui but a baseline principle all retail enterprises should uphold.