Meituan’s Xiaoxiang Supermarket has recently opened offline stores for its private-label brand “Xiaoxiang Bakery” near Houshayu and Wangjing in Beijing.
From Meituan’s rollout of “Handmade Bakery” under Xiaoxiang Supermarket, to Pupu Supermarket quietly launching its self-operated delivery business “Pupu Kitchen” in September 2025, and to JD.com—around the same time—following “Xiaoxian Kitchen” with the high-profile launch of “7FRESH Coffee,” claiming it plans to open 10,000 stores within three years, with an Americano priced as low as RMB 4 after subsidies—these moves have further stirred an already red-hot coffee market.
From freshly baked bread, to hot ready-to-eat meals for three square meals a day, and then to pick-me-up coffee—these businesses, which may look like “small, petty profits,” are becoming a new battleground for internet giants. As the online traffic dividend has peaked, the giants that once chased scale and speed have, almost in unison, slowed down, lowered themselves into the trenches, and started meticulously building their own “world” inside something as small as a “snail shell.”
So what’s really behind this—an unavoidable move driven by traffic anxiety, or a necessary path toward higher profits and stronger user stickiness?
Meituan Reignites Its Offline Retail Ambitions
Meituan’s obsession with offline retail has long been no secret. From the failed “Xiaoxiang Fresh” to today’s comeback with Xiaoxiang Supermarket’s offline stores, Meituan has been searching for the best solution to connect online and offline.
The first Xiaoxiang Supermarket store, located in Beijing’s Wanliu area, spans nearly 6,000 square meters—far larger than a traditional front warehouse. Rather than a supermarket, it is better described as a hybrid format combining a “fresh-produce market + dining experience + front warehouse.”
According to publicly available information, Xiaoxiang Supermarket has developed a four-brand private-label portfolio that includes “Xiaoxiang,” “Chef Elephant” (covering prepared foods and braised deli items, dairy, bakery products, and more), “Xiang Xiao Jia,” and “Xiaoxiang Bakery.”
The core strategy is plain to see: making “fresh food” the absolute centerpiece. Fresh produce, prepared foods (baked goods, ready-to-eat dishes, noodles and dumplings, etc.), and groceries account for as much as 98% of the display space. Among them, the way the bakery section is set up is particularly telling.
Rather than a simple display area for finished products, as in a traditional supermarket, it has been designed as an open kitchen staffed by roughly 13 employees. From kneading the dough onward, the full on-site production process and the transparent display windows send consumers a clear message of “handmade,” “fresh,” and “high quality.” A “750g Strawberry Box Cake” priced at just RMB 49, thanks to its exceptional value for money, quickly became a viral hit and set social media abuzz.
At the first store in Wanliu, the bakery section was designed as an open kitchen, strongly emphasizing “handmade, made-to-order” and a “high-quality, great-value experience,” selling a range of freshly made items prepared the same day, including “Signature Butter Milk Toast” and “French AOP Butter Croissants,” among others.
Meituan’s move has at least three strategic goals.
First, it is reshaping brand perception. Through a tangible offline presence and a visible handmade production process, it is upgrading “Xiaoxiang Supermarket” from a purely online channel brand known for “30-minute delivery” into a lifestyle brand that stands for “fresh quality, organic health, and handmade, made-to-order.”
Second, it is pursuing higher margins. Compared with standardized packaged foods, freshly made bakery items and prepared foods—so-called 3R products (ready to cook, ready to heat, ready to eat)—carry higher gross margins. Against the backdrop of razor-thin profits in on-demand retail, this is a crucial step toward improving per-store profitability.
Third, it is creating an offline traffic gateway. A bakery section that is both high quality and high value for money can effectively draw nearby community residents into the store, building stable in-store foot traffic and, in turn, driving sales of other high-value items—forming a closed loop between online and offline traffic.
Xiaoxiang Bakery’s offline experiment is, in essence, a physical extension of Meituan’s local services ecosystem. It is no longer content to be merely a platform connecting merchants and users; instead, it wants to step onto the field itself and become a producer of goods and services.
Pupu and JD.com Move into the Kitchen
If Meituan opening supermarkets was a “do-over,” then Pupu and JD.com getting into dining and coffee feels more like a “light grab.” Their goal isn’t to recreate another “Haidilao” or “Luckin,” but to use higher-frequency consumption scenarios to “transfuse” their core businesses.
Pupu Supermarket has already built extremely high user penetration and a strong brand moat in Fuzhou—and even across the broader South China market. Data shows Pupu’s user penetration in Fuzhou exceeded 70%, its annual sales in that single city topped RMB 10 billion, and it achieved annual profitability in 2024. With such an advantageous position, launching “Pupu Kitchen” looks more like a “defensive offense.”
The core logic is “using dining’s high frequency to drive retail’s lower frequency.” A user might buy groceries 2–3 times a week, but could order delivery 5–7 times a week. By offering highly cost-effective fast meals (mostly priced between RMB 10–20), Pupu Kitchen is targeting the rigid-demand market of office workers’ weekday meals.
At present, the business is still in a small-scale pilot around Pupu’s Fuzhou headquarters, but its strategic intent is very clear.
On the one hand, it boosts user activity and stickiness, keeping users firmly inside Pupu’s app and preventing them from drifting to specialist food-delivery platforms like Meituan or Ele.me.
On the other hand, trying multiple formats in its home base can reinforce regional advantages and build experience for a potential nationwide expansion in the future. By combining food-delivery orders with supermarket orders for joint fulfillment, Pupu can reuse its powerful front-warehouse network and delivery team, effectively diluting fulfillment costs.
Pupu Kitchen’s model is very “light”: it relies on the existing supply chain and fulfillment system, keeping risks controllable, while rehearsing a bigger strategy—shoring up its stronghold and increasing users’ lifetime value.
JD.com’s ambitions in local services have long been no secret. From “JD Daojia” to “7Fresh” supermarkets, and then “7Fresh Kitchen,” which launched in July 2025, JD.com has been looking for a “dagger” product that can break into high-frequency consumption scenarios. And coffee is precisely that perfect “dagger.”
Qixian Coffee’s approach is more internet-native: it adopts an asset-light “shop-in-shop” model, embedded within “Qixian Kitchen,” sharing space, foot traffic, and back-of-house resources—dramatically lowering store-opening costs and reducing site-selection risk.
It is entering the market with a low-price strategy, directly benchmarking against Luckin, trying to grab market share quickly through subsidies. Coffee serves as a traffic magnet, intended to funnel users to Qixian Kitchen—and even to JD.com’s broader local lifestyle services—building a closed-loop ecosystem of “coffee + dining + retail.”
JD.com’s objective is very clear: by using coffee, a high-frequency and high-stickiness category, to seize mindshare and “pull” users into its local lifestyle ecosystem.
Despite challenges such as weak brand recognition, enormous profitability pressure, and intense industry competition, JD.com is clearly willing to spend heavily—because this is about where it stands in the second-half battle of instant retail.
Big Tech’s Strategies and Anxiety
Whether it’s Xiaoxiang Supermarket’s bakery, Pupu’s kitchen, or JD.com’s coffee business, these seemingly “off-track” moves all point to the deeper logic of the instant retail industry’s evolution—and the shared anxiety of the giants.
The internet growth myth has ended, and the cost of acquiring users online has continued to climb. Offline physical space, as a natural traffic entry point, is being revalued. The giants need tangible, touchable brick-and-mortar formats to reach and serve users who have not been fully digitized—or to deepen their connection with existing users.
Especially for the front-warehouse model focused on fresh groceries, razor-thin margins are hard-pressed to cover high operating costs. As a result, improving sales per square meter through “integrated warehouse-and-store” operations, or grafting on higher-margin, high-repeat-purchase categories like coffee and prepared food, has become an inevitable choice for improving overall profitability. This is not just an optimization of the business model—it is an exploration tied to corporate survival.
The battleground of instant retail has long since expanded from a single fresh-grocery category to all-category competition aimed at “everything delivered to your door.” According to forecasts by the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce and other institutions, China’s instant retail market was projected to surpass the trillion-yuan mark between 2025 and 2026.
In this vast market, whoever can meet users’ more diverse and higher-frequency needs will ultimately hold the power to set prices. Everything the giants are doing is aimed at “taking over” all of users’ immediate needs—from three meals a day to afternoon tea and then everyday shopping—and locking them inside their own ecosystems.
When grocery sellers start cooking, food-delivery platforms start baking bread, and e-commerce players start grinding coffee—behind it all is the convergence of different paths under traffic anxiety, and the inevitable route to higher business efficiency.
For consumers, this may mean more convenient and more varied services. But for the giants caught in the middle, this close-quarters battle—unfolding in a “snail shell” over supply-chain depth, operational precision, and the breadth of users’ mindshare—has already moved from the cloud down to the street corner.
