(Yicai) Nov. 17 -- China’s Pet&Fresh will close all of its offline stores by mid-December due to mounting operational pressure while maintaining its online business, Hou Yi, founder of the pet retail brand, said to Yicai today.

The shutdown marks a sharp reversal from Hou’s initial expansion plan for the company, which opened its first store in February and aimed to build a network of 100 Shanghai outlets this year. The move comes despite robust investor interest, including a USD25 million angel round in May that set a recent industry record. Hou is also the creator of Freshippo, Alibaba Group Holding’s grocery arm.

Pet&Fresh has over 10 stores in Shanghai, according to information on the Dianping platform, but seven are now marked as either “temporarily closed” or “permanently closed.” Store employees cited weak foot traffic and slow business, noting that many pet owners prefer to purchase supplies online.

However, people familiar with the company said overall operations remain normal. “We will continue our online business and are considering new developments for the future,” Hou, who stepped down as chief executive of Freshippo last year, told Yicai. He previously estimated that each Pet&Fresh store required about CNY500,000 (USD70,350) in investment, with a payback period of 12 to 18 months.

China’s pet economy surpassed CNY300 billion (USD42.2 billion) in 2024, with urban dog and cat consumption rising 7.5 percent, according to data from the Pet Industry Branch of the China Animal Agriculture Association. Industry insiders believe the sector has significant potential, though business formats and models still require careful exploration.

Editor: Emmi Laine