In the A-share market, the retail industry has been an industry that I have disdained for many years. The only part of the retail industry that I currently favor is duty-free and outlet stores, due to their higher competitive barriers. Additionally, some brands are not available on e-commerce platforms. Typical examples are China Duty Free and Wangfujing.

In recent years, a new retail model called "Pang Donglai" has emerged. Its unique service philosophy, corporate culture, and management methods have collectively contributed to the success and profitability of Pang Donglai. This has allowed it to stand out in the context of a depressed physical retail industry.

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For instance, Pang Donglai emphasizes a customer-centric service philosophy, providing services beyond expectations, such as unconditional returns and exchanges, free value-added services, etc. These services make customers feel respected and trusted, thereby enhancing customer loyalty and repurchase rates.

Furthermore, Pang Donglai motivates its employees through measures such as high salaries, profit-sharing, and short working hours, ensuring high employee satisfaction and low turnover rates, which is relatively rare in the retail industry. I believe that the Pang Donglai model is only suitable for mid-to-high-end boutique stores and is not suitable for a nationwide super chain.

The Pang Donglai model will inevitably lead to an increase in the company's operating costs, requiring the company's products to be sold at high prices to maintain operations. Obviously, only high-income groups are not sensitive to product prices. Therefore, the Pang Donglai model is only suitable for boutique stores and cannot be widely promoted. After all, the wealthy are a limited group.

Many years ago, Yonghui Supermarket was definitely a white horse leader stock in the A-share market and was the target of market pursuit. Who could have imagined that in 2023, Yonghui Supermarket achieved a business income of 78.642 billion yuan, a year-on-year decrease of 12.71%, and a net profit of -1.329 billion yuan. In 2022, Yonghui Supermarket lost 2.763 billion yuan, and in 2021, it lost 3.944 billion yuan?

Now, Yonghui Supermarket has proposed to learn from Pang Donglai and has invited the management team of Pang Donglai to come in person to help. I believe that the assistance from Pang Donglai may have a positive impact on Yonghui Supermarket, but whether it can achieve long-term stability still needs further observation and evaluation.

I think it is difficult for Yonghui Supermarket to imitate the Pang Donglai model. If it wants to replicate Pang Donglai, Yonghui must cut at least two-thirds of its existing stores. Because not all stores are suitable for the Pang Donglai model. Such a reform may be difficult for the management of Yonghui Supermarket to accept.

For the stock of Yonghui Supermarket, I think it is better to invest cautiously. After all, it is the era of internet e-commerce, and retail department stores will never return to the glory of the past. It is unrealistic to have too high expectations for the future of traditional retail department stores. Just like smart phones replacing traditional mechanical phones and new energy vehicles occupying the traditional fuel vehicle market, this is the general trend of the times, and it will never go back.Although the retail department store sector has been declining for many years, not all industry sectors at the bottom are worth long-term investment. Many sectors, despite being at the bottom for a long time and having very low valuations, do not have a promising future in terms of industry development prospects, and thus do not hold significant investment value. For example, bicycles, fountain pens, photography, movies, publishing, taxis, traditional news media, and so on.

In our investment, we should stay away from these industries and individual stocks that have been abandoned by the times, no matter how cheap and tempting they may appear now, we should not buy them.