Frank: When did GenBridge Capital first come into contact with Busy for You?
Victor: GenBridge is a fund focused on consumer investment, and various consumption models in the community have always been our focus. We’re constantly looking for innovators in this field.
In 2019, we noticed Busy for You. Whether through its stores, display, lighting, or foot traffic, it’s all eye-catching. Therefore, we took the initiative to seek opportunities to interact with them, and thus knew Mr. Yan, the founder of Busy for You.
Frank: What is the biggest difference between Busy for You and other brands?
Victor: I believe that most of the earliest understanding of the leisure snack industry came from chain companies such as Bestore and LYFEN. The most obvious feature of this business model is that they build a chain system based on their own unique products, and attract consumers through high-quality products to gradually form a brand effect.
However, the entire industry has undergone significant changes in the past few years. In the context of abundant food supply, consumers are no longer just focusing on one or two specialty products, but want a channel to meet their needs for a variety of snacks at attractive prices.
The biggest difference between Busy for You and the previous generation of brand chains is that their brand orientation is very clear. They aim to “create variety stores and provide inexpensive and tasty snacks for the people”, and practice the simple business philosophy of “low margins and quick turnover”. In its stores, over 40% of snacks can be randomly selected in any quantity before being weighed and packaged. This not only meets the diverse needs of consumers for snacks, but also creates a scenario-based snack purchasing experience, allowing consumers to shop offline without any pressure and buy cost-effective snacks within budget.
What Busy for You has overturned the most is actually the traditional supermarkets. Supermarkets are one of the most important channels for people to buy snack food in the past. However, Busy for You has an advantage over supermarkets in terms of image, display, price and product variety. More than 80% of its stores are neighborhood stores, which are set at the entrance of the residential areas, while they give consideration to convenience and professionalism.
Today, China’s consumption has entered a more mature stage, and the consumption pattern has also changed. It used to be an era of growth markets, where every company could gain more and more benefits as the market expanded. But today, in the snack or larger food industry, generally the market shares are shifting as consumers have a lot of choices and channels. More competitive models will replace some of the traditional models, and snack collection stores, represented by Busy for You, will also replace those snack areas in supermarkets and street stores.
Frank: What do you think are the factors for Busy for You to achieve rapid development?
Victor: The success of the retail business depends on many factors, and there is no one trick pony stuff in this industry. Having an advantage over others in every dimension will ultimately result in higher overall competitive efficiency. I would like to talk about the explicit factors on the front end and the implicit factors on the back end, which is critical in retail. The front end is about stores and consumers, while the back end refers to procurement, quality control, and organizational efficiency.
In terms of front-end management, Busy for You has established a set of efficient store operation mechanisms and a standardized store management system, including how franchisees arrange their stores to serve customers, and how headquarters guides them to update, show and price their products, as well as adjust the portfolio of their goods. Busy for You has lower product prices, tidier layouts, and higher levels of standardization than supermarkets. These are all explicit factors.
The back end is about what’s implicit, which is the internal strength that we cannot see. For example, in terms of procurement, the company is characterized by “large quantity of single products”, “cash settlement without payment days”, “zero back-end expenses”, and “direct supply from the manufacturers”. They enjoy very advantageous prices and negotiation conditions. Busy for You, for example, has high-quality franchisees. They are very strict in selecting their franchisees. In 2022, nearly 40,000 people consulted them. Through screening the resumes of these individuals, as well as conducting written exams and interviews at the company, only 332 new franchisees (less than 1%) successfully opened their stores. They selected like-minded franchisees who recognized the company’s philosophy, corporate culture, and management model. It is important for franchisees to operate a store, as this directly affects the effectiveness in various aspects, such as store performance and whether the service satisfies consumers. Those new stores are mostly those opened by old franchisees, which perform better in the execution of standardization and management.
In addition, the company’s honest and transparent culture is also worth mentioning. Busy for You is a business that pursues small profits and quick sales, so they are more demanding on the efficiency of the value chain. For retail enterprises, internal corruption and wastage in each link are the biggest obstacles to efficiency. Busy for You regards “honesty” as their first corporate value. Franchisees and suppliers do not need to consider the traditional code of conduct and secret “manipulation” when they come to the company to talk about business. It’s very simple and clean. This has been well practiced, and it’s one of their characteristics. Only clean-fingered integrity can essentially guarantee the efficiency and fairness of the business.
Last but not least, we guided the company how to make its own long-term strategy out of the corporate vision of serving mass consumption, which is also the source of the underlying logic behind the brand. Only by leading in these implicit factors can we ensure the efficient operation efficiency of the brand, which is the most important source of Busy for You’s competitiveness.
Frank: Busy for You had more than 6 billion yuan in retail revenue in its stores last year. How far do you think it can go in the future? Are there more possibilities?
Victor: As an investor, it’s hard for me to put an exact number on it. But numbers aside, we can have some discussion here about the ceiling Busy for You can touch.
Busy for You got out of Hunan in 2021. Today, it has successfully expanded to Jiangxi, Hubei, Guizhou and other neighboring provinces, and opened some stores of considerable scale, which shows that they are very well recognized by local consumers. In Hunan Province alone, they have opened 1,500 stores and some of them have stretched into towns and villages. One province alone has more than 1,000 stores, and this is really dense. If so, I think there is a good chance for Busy for You to replicate this model in other provinces across China in the next few years. This is how I see them from a short-term perspective.
In the long term, it will focus on the neighborhood with stores between 100 and 200 square meters in size, and put snack sales as the core of its efficient model. If they can do that consistently, then I expect Busy for You to have the potential to take 10-20% of the snack market in China in the future. Although this is only happening in Hunan, but in the future it will happen in a wider range across China, which is really worth imagining.
Frank: An important external reason for the popularity of Busy for You lies in Changsha, its birthplace. How much do You think the business environment of Changsha has promoted Busy for You? What else does Busy for You need to work on if they want to go nationwide?
Victor: Changsha is a very unique place. But I think it’s both unique and representative.
Changsha is often referred to as a base of influences. But in fact, Changsha has another feature, its developed business environment. Changsha is a very developed region where goods from all over the country circulate here. This district itself also has very strong wholesale markets, such as Gaoqiao Great Market, Hongxing Great Market and Haijixing Great Market. As a result, retail competition in Changsha has always been the fiercest in China.
It’s the same for Busy for You. If you want to fight your way out of such a market, your advantages must become stronger. Changsha is just such an external environment for Busy for You to forge its advantages. In Changsha, faced with a large number of previous generation of snack chain stores in the market, Busy for You continuously focuses on its product portfolio, pricing and store layouts to make its advantages stronger.
Busy for You is mainly serving local residents in Changsha. When it looks for locations in other provinces across the country, it will pick areas where locals like to shop for snacks in Changsha. It should be that people need to be basically similar in their food and snack preferences. But it is important to note that people in different places have certain differences in taste.
In addition, each region has its own local brands. These brands may not be well known nationwide, but they enjoy a high reputation among local consumers. When people see such products in the supermarkets, they also would expect to see them in the snack stores.
In its process of expanding from Changsha to the whole country, it is important for Busy for You to better understand consumers’ needs, the types, flavors, product characteristics they are familiar with, as well as their brand preferences. The company needs to make a lot of local adjustments based on the needs of local consumers, which is a very important job. Fortunately, Busy for You has already given some thought in this regard and is attempting to make some localized adjustments to the product structure and brand in other provinces.
Frank: “Should we base ourselves locally or go out?” is a question that many new consumer brands featuring urban cultural traditions are thinking about. Could you give some suggestions to these hesitant regional brands?
Victor: I find it difficult to have a standard answer, but let me share some of my thoughts.
China is an interesting market. On the one hand, Chinese people are generally similar in terms of eating habits. For example, Chinese people love rice and take pork as the main source of meat. But from another perspective, the differences are also obvious in different regions. For example, people in Changsha like spicy food while those in Guangdong prefer fresh food. These regional differences are the result of our cultural and dietary traditions. On the other hand, China has tier 1, 2, 3, 4 cities. Even within the same city, people also vary widely in their incomes. When it’s divided by such dimensions as region and income, there are what you call market segments. So the question becomes: Once we’ve been successful in a market segment, how do we move to the next growth opportunity?
It’s often blamed on genetics, where people think: I do well in one area, but maybe I don’t have the genes to do well in another area. For entrepreneurs, I think on the one hand, they should not be too optimistic and assume that one model can be applied to the whole country; and on the other hand, they should not be too pessimistic and would give up the idea of going offline simply because they can’t do offline operations.
The experience we have gained from practice is that we should make more use of platforms and related channels, go out to explore more, and talk with those who have think differently from us. These are also the values reflected by our capital institutions that research industries. We should make some changes in ‘genes’ through interactions. Then, after we are able, we can expand our business to other districts according to local conditions. We should make attempts while making corrections based on the feedback we receive. In this way, we may go more steadily and further.