All Closed! HeyTea Gives Up...

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HeyTea's Subbrand HeyXiaoCha Closes All Stores After 2.5 Years

According to media reports, the last HeyXiaoCha store, located in Guangzhou City Investment Building, has closed, merely two and a half years after its opening. Currently, HeyXiaoCha's mini-program is no longer searchable, and the last post on its official WeChat account was published on July 20, 2022. As of now, HeyTea has not yet issued an official response regarding this matter.

HeyXiaoCha was a subbrand under HeyTea, focusing on the Pearl River Delta market. It opened 22 stores across six major cities: Shenzhen, Guangzhou, Dongguan, Zhongshan, Foshan, and Huizhou. HeyXiaoCha stores were relatively small, with only approximately 3-5 square meters of space for customers to order and pick up their items. The locations were primarily chosen in bustling commercial areas like Huaqiangbei, which emphasized affordable consumption. The brand focused on immediate purchase-and-go models and delivery services, primarily offering online ordering with in-store pickup or delivery options.

In April 2020, HeyXiaoCha opened its first store in Huaqiang Plaza, Huaqiang North Road, Futian District, Shenzhen, Guangdong Province. Single products were priced between 8-16 yuan, equivalent to half of HeyTea's prices at that time. In the months following the opening of its first store, it gradually expanded to more cities in Guangdong. The product categories included five main types: fresh milk tea, fruit tea, coffee, ice cream, and pure tea. There were 4 signature products in the "Grand Slam" series, containing soy milk, fruits, and other ingredients...

According to the "HeyXiaoCha First Anniversary Report" released in 2021, HeyXiaoCha sold over 2.8 million drinks in its first year of operation. At its peak, HeyXiaoCha had more than twenty stores. It is reported that until the closure, most HeyXiaoCha stores remained profitable.

Earlier this year, HeyTea made headlines on Weibo with "HeyTea bids farewell to 30 yuan prices" and announced price reductions for some products. Among them, pure tea prices were reduced by 3-5 yuan, 5 fruit teas were reduced by 2-3 yuan, and cheese tea was reduced by 1 yuan. On February 24, HeyTea further announced that it would no longer launch drinks above 29 yuan this year and promised not to increase the prices of existing products. Subsequently, it announced that all new products would be priced no higher than 20 yuan.

The product standards of HeyTea and HeyXiaoCha have not differed significantly. HeyTea uses "real fruit, real tea, real milk," while HeyXiaoCha also insisted on "authentic ingredients," making it difficult to further reduce costs. Facing the price adjustments driven by the main brand, HeyXiaoCha followed suit with price reductions and promised that drinks launched this year would not exceed 15 yuan. Both brands gradually became similar in terms of product positioning and pricing.

It is understood that behind HeyTea's price reduction, similar to HeyXiaoCha's approach, was the desire to allow more consumers to enjoy high-quality, affordable products, customize toppings according to their preferences, choose sizes, and enjoy different prices. The development trend of new tea drinks is becoming increasingly fierce. HeyTea's price reduction in this context may be an effort to capture a broader consumer base and achieve the goal of small profits but quick turnover.

According to reports, the younger HeyXiaoCha was also more popular among equally young consumer groups. Compared to HeyTea's consumer group where 49.2% were post-95s and post-00s, HeyXiaoCha's consumer proportion in the same age group reached 61%. HeyXiaoCha's post-90s consumers accounted for approximately 22%, post-95s consumers about 39%, and post-00s consumers about 22%, with the overall consumer group having significant potential in society.

When the main brand and subbrand attack the same market in the same way, HeyXiaoCha may have completed its mission and thus retired successfully. It's also possible that HeyTea's price reduction strategy directly conflicted with HeyXiaoCha's price range, becoming one of the reasons for HeyXiaoCha's store closures.

Image source: Internet

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