Meituan increases investment in the 7 trillion yuan service retail market

Author | Wang Xiaojuan

Editor | Huang Yu

"By 2030, the online service retail penetration rate will increase to 25%, giving birth to 300 brands with a thousand stores."

On June 26, the 2025 Service Retail Industry Conference was held in Shanghai. Wang Puzhong, CEO of Meituan's core local business, directly predicted that the online transformation of the demand side has been completed, and in the next five years, service retail will accelerate its online transformation. The aforementioned data is his direct prediction of the online transformation of service retail.

In recent days, major companies have started a fierce competition in instant retail. As a defender, Meituan has also adjusted its strategy, rapidly increasing its investment in instant retail, planning to expand its Xiaoxiang Supermarket to all first- and second-tier cities. While delivering more relatively standardized products to a wide range of consumers at a speed of "within 30 minutes," Meituan has also begun to increase its focus on the non-standard product market of service retail, accelerating the online transformation of the trillion-yuan service retail sector, thereby sharing in the profits.

Wang Puzhong further introduced that Meituan's current focus in service retail is on a wide range of service retail industries beyond hospitality, catering, and healthcare. The scale of the service retail industry will reach 7 trillion yuan by 2024, with a compound annual growth rate of 8% from 2021 to 2024; however, the online scale of the industry is only 0.64 trillion yuan, with an online penetration rate of only 9%, but the compound annual growth rate from 2021 to 2024 is as high as 38%, indicating significant growth potential.

The vast market prospects provide Meituan with sufficient motivation to invest in the online transformation of the service retail industry. Additionally, Meituan's recent investments in AI can also delegate many services to AI, reducing the need for human resources.

At this press conference, Meituan officially launched its first AI digital employee for service retail merchants and will equip each store with a professional AI business assistant.

Currently, the business assistant team includes customer service specialists, scheduling specialists, business store managers, and operation specialists, covering the entire online operation chain for merchants on the platform, providing services such as business diagnostics, growth opportunity identification, operational support, intelligent scheduling, and customer service reception.

For example, as for customer service specialists, they have already been deployed in over 20 industries, including education and training, home furnishings, weddings, and postpartum services. Data shows that 50,000 education and training stores have used AI customer service specialists during nighttime hours, with a nighttime lead retention rate increasing by more than 40%. For instance, in the case of Gujia Home Furnishings, over 2,000 online Meituan stores have connected to AI customer service specialists around the clock, with a lead retention rate increasing by more than 20%.

Lin Xiaowei, product head of Meituan's service retail division, stated, "In the service retail industry, many long-tail small store merchants have strong offline service capabilities, but due to a lack of operational knowledge, they miss out on a large number of online business opportunities. Meituan hopes to leverage the platform's data accumulation and cutting-edge practices in AI to allow more ecosystem partners to share in the technological dividends, helping merchants reduce the difficulty of online operations, break through growth bottlenecks, and thus free up more time to provide better customer service, promoting high-quality development in the service retail market." At the same time, the growth of the service retail industry market size is also expected to create more jobs for society. According to data from the National Bureau of Statistics, the average annual increase in employment in the service industry over the past decade has been 7.41 million.

According to calculations by Meituan, in 2024, the number of practitioners in typical service retail industries will include 7 million artisans in the massage and foot therapy industry, 4 million hairstylists, and 2.4 million artisans in nail art and eyelash extensions. Wang Puzhong stated that Meituan will accelerate the construction of online profiles for artisans, providing a more convenient management mechanism for artisans, allowing more skilled artisans to turn into good businesses.

Previously, despite the huge market, the online penetration rate of this industry has always been low. Compared to product retail, the onlineization of non-standard service retail is more challenging, as it involves appointments, verifications, evaluations, and service standardization, requiring platforms and merchants to work together to achieve higher efficiency.

At the same time, compared to the chaotic competition in product instant retail, Meituan has accumulated years of experience in service retail, and now increasing its investment is also beneficial for forming a competitive moat earlier. Data shows that since 2024, Meituan has continuously expanded into over 200 service retail industries, cooperating with 6.3 million merchants, with order volume growing by 77% year-on-year.

For many years, the onlineization of service retail has primarily taken place in large cities. However, in many small and medium-sized cities, the service industry is a fundamental sector, especially in some characteristic tourist cities, where the service retail industry, as a form of experience economy, has become a representative industry.

For example, in Jingdezhen, Jiangxi, the number of Meituan users experiencing pottery-making has seen a compound annual growth rate of 350%, directly leading to a more than fivefold increase in local pottery stores; in Dali, Yunnan, "Cangshan Hiking Home" launched unique group purchases such as "stream hiking + tie-dye" and "tea picking and making," with Meituan's collection rate exceeding 98% compared to its peers...

In this consumer behavior, users have mature online experience, but the supply side has been insufficient for a long time.

In the past few years, Meituan's practice has proven that after service retail merchants in lower-tier cities connect to online platforms, they contribute significantly to performance. Data shows that since 2022, the transaction volume of Meituan's service retail in lower-tier cities has seen a compound annual growth rate of over 90%, with the annual number of transaction users growing by over 60%.

It is not difficult to understand Meituan's increased investment in service retail. As food delivery becomes more competitive, Meituan has already seen the ceiling; the growth of delivery orders has visibly slowed down. Instant retail, while booming, primarily delivers standardized products. In contrast, the numerous beauty salons, pet shops, and training classes on the streets are the real untapped hard nuts to crack—the market is several times larger than food delivery, but the online penetration rate is only a fraction of that of food delivery, presenting significant opportunities.

In summary, although the 7 trillion market is enormous, it is a "fragmented market." For Meituan to transform it into its growth blue ocean, it will require more time for meticulous cultivation. There are issues that can be solved through AI, such as customer service, and there are problems that must be gradually resolved by people, which also means that Meituan's long march in the service retail industry has just begun.

However, at this service retail industry conference, Wang Puzhong introduced that Meituan's core local business has about 80,000 employees. At the same time, as Meituan expands into multiple businesses, the reputation of its ground promotion team has also been heard in the industry, which increases Meituan's chances of success Perhaps with Meituan's new move, internet players serving the retail industry will also start a new story