Last-Kilometer Business

By Zhang Shasha

With the novel coronavirus disease（COVID-19） making people stay home and maintain social distance， lifestyles are changing. Some people have become indoor fitness enthusiasts， some voracious readers and many chefs.

Feng Xiaoyu is one of the emerging cooks who found her talent in food. The 29-year-old， a white-collar worker in Beijing， has started posting photographs of the dishes she makes at home， including tapioca milk tea， on social media.

“The happiest thing these days is strolling in supermarkets，” Feng told Beijing Review. “Ordinary things like oil and rice we took for granted earlier now hold real power of healing.”

Catalyst for change

Industry insiders say the pandemic has boosted “community business，” a retail model providing daily necessities and services to people living within a 1-km circle.

“COVID-19 has altered peoples lifestyles，” Li Jiangtao， a research fellow with the Institute of Economics at Tsinghua University， told Beijing Review. In the past， city dwellers consumption occurred mostly around their work areas. Now it has shifted to their living areas， triggering new business opportunities.

Supermarkets are a top beneficiary of this opportunity. In January alone， the sales at Yonghui Superstores， a grocery store chain with locations across the country， hit 12.5 billion yuan （$1.8 billion）. It was equivalent to over 56 percent of its total sales in the fi rst quarter of 2019.

Tech giant Alibabas Hema Fresh， a fresh food e-commerce provider， announced a plan to launch 100 mini stores near residential communities across the nation， with the delivery distance shortened within 1.5 km.

Another change has been in peoples work styles. Li said working remotely may continue even after there are no new infections. If people can work online wherever feasible， it will reduce commuting to the workplace and change the business centerconcentrated consumption habit.

However， some think the newly found opportunities may not last long. “Community business will be robust in the short run， but after life returns to normal， people are more likely to prefer to return to previous business models unless the community business operation is excellent enough to retain consumers，” Wang Ruoting， General Manager of Beijing InCity， a shopping mall， said at an online salon on March 20，

Li， however， thinks the new business ecosystem based on the community is here to stay. Drawn by community services， people will relocate their party destination to their houses or the neighborhood. As a result， the function of the community will change from being a place to live in， especially for the elderly， to one with functions allied to living—entertainment， catering and shopping.

“It is a transformation of peoples views and values，” he said.

Upgrading consumption

Last year， the government released a document on optimizing community services and facilities as part of the consumption upgrade plan. Subsequently， some local commerce departments rolled out measures to advance the concept. Beijing issued a three-year plan to build 6，400 convenience stores so that every 1 million residents have access to 300 convenient stores. Nanchang， capital of Jiangxi Province in east China， and Fuzhou in Fujian Province， southeast China， promised financial support for opening convenience stores. Chengdu in Sichuan Province， south-west China， famous for its hotpot and giant pandas， included the community as one of the eight new consumption scenarios it is promoting to become an international consumption city.

However， the community business is still at a fledgling stage. According to the Beijing Chamber of Commerce， Beijings consumption in communities accounted for 52 percent of the total volume of retail consumption in 2018. In developed coun- tries and regions， the fi gure is 70-80 percent. Experts said in overall China， it is only 30 percent.

But it indicates huge potential for the new business model. It is estimated that by this year， the urban residential property in the country will reach 30 billion square meters with the market scale of community services reaching 13.5 trillion yuan （$1.9 trillion）.

Wangshunge， a chain restaurant specializing in fi sh dishes， seized the new opportunity during the COVID-19 outbreak. From Januaryend， some of its Beijing branches began to set up vegetable stalls and opened online ordering platforms， originally to let off inventory pressure. It led to surprising performance both online and offl ine.

So they expanded their product portfolio and the stalls also began selling condiments such as pickled fish and sauces and precooked food. According to Zhang Yaqing， founder of Wangshunge， their takeaway sales have tripled. “The experience tells us we need to think more about our business model. We found there is great potential in communities. The retail stores in communities showed strong anti-risk capacity，” Zhang told Beijing Business Today.

She is now getting ready to open more stores on streets and in communities， which will expand their functions as residents canteen and fresh food convenience store， if needed. With the Beijing local government issuing policies to encourage community business， she aspires to diversify the restaurant and make it provide more convenience to customers.