Are physical vape shops entering a downturn?
Is the physical vape shop entering a downturn?
This question needs analysis, as I have conducted extensive case studies on physical vape shops recently.
Major Issues Facing Physical Stores
- 1. Overall, the growth rate of users in the e-cigarette market has significantly slowed.
- 2. The number of physical vape shops has surged.
- 3. Policy uncertainties have brought industry uncertainties.
- 4. Recent negative news has been overwhelming.
- 5. Major brands have started to aggressively exploit the market.
First, we must clarify that the overall e-cigarette market continues to expand, but the growth rate is slowing, while the number of physical stores is rapidly increasing.
In 2020, many shop owners who joined RELX made good profits due to less competition, but this also led to a frenzy of opening stores. From the beginning of 2020, there was a wave of store openings, and now, just a year later, physical vape shops are everywhere, with RELX stores being the most numerous.
The reality is that most of the stores located in good positions with relatively low rents and longer operating times are quite profitable. However, many RELX stores that opened at the end of 2020 and early 2021 no longer have the advantages of timing, location, and human resources. Most of these newly opened stores face very low sales, with fewer than 5 customers entering the store daily, which is quite common. Many new store owners believe that as long as they wait long enough for customer accumulation, business will improve, which is a naive hope. Little do they know that major brands are intensifying their exploitation of the market, constantly encouraging everyone to join.
For RELX, almost all RELX stores, based solely on customer foot traffic, see fewer than 10 customers a day for new stores, which suggests daily sales of less than 1,000 yuan. This is the situation for most new stores, not to mention other brand specialty stores, which are mostly operating at a loss (excluding stores that sell through other channels like WeChat).
Therefore, entering the physical vape shop market now, unless there is a large customer base or channels, most are just being exploited.
I hope this information is helpful to everyone.
