Pupu Supermarket Expands into Brick-and-Mortar: Fresh Grocery E-Commerce Triggers Offline Store Competition

In 2025, China’s retail market is undergoing a profound paradigm shift. Even Pupu Supermarket, a veteran in front-warehouse operations, made headlines with a bold announcement: it plans to open its first offline store in Fuzhou, covering 5,000–6,000 square meters, directly on the site of the former Yonghui Supermarket. The move of online retailers “going offline” is far from an isolated incident; it signals the industry’s shift from online traffic competition to deep cultivation of offline retail scenarios—a full-scale revolution surrounding omnichannel strategies, supply chains, and consumer experiences has officially begun.The offline expansion of a front-warehouse giant like Pupu Supermarket is more than a reactive measure—it’s a long-planned strategic upgrade. Founded in Fuzhou in 2016, this fresh food e-commerce player has spent nine years solidifying its regional presence through the front-warehouse model. By 2024, it achieved approximately RMB 30 billion in revenue, turned profitable for the first time with a gross margin of 22.5%, and launched plans for a Hong Kong IPO. Entering offline retail at this stage is both a strategic move to overcome growth bottlenecks and a precise response to industry trends.Pupu’s choice of location for its first offline store is highly strategic—Fuzhou Yuanyang Decheng LeDi Port, the former Yonghui Supermarket site, spanning 5,000–6,000 square meters. Its positioning clearly differs from the hard-discount “Happy Monkey” model, leaning instead toward a premium experience format, directly competing with brands like Hema Fresh and Xianfeng Life.

This decision reflects Pupu’s precise positioning based on its strengths: in core regions such as Fujian and Guangdong, Pupu has accumulated strong brand recognition and a loyal user base, with a 65% repurchase rate in Quanzhou, providing natural traffic support for offline stores. On the supply chain front, 80% of Pupu’s fresh products are sourced directly, with 45% procured from local agricultural markets. Leafy vegetables can be shelved within six hours, reducing circulation steps from seven to three and keeping fresh food wastage below 3%, well under industry averages. This efficient supply chain underpins both quality and cost-effectiveness for offline stores.Strategically, Pupu’s offline expansion aims to build a “front-warehouse + offline store” integrated retail ecosystem. The online front warehouses satisfy consumers’ need for immediacy and convenience, while large offline stores serve three main functions:Enhancing experiential shopping: Featuring ready-to-eat, light meal, and beverage sections to cater to younger consumers who view shopping as leisure. The previously launched “Pupu Kitchen” channel, offering hundreds of ready-to-eat products, lays a foundation for offline food service.Brand building: As the first offline flagship, its store design and service standards will embody Pupu’s brand culture.Traffic redirection and higher ticket value: Drawing lessons from Sam’s Club, where offline average spend can exceed RMB 1,000 versus RMB 200 online, Pupu’s offline store is expected to drive high-value sales through immersive, scenario-based shopping, optimizing overall profitability.However, the path to transformation is not without challenges.

For Pupu, accustomed to standardized front-warehouse operations, offline stores bring new obstacles:Operational differences: Offline operations require handling merchandising, shelving, inventory management, and customer service, with rent and labor costs far exceeding those of front warehouses, demanding stronger cost control.Cross-regional expansion: Beyond Fujian, Pupu’s supply chain advantage diminishes, and cross-regional logistics costs increase compared to local direct sourcing.Organizational management pressures: Operating front warehouses, offline stores, and food services simultaneously poses a severe test to talent and management systems.Efficiency vs. Experience Strategies: Comparing Pupu’s offline approach to Meituan’s “Happy Monkey,” both represent online giants’ offline push, yet illustrate distinct strategic paths driven by corporate resources and market positioning. “Happy Monkey” follows a small-but-dense community model: 800–1,000 square meter stores, around 1,500 SKUs, focused on household essentials with extreme cost-effectiveness targeting rational-spending families. Advantages include rapid expansion, low operating costs, and potential synergy with Meituan’s instant retail network, strengthened further by “30-minute delivery.”In contrast, Pupu pursues a “large and premium” experiential model: 5,000–6,000 square meter stores, extensive SKU offerings, integrated dining and leisure spaces, targeting mid-to-high-end consumers who value shopping experience and product quality. This model emphasizes scenario upgrades to enhance brand premium and basket size, complementing Pupu’s regional supply chain strengths.

Regarding site selection, both aim to leverage the “legacy supermarket advantage,” but with different logic: “Happy Monkey” prefers community street-level or suburban locations for high-density coverage, while Pupu targets large shopping malls to build regional commercial landmarks, reaching broader consumer bases. Fundamentally, this is a difference in traffic acquisition strategy—“Happy Monkey” relies on natural community traffic, Pupu aggregates mall footfall.The clash of these models is essentially a contest between efficiency-driven and experience-driven retail strategies. However, mutual learning is likely: “Happy Monkey” may enhance its own brand and scenario experiences, while Pupu could deploy smaller community stores in core regions, forming a “flagship + penetration” combo. Regardless of model, the competition will ultimately hinge on supply chain integration, cost management, and customer experience optimization.Restructuring industry cost structures and operational logic: Offline expansions by Meituan and Pupu are not isolated actions but inevitable outcomes of China’s retail evolution, driven by multiple factors. Online traffic has plateaued, with giants like Alibaba, JD.com, and Meituan experiencing slower online growth and rising customer acquisition costs. Offline retail, though impacted by e-commerce, still accounts for a significant share of total retail sales with irreplaceable scenario value and traffic advantages. In this context, “online + offline” integration is key to breaking growth barriers, whether through e-commerce giants moving offline or traditional supermarkets digitizing—they are building omnichannel capabilities.

Consumer demand upgrades also favor offline resurgence. With rising incomes, shopping has shifted from mere transactions to experiences emphasizing social interaction and immediacy. Offline stores offer scenarios, physical experiences, and instant interactions, while online channels provide convenience and delivery, forming a new “instant retail” growth engine.Competition is intensifying with the rise of hard-discount formats. In 2024, China’s hard-discount market exceeded RMB 200 billion, but penetration is only 8%, far below Germany (42%) and Japan (31%), attracting numerous players. Beyond Meituan’s “Happy Monkey,” Hema Fresh has opened 350+ stores, JD Discount Supermarkets target northern markets with 5,000 m² stores, and traditional chains like Wumart and Zhongbai accelerate hard-discount transitions. Online giants leverage traffic, technology, and supply chains to profit offline, while traditional retailers transform to survive, rapidly increasing industry concentration.Crucially, offline-online integration is not mere channel stacking but deep coordination of supply chains, data, and users. The “store-warehouse integration + omnichannel collaboration” model is reshaping retail cost structures and operational logic, forming a core barrier to competition.Although online-offline integration is inevitable, Pupu and similar enterprises face multiple challenges, shaping the future industry landscape. Ultimately, omnichannel integration—“store-warehouse synergy + instant delivery + regional deep cultivation”—will become the retail standard. Future retailers will not be purely online or offline, but comprehensive service providers with full-channel reach, scenario coverage, and end-to-end coordination. As China’s retail sector evolves, industry concentration is expected to rise sharply in the next five years, potentially forming a market dominated by 3–5 major players with regional brands as supplements.