Chapter 918
A 3% profit margin, throwing money at charity
The Tangdu High-tech Zone is brightly lit at night.
The neon sign of Galaxy Supermarket No. 1 is particularly eye-catching in the night. It is a simplified star trail pattern, which is consistent with the name "Galaxy". Below are four simple characters - "Galaxy Supermarket".
The hustle and bustle of the first three days of opening has subsided, the flower baskets in front of the door have not yet been removed, but the flow of people has changed from the crowds on the first day to a stable normal.
On the third floor of Yihaodian, in a small meeting room that is not open to the public, several people sat together.
The outline of the entire shopping mall can be seen from the window, and further away are the tower crane lights of the Tanghuangcheng construction site, like a row of silent giants.
Yu Donglai sat by the window, wearing his signature gray hoodie, holding a cup of free tea he had brought up from the staff canteen downstairs.
Wang Donglai, who was standing next to him, was wearing a dark shirt with the cuffs casually rolled up, and his fingers were unconsciously twirling the pen on the table.
Across the long table, Nie Yun sat upright, but the unyielding seriousness between his brows had not dissipated since he entered the room.
Zhao Mingyuan sat next to Nie Yun, the store manager who had been poached from Pang Donglai. At this moment, he placed his hands on the table with his knuckles crossed, which were slightly white from the force.
The atmosphere was somewhat awkward.
"The data is out."
Nie Yun's voice was a little hoarse. He looked down at the statistics report on his phone, as if to confirm that he hadn't misread it: "In the three days since the opening, the total number of visitors was 97,000 and the sales amount was 10.3 million. This result sounds pretty good."
He paused, then added, "But our profit margin is only 3.2 percent."
Zhao Mingyuan's finger twitched, but he didn't say anything.
Three point two percent.
Everyone present knew what this number meant in the retail industry.
The net profit margin of traditional supermarkets is generally between 5% and 8%, and those that perform well can reach 10%.
3.2 percent is barely enough to cover operating costs. If the depreciation of the equipment invested in the early stage is included, the book shows a loss.
"Labor costs account for 37 percent."
Nie Yun continued, his voice growing softer: "It's 20 percentage points higher than the industry average. Just the employees' social insurance and housing fund, base salary, performance bonuses, and year-end bonus pool eat up most of the gross profit."
He put down his phone, took off his glasses, pinched the bridge of his nose with his thumb and forefinger, looking as tired as if he hadn't slept for days.
"If this profit margin continues, it will take about fifteen years for our Yihaodian store to break even."
The meeting room fell silent.
The faint sound of airflow from the air conditioner vents was exceptionally clear at that moment.
Zhao Mingyuan finally spoke, his voice soft, but each word seemed to have been carefully considered before being uttered: "President Nie, it's my fault. The promotional plan can be further optimized, the spoilage rate can be reduced, and the turnover rate of the fresh produce section can be increased by 15%..."
"It's not your problem."
Nie Yun interrupted him, put her glasses back on, and looked at Zhao Mingyuan's face. She said seriously, "You have done a great job. 97,000 customers, over 90% customer satisfaction, and zero complaints. These figures are benchmarks for any shopping mall in the country."
Zhao Mingyuan opened his mouth, but said nothing.
He certainly knew he hadn't done a bad job.
But therein lies the problem—it's not bad, but it's still not enough.
Those peers who came to investigate, those competitors who were waiting to see them fail, and those who made sarcastic comments on industry forums were all waiting for this number.
In their eyes, a profit margin of 3.2% is the best evidence that the "Galaxy model is unsustainable".
Outside the window, the mall lights began to go out one by one.
The cleaning team was doing the final cleaning. The employees, dressed in gray uniforms, walked out of the gate in twos and threes. Some were still chatting and laughing, while others were tired but satisfied.
Yu Donglai remained silent.
He held the now-cold tea cup, watching the figures of people leaving get off work outside the window, a faint smile on his lips, as if he were looking at something reassuring.
"President Nie."
He finally spoke, his voice low and gentle, carrying a warmth that comes with the passage of time: "Do you know what the profit margin was when Pang Donglai first opened?"
Nie Yun raised his head.
"Negative".
Yu Donglai continued, "In the first year, we lost all the savings we had accumulated over the past three years."
Zhao Mingyuan was stunned for a moment.
He knew that Pang Donglai had started from a small shop, but he never imagined that Pang Donglai had also experienced such a time.
"Back then, there weren't many big supermarkets in Liancheng. I was the only fool who insisted on paying high salaries to my employees, implementing 'money-back guarantee' policies, and letting customers try before they buy. My competitors laughed at me, suppliers said I was crazy, and even my wife asked me, 'Old Yu, what are you after?'"
He put down his teacup, crossed his hands on the table, and his gaze became distant, as if he were recalling something from long ago.
“What am I after? I want to be still here when all those who laughed at me have closed down. I want to be still here when those who said ‘high salaries can’t sustain a business’ are shut up. I want to be here when my children grow up and can point to the supermarket and say, ‘This is what my dad did.’”
“I treat this as a lifelong career, not as a money-making business.”
His voice was calm, but every word carried an undeniable power.
Nie Yun looked at Yu Donglai, remained silent for a few seconds, and then said, "Mr. Yu, it's not that I'm afraid of losing money. I'm betting on exchanging Yunda's shares for a ticket to Galaxy Supermarket, which is a huge gamble in itself. But what I'm afraid of is... that this path won't work."
He took a deep breath, as if organizing his thoughts.
"In the first few days after opening, I walked around the store every day, watching how the employees smiled at the customers, how the customers left satisfied, and how the elderly sat in the rest area drinking tea and chatting. I felt that this was the right path. But the data is there: a profit margin of 3.2%. If the next store is like this, and the one after that is like this... how many stores can we survive?"
Zhao Mingyuan's shoulders tensed slightly.
He knew that Nie Yun was telling the truth.
The initial plan for Galaxy Supermarket is to have ten stores, with an investment of several billion yuan for each.
If the profit margin of each store is stuck at three percent, let alone breaking even, just maintaining operations will require a huge cash flow.
Galaxy Technology is indeed rich, but that's not how you burn money.
Wang Donglai listened attentively without interrupting anyone.
His fingers stopped twirling the pen and instead tapped lightly on the table, making a rhythmic sound.
The sound was neither hurried nor slow, like some kind of steady metronome.
"Mr. Yu is right."
He finally spoke, his voice not loud, but the air in the conference room seemed to fall silent for a moment.
He had walked this road before. So he knew that what he saw now was not the end.
He looked at Nie Yun, his gaze as calm as a deep pool of water.
"Mr. Nie, you just said you were worried this path wouldn't work. So let me ask you a question: how long do you think it would take for a store to get the surrounding residents into the habit of 'going to Galaxy Supermarket for shopping'?"
Nie Yun paused for a moment, thought for a moment, and said, "If the service is up to par, it will probably take about a year."
"How long will it take before those employees truly consider the store their home?"
Zhao Mingyuan blurted out, "At least two years."
"How long will it take to convince those suppliers that cooperating with us is a long-term and stable business?" Nie Yun paused for a moment and said, "Three years."
Wang Donglai nodded, a slight smile playing on his lips. There was no smugness in his smile, only a reassuring certainty.
"What we are discussing now is the profit margin for the first three days of operation."
He paused, his voice softening but becoming more forceful: "Three days is as short as the blink of an eye in a person's life. In the operating cycle of a supermarket, it's not even a warm-up."
Nie Yun was stunned.
Zhao Mingyuan was also stunned.
They have been using data from "three days of operation" to fit a model for "the next three years," which is inherently misaligned.
"It took Mr. Yu three years of losses to establish Pang Donglai. What did he have after those three years? The best service team in Liancheng, the most loyal customer base, and the most stable supplier relationships. These things aren't listed on the profit and loss statement, but they are more valuable than any number."
Wang Donglai's gaze shifted from Nie Yun to Zhao Mingyuan, and then back again.
“We now have better conditions than Mr. Yu did back then. We have Galaxy Technology’s supply chain, Pinduoduo’s direct supply of agricultural products, and Xinghuo Express’s logistics network. Other companies don’t have these things. So our path is much easier than Mr. Yu’s back then.”
He stood up, walked to the window, and looked at the darkening sky outside.
"But some things can't be rushed."
“Employees’ identification with the company is built up day by day. Customers’ trust in the brand is built up with each purchase. The tacit understanding between the supply chain is honed through each transaction. These are the true assets of Galaxy Supermarket.”
He turned around and looked at Nie Yun.
“President Nie, you just said you were worried this path wouldn’t work. Well, let me tell you, President Yu has walked this path before. Pang Donglai has been doing this for over twenty years, growing from a small shop to a nationally renowned brand. We have his experience, the foundation of Galaxy Technology, and the best supply chain in the industry. If even this doesn’t work, then no retail industry in the world can expect to succeed.”
Nie Yun's eyes lit up, but the light wasn't the relaxation that came from being persuaded; rather, it was the determination that came from being ignited.
"Mr. Wang, I'm not afraid that the route won't be passable, I'm afraid that we'll be too slow."
His voice was no longer hoarse; instead, it carried a power that had been suppressed for a long time and was finally being released.
"How far has Mr. Yu gone in the past twenty years? Liancheng and Xinxiang, just those two cities. I'm not saying Mr. Yu hasn't done well; he's been steady, so steady that everyone admires him. But Mr. Wang, our plan is to open ten stores and successfully establish ourselves in first-tier cities across the country. Mr. Yu's experience isn't enough to achieve that speed."
Yu Donglai wasn't angry; instead, he smiled, as if he had been waiting for those words.
"Mr. Nie, you're right. Pang Donglai moves slowly not because it doesn't want to go faster, but because it's afraid to go faster."
His voice carried the wisdom of someone who'd been through it all: "I don't have your resources. I have no money, no people, no supply chain. To open a store, you have to stake everything you have. So I can only slowly grind it out, until each store is stable before I dare to open the next one."
He paused, his gaze becoming distant.
“But you are different. You have the foundation of Galaxy Technology, the best supply chain, and the best logistics in the country. You did not start from scratch, but from a hundred. So your speed is not reckless, but in line with the trend.”
He looked into Nie Yun's eyes and said earnestly, "President Nie, do you know why I'm willing to be this honorary chairman? It's not because President Wang offered good terms, but because I saw a possibility in you."
"What's possible?"
"The possibility of replicating Pang Donglai's philosophy across the country."
Yu Donglai's voice was calm, but every word carried weight.
“I can only operate in two cities, Liancheng and Xinxiang, in my entire life. But you have the capacity for ten stores, a nationwide network, and the entire Galaxy Technology system. What you can do, I can never do in my lifetime. So I'm here not to give orders, but to watch you succeed.”
“If possible, there could be more than ten, maybe twenty or thirty.”
The meeting room fell silent.
Zhao Mingyuan sat there, his fingers no longer intertwined.
He looked at Yu Donglai, then at Wang Donglai, and suddenly felt that his worries were somewhat ridiculous.
What is he afraid of? Is he afraid he won't last as store manager? Is he afraid of being replaced due to poor performance?
But Yu Donglai lost money for three years back then, and who replaced him? How many of Pang Donglai's store managers were replaced?
Outside the window, the last group of employees walked out of the mall.
They were wearing gray work clothes; some rode electric bikes, some walked, and some chatted in twos and threes.
Zhao Mingyuan recognized several of them.
Yesterday, Ms. Li from the fresh produce section helped an elderly man pick out fruit for twenty minutes. In the end, the man only bought three pounds of apples, and Ms. Li smiled as she saw him off.
Xiao Zhang from the prepared food section worked overtime until 11 p.m. the night before last to research a new recipe. Today, during the trial sale, the product received rave reviews.
Xiao Wang, the cashier, is always smiling. When he's at the counter, he tells each customer, "Welcome to come again next time."
These people were either brought over by him from Pang Donglai, or recruited locally in the past two months.
He personally trained them, personally guided them, and personally watched them transform from novices into skilled workers.
If one day, Galaxy Supermarket really does open stores nationwide, what will these people become? Team leader, section chief, store manager, regional manager?
They will carry on the same philosophy in new cities and new stores.
Zhao Mingyuan suddenly understood what Wang Donglai meant by "this path is feasible".
It's not that the data makes sense, it's that people's hearts and minds make sense.
"Mr. Yu."
Zhao Mingyuan spoke, his voice a little hoarse, but much steadyer than before.
"I have a question."
"You said."
"Pang Donglai can achieve a zero employee turnover rate because Liancheng is your hometown, and the employees are all locals who have a sense of belonging. We have a nationwide chain, and our employees are all over the country. How can we ensure their identification with the company?"
Yu Donglai smiled, a smile that conveyed a sense of understanding.
“Mingyuan, that’s a good question, but you’ve forgotten something.”
"what?"
"Why don't Pang Donglai's employees leave? It's not because their home is in Liancheng, but because they are happy working here. If they are happy, they don't want to leave. Having their home in Liancheng is icing on the cake, but not the fundamental reason. The fundamental reason is that if you treat them well, they will treat you well. This principle applies everywhere."
He paused, then added, "You brought so many people from Pang Donglai, why did they follow you?"
Zhao Mingyuan was stunned.
He had never thought about this question.
Those people came to Tangdu with him because they trusted him and believed that the path he had chosen was correct.
This trust was something he had built up little by little over several years.
"So, it's not a question of where your home is."
Yu Donglai said earnestly, "It's a question of where the heart is."
"As long as we treat people with sincerity and exchange sincerity for sincerity, we can do this job well."
Wang Donglai walked back to the table, but did not sit down. He rested his hands on the edge of the table and glanced at everyone present.
"Data is important, but not the most important thing. Profit margin is important, but not the most important thing. Three-year plans are important, but what happens three years from now is more important than what happens within three years."
He looked at Nie Yun, his tone becoming serious: "President Nie, do you know why I'm starting the Galaxy Supermarket?" (End of Chapter)