Shanxi Meitehao Store Caught in a Run Crisis: Will It Be the Next Carrefour?

Shanxi Meitehao Store Caught in a Run Crisis: Will It Be the Next Carrefour?Recently, Shanxi’s leading retail company, Meitehao, has been facing challenges. On December 11, Meitehao announced: “Our existing stores are undergoing a major renewal and upgrade phase.” At the same time, Meitehao shut down its online delivery service. The app now indicates that any remaining balance can be used at its Happy Market locations. Soon after, rumors began circulating that “Meitehao is about to close,” prompting a rush of customers holding Meitehao gift cards to flock to stores.On December 12, industry media The Third Eye on Retail reported that Meitehao stores are facing widespread shortages, with some locations having no goods available for sale. In response, Meitehao confirmed that 34 stores are still operating, including five hypermarkets and 29 community stores, and reassured the public that the company is not facing closure, and that stores would continue to undergo optimization and upgrades.Founded 32 years ago in Shanxi, Meitehao operates multiple brands, including Meitehao, Happy Market, Youxian Duoge, and Global Frog, spanning across retail, foodservice, logistics, and more. In 2024, the company’s sales were projected to exceed 6.55 billion yuan, a 5% increase, placing it 27th in the list of China’s top 100 supermarkets.

This year, the company has also been promoting its new brand, Happy Market, exploring new models in supermarkets, dining, and factories, positioning itself as a healthy business.Given this, why has Meitehao fallen into the crisis of stockouts, store closures, and panic buying? In fact, the signs of this crisis have been evident for some time. Since October of this year, some consumers have reported on social media that Meitehao stores in their area had closed or faced product shortages. In response to these concerns, many began to concentrate their spending on gift cards, sparking the first wave of panic.In response to market rumors and consumer panic, Meitehao issued a public announcement explaining that the store closures were part of a strategic plan to focus resources on new growth strategies. On October 8, the company closed 14 stores, and plans to focus on dual-brand operations for “Meitehao Fresh Supermarket” and “Happy Market Membership Stores.” This passive disclosure failed to quell doubts, and instead, the lack of advance notice regarding store closures led to widespread complaints.On October 15, the Shanxi Provincial and Taiyuan Municipal Consumer Protection Bureau, along with the Retail Industry Association, held a meeting with Meitehao, urging the company to improve its communication and provide prior notice about future store closures to protect consumer rights.

On the evening of December 10, Meitehao’s founder, Chu Dequn, posted on his social media, saying, “The public opinion has been negative, and the run has been ongoing for over three months, severely impacting our cash flow.” He repeatedly urged consumers to make rational purchases and use cash rather than stored-value cards.Despite official intervention and promises for corporate rectification, the sudden and poorly communicated store closures severely drained the company’s commercial credit. Combined with ongoing stockouts, the company’s explanation of a “strategic adjustment” was perceived by the public as a prelude to bankruptcy, ultimately triggering a large-scale rush for products. From a business standpoint, this “panic—run—stockout—more panic” vicious cycle is extremely destructive.In retail businesses, when a company sells stored-value cards, the prepaid funds are often already invested in daily operations or expansion. When a run occurs, concentrated card usage rapidly depletes store inventories, and inventory replenishment requires cash flow support. Suppliers, fearing delayed payments, may demand immediate settlement, creating a double pressure that causes the company’s cash flow to break down. Meitehao’s stockouts are a direct result of this pressure on the supply chain, and the stockouts further reinforce the “bankruptcy” rumors, deepening the “panic—run—stockout—more panic” cycle.This type of scenario has played out before in the retail industry.

In 2022, many consumers noticed that Carrefour gift cards were being restricted at certain stores — some locations limited the percentage of card balance that could be used, while certain essential goods, like fresh produce and grains, were labeled as “card-not-accepted.” Once this news spread, a nationwide rush to buy items occurred, with customers eager to clear their card balances. Carrefour initially denied the restriction, claiming “system malfunctions,” but under public pressure, they restored card usage without addressing the stockout issues. As suppliers started demanding payments, many brands stopped supplying goods, which further worsened the stockout situation.In early 2023, Carrefour had to initiate a pre-paid card refund registration, but with conditions such as “refunds of only 70% of the balance” and “payments in installments,” sparking a larger-scale consumer rights movement. Under the intense pressure of a run on the stores, this once retail giant collapsed rapidly: in 2023, Carrefour closed over 300 stores, marking the end of an era for this retail leader.In comparison, Meitehao seems to be teetering on the edge of the cliff but still has some room for maneuver. The 5% growth in sales for 2024 suggests that its core business is not fragile. This crisis, at its core, is a credit run caused by aggressive strategic adjustments. How Meitehao balances its strategic shifts with public communication and ensures the rights of cardholders will be crucial to whether the company can overcome this storm.