Offline payments increased by 2.6%, why did small merchants achieve a 5.7% growth rate?

There is a set of interesting figures emerging in China's offline consumer market.

In the third quarter, the total amount of various offline consumer payments across the country increased by 2.6% year-on-year. However, a set of payment data reflecting the operating vitality of small and medium-sized merchants achieved a 5.7% year-on-year growth in September.

One grew by 2.6%, and the other grew by 5.7%.

At first glance, the growth rate of small merchants seems to be twice as fast as the entire offline market. Does this mean that street-side shops, whose living space was squeezed by large shopping malls and chain brands in the past, are ushering in new opportunities? What is more noteworthy is where exactly consumers' money flows to?

For shop owners, this is not only related to this year's turnover, but also related to whether to expand stores next year, what to sell, and how to make real profits.

The consumer market is regaining its vitality, but the way to make money may have changed.

What consumption signals are hidden behind 2.6% and 5.7%?

On October 11, People's Daily reported the high-frequency economic data released by the National Information Center of the National Development and Reform Commission. Among them, several positive changes have taken place in the consumption sector.

In the third quarter, the total amount of various offline consumer payments increased by 2.6% year-on-year, 0.7 percentage points higher than that in the second quarter. The payment amount for commodity consumption increased by 4.5%.

In September, the offline payment amount increased by 3.1% year-on-year, 0.5 percentage points faster than that in August, and has rebounded for three consecutive months.

Another set of data is even more noteworthy. The data of "Shouqianba", which reflects the operating vitality of small and medium-sized merchants, shows that the payment amount in September increased by 5.7% year-on-year, 1.3 percentage points higher than the previous month.

These figures illustrate at least two things. First, the payment activities of offline consumption are improving. From a quarterly growth of 2.6% to a 3.1% growth in September, and then to a 5.7% growth in the payment samples of some small and medium-sized merchants, different statistical dimensions have all released signals of improving demand.

Second, consumption recovery does not mean all merchants grow at the same speed. It must be noted here that 2.6% is the offline consumption payment data for the third quarter, while 5.7% is the sample data of small and medium-sized merchants covered by a specific payment service provider in September. The time range is different, the merchant structure is different, and the coverage of payment channels is not exactly the same.

Therefore, we cannot simply draw the conclusion that "the growth rate of small shops across the country is twice that of large shopping malls". But this does not prevent us from raising a question worthy of research: Why can some small and medium-sized merchants show relatively active transaction growth?

The answer may not lie in the scale of the store, but in the matching degree between consumer demand and business model.

In the past, when studying consumption, people used to focus on the sales volume of large shopping malls, the performance of international brands, and the passenger flow during holidays. But a consumer's daily activities do not only happen in large shopping malls.

Buying breakfast in the morning, ordering a working meal at noon, buying fruit on the way from work, having a haircut, washing the car or buying daily necessities in the community in the evening. These consumptions with not necessarily high single amount constitute a huge daily transaction network.

For consumers, spending 20 yuan on breakfast and spending 2000 yuan on clothes are two completely different consumption decisions. The former pays more attention to convenience, frequency and certainty, while the latter requires longer consideration. This also means that when consumer demand recovers gradually, different types of merchants may have completely different growth rhythms.

Why may small businesses be more flexible than large businesses?

Assume that a consumer has 5000 yuan of discretionary budget every month. When he wants to control his expenditure, he may postpone the purchase of a high-priced commodity, but not necessarily reduce his daily breakfast, lunch and necessary living services.

This does not mean that low-price consumption will definitely grow, nor that high-price consumption will definitely decline. The real difference lies in the threshold of consumption decision-making.

When purchasing high-unit-price products, consumers usually need to compare brands, quality, discounts and purchase timing. But when buying a cup of coffee, a simple meal or an ordinary living service, the decision may only take a few minutes.

For community shops with suitable locations, stable products and reasonable prices, their operating advantages first come from three aspects.

First, the consumption distance is short. Consumers may not be willing to cross half the city just to save a few yuan, but they may patronize frequently because a shop is on their way home. This convenience is a natural competitive condition for many community businesses.

Second, the demand frequency is high. Even if a large furniture store has many customers, a single consumer may only make a purchase once every few years. But breakfast, fresh food and living services have higher opportunities for repeated consumption. As long as operators can accumulate a group of stable customers, they can form a continuous cash flow.

Third, the adjustment speed is fast. Some small shops can quickly adjust their menus, product combinations, business hours and promotion methods according to the needs of surrounding consumers. Large-scale chain operations usually emphasize standardization, while small merchants have the opportunity to form differences through flexibility.

Of course, the flexibility of small shops does not equal to natural profit advantages. Large chain brands usually have scale advantages in procurement, supply chain, brand marketing and digital management. If small shops lack stable products, cost control and continuous customer acquisition capabilities, it may be difficult to achieve sustainable profit even if the transaction volume grows.

Therefore, what small merchants really need to compete for is not simply low prices, but the reasons for consumers to choose them repeatedly. For many street-side stores, making nearby residents come one more time every week may be more valuable than spending money to attract a large number of customers who only come once.

Consumers are starting to recalculate every sum of money

In the past, when talking about consumption upgrading, people often used to understand it as consumers buying more expensive products. But real consumption upgrading does not necessarily mean that the unit price keeps rising.

Consumers may also be willing to pay for higher quality, more convenient services and more reliable experiences, while reducing additional expenditures that lack practical value.

For example, when buying daily drinks, consumers may pay more attention to whether the price matches the quality. When choosing a restaurant, in addition to decoration and brand, they will also consider the actual taste, portion, hygiene and service. When buying daily necessities, consumers may be willing to pay a reasonable premium for stable quality, but do not want to bear excessively high prices just for packaging and marketing.

From a business perspective, this change in choices may produce two results. On the one hand, merchants that can provide cost-effective and convenient services are more likely to meet high-frequency demands. On the other hand, business models that only rely on decoration, marketing and brand premium but lack sufficient product value will face more obvious competitive pressure.

It needs to be emphasized that the currently released offline payment data cannot directly prove that consumers have fully turned to low-price products, nor can it confirm that a certain type of merchants are losing the market.

But it reminds merchants that they should not only focus on the total consumption volume, but also pay attention to why customers are willing to pay. Especially in regions with active private economy and full competition in physical commerce such as Guangdong, Zhejiang and Fujian, operators often face a practical problem: customers are not completely unwilling to consume, but they are increasingly concerned about whether the money is spent properly.

For merchants, what really matters is not how to make customers spend an unnecessary extra sum of money, but how to become the first choice that customers think of when they make their next consumption.

The growth of payment amount does not necessarily mean that the owner makes more money

There is another easily overlooked problem here. If a store receives more money, does the owner definitely make more money? The answer is no.

Payment amount is not equal to operating profit, and operating profit is not equal to the final cash left in the owner's account.

Take a simple business model as an example. Assume that a community catering store achieved an operating income of 200,000 yuan in September last year, and the same period this year increased by 5.7% to 211,400 yuan. It seems that it has received an extra 11,400 yuan.

If the store's original total operating costs including ingredients, labor, rent, utilities and other expenses are 180,000 yuan, then the original operating balance is 20,000 yuan. Even if the operating income increases this year, if the increase in ingredient costs, labor costs or marketing expenses exceeds 11,400 yuan, the operating balance may still decline.

Conversely, while the income increases, if the procurement efficiency is improved, losses are reduced, and employee scheduling is more reasonable, the profit growth rate may also significantly exceed the income growth rate.

This is exactly the most easily overlooked part in the operation of small shops. For the owner, the number on the payment collection QR code is only a starting point. What really needs attention is the daily number of transactions, average customer unit price, gross profit level and fixed costs.

Among them, the number of transactions and customer unit price are particularly important. Assume that a store's monthly income increases by 10%. One situation is that the number of customers increases by 10% and the per capita consumption remains unchanged. Another situation is that the number of customers remains unchanged, and the commodity price or customer unit price increases by 10%. There is also a situation where the number of customers decreases to some extent, but the sales proportion of high-priced products increases significantly.

All three situations will show income growth, but they represent completely different business trends. The first one may mean enhanced customer acquisition capability, the second one needs further observation of the impact of price changes on demand, and the third one needs to be alert to customer loss.

Therefore, we cannot conclude that merchants have more customer flow and higher operating profit just based on the year-on-year growth of payment amount. For physical store owners, a truly valuable business report should at least answer four questions: How many customers came today? How much did each customer spend on average? How much is left after deducting direct costs for each transaction? Will these customers come again next month?

These four questions are closer to the essence of business than simply pursuing the growth of turnover.

Who has more opportunities in the next round of competition in physical commerce?

In the long run, offline commerce may show an increasingly obvious competition direction: large enterprises compete for supply chain and scale efficiency, while small merchants compete for local demand and service density.

The advantage of large chain brands is to reduce costs through centralized procurement, unified operation and standardized management. When the procurement scale is large enough, even if the profit of a single product is not high, good operating returns can still be obtained relying on the overall sales scale.

It is difficult for community small shops to directly compare costs with large chains in every link. They have more opportunities to use their understanding of the surrounding market to improve the pertinence of services.

For example, a community convenience store can adjust its products according to the resident structure to reduce unsalable inventory. A breakfast shop can optimize meal delivery speed according to the commuting time of surrounding office workers. A community repair shop can establish stable customer relationships by virtue of response speed and regular customers' trust.

These examples illustrate the business logic, and do not mean that all relevant industries have achieved high growth.

At the same time, digital tools are providing new business possibilities for small and medium-sized merchants. Electronic payment collection, member management, online reservation, inventory analysis and simple customer operation systems can help shopkeepers understand the transaction situation more accurately.

In the past, a small shop might only know how much money it received every day. Now, if operators can use transaction data in compliance with laws and regulations, they can further analyze which type of products are more popular, which time periods have concentrated passenger flow, and which promotion activities are truly effective.

However, digitalization cannot increase profits just by installing the system. For small shops, tool investment must match the business scale. If a shop adds thousands of yuan of software, operation and promotion expenses every month without bringing corresponding efficiency improvement, digitalization may instead become a new burden.

Therefore, the competition in physical commerce is not simply large shops against small shops, or online against offline. The real competition is who can continuously meet the needs of specific consumers at a reasonable cost.

Three business judgments for physical store owners

Starting from this consumption data, operators can get at least three inspirations.

First, do not take the average market growth rate as the growth target of your own shop. The 2.6% year-on-year growth of national offline consumer payment amount does not mean that every store should grow by 2.6%. There may be great differences among different industries, regions and customer groups. A store should first compare its own business data of the same caliber in the past 12 months, and then refer to the changes of its business district and industry.

Second, rather than blindly expanding stores, it is more important to verify the profitability of a single store first. The growth of income of one store does not mean that the same profit can be maintained after copying ten stores. Before expansion, it is necessary to calculate the additional rent, labor, distribution, inventory and management costs, and also consider whether the new store will divert original customers. Especially for small and medium-sized operators with limited cash flow, stable returns from a single store are usually more important than unproven expansion speed.

Third, build your own repeat consumption capability. If customers only come for a subsidy or a discount, after the activity ends, the store may still need to keep spending money to acquire new customers. But if customers recognize the products, location, services and prices, continuous transactions may be formed. This repurchase capability has more business value than a one-time surge in turnover.

At present, the continuous improvement of offline consumer payment data is a positive signal. The 2.6% growth in the third quarter, 3.1% growth in September, and 5.7% growth in the payment samples of some small and medium-sized merchants indicate that there is vitality in the consumer market worthy of further observation.

However, 5.7% cannot prove that small shops have won in an all-round way, and 2.6% cannot represent that all physical merchants can only grow slowly.

What is really worth tracking in the future is whether these payment growths can be continuously transformed into more stable passenger flow, healthier profits and sufficient operating cash flow.

For consumers, more choices, better quality and more reasonable prices are tangible gains. For merchants, being able to make customers willing to come back and make the enterprise make sustainable profits is the real growth.

The next round of opportunities for offline consumption in China does not necessarily only belong to enterprises that open the largest number of stores. It may also belong to those operators who know the surrounding consumers best, are best at calculating operating costs, and can do ordinary business in a down-to-earth manner.

The market is regaining its vitality, but what really determines who can stay is not how many times the payment QR code rings, but how much profit is left after each payment, and whether customers are willing to come back next time.

This article is from the WeChat official account"BT Finance" (ID: btcjv1), the author is BT Finance, and 36Kr publishes it with authorization.