In 2004, the total output value of China’s hardware industry (including small hardware, construction hardware, and daily hardware) was approximately 250 billion yuan. At that time, few people in the country purchased screws online.
A hardware store on a neighborhood corner took root around that time.
However, after experiencing a glorious period and struggling to survive for several years, this year the store finally posted a “transfer” notice.
This is not an isolated case.
Around May 2026, similar farewell scenes were frequently staged in urban and rural old streets and building materials markets.
The words “transfer” and “clearance disposal” on the door panel seem to be a collective sign that the channel system is coming to an end.
What has supported this hardware store for 22 years is a unique set of channel logic.
The profit structure of hardware stores does not rely on retail sales. Retail investors buy screws, decorators replace water pipe joints and other scattered orders, just to maintain the appearance and popularity, and are not the main source of profit.
According to common reports from industry practitioners, what really supports a hardware store is the project order, that is, it undertakes bulk purchases from nearby construction sites, properties, and small construction teams, and its profit ratio far exceeds that of retail sales.
This logic has two important premises.
The first premise is information asymmetry.
When a project site urgently needs a batch of expansion bolts of special specifications, the project manager often does not go to 1688 to search for the lowest price in the country. Instead, he chooses to ride a 5-minute ride to a familiar nearby hardware store owner to pick up the goods.
In this case, price is not the primary consideration, but getting the goods in time is the key.
The second premise is demand growth.
From 2010 to 2016, major infrastructure construction and the real estate market expanded simultaneously, and the demand for hardware and building materials for newly started real estate projects, high-speed railways, urban subways and other projects continued to increase.
Hardware stores only need to stay at the exit of demand, and orders will come naturally.
When these two conditions are met at the same time, this business can be stable and profitable.
However, three knives cut off this logic from three directions.
The first knife comes from real estate.
In 2024, the area of new housing construction nationwide will decrease by 23.0% year-on-year, the area of completion will decrease by 27.7%, and investment in real estate development will decrease by 10.6%, and this downward trend has continued for many years.
New construction fell, the number of construction sites dropped, and work orders disappeared.
For hardware stores, the lack of work orders does not just reduce a part of their income, but cuts off their lifeline. The profits from retail retail cannot fill this gap at all.
The second knife comes from e-commerce, which breaks the situation of information asymmetry.
Nowadays, just open Pinduoduo and within 3 seconds you can see the lowest price in the country for an M8 expansion screw.
Renovation contractors can compare prices on their phones, eliminating the need to go to the corner hardware store.
According to predictions from industry organizations, the online penetration rate of standard parts such as screws, light bulbs, hinges, etc. will exceed 60% in 2025.
After price transparency, the advantages that hardware stores have established by relying on geographical location and acquaintance relationships have sharply narrowed, and e-commerce has filled this moat with price visibility.
The third knife comes from the procurement platform, which intercepts institutional customers.
In recent years, the procurement logic of state-owned enterprises and central enterprises has undergone fundamental changes.
According to the requirements of the “State-owned Enterprise Procurement Credit Information Disclosure Standards”, state-owned enterprises and central enterprises must go to the platform for procurement, and suppliers must complete information filing and qualification submission.
Due to the lack of standardized supplier qualification files and complete invoicing capabilities, most mom-and-pop hardware stores find it difficult to meet this set of procurement rules, thus losing these customers with high orders.
These customers are more likely to choose MRO industrial product platforms such as Zhenkunxing and JD Industrial Products because they meet the compliance requirements for platform-based procurement.
The logic of these three knives is not simply superposition, but mutual reinforcement.
The shrinkage of real estate has reduced the total market volume, e-commerce has eliminated information barriers, and the procurement platform has intercepted the remaining high-value customers.
The simultaneous efforts in three directions have left little stock space for traditional hardware retail.
To survive these three pressures, what traditional hardware stores need is not more diligence, but a completely different business model.
Most of the surviving hardware stores have gone to two extremes: either they are deeply involved in a certain professional category, such as industrial fasteners, high-end bathroom hardware, special tools, etc., and rely on professionalism and customer stickiness to maintain a premium; or they are transformed into service-oriented stores, undertaking maintenance, installation, parts replicas and other services that are difficult to replace offline.
These two paths no longer rely on stocking volume and price, but on knowledge density and response speed.
Twenty years ago, the street hardware store was a stable small business.
Twenty years later, according to industry statistics, the market size of the small hardware industry is still growing, reaching approximately 2,542.7 billion yuan in 2023.
But part of the growth no longer flows through street retail shelves, but to e-commerce platforms, MRO industrial product supermarkets and one-stop building materials chains.
The mom-and-pop store model that relies solely on retail sales has found it difficult to find its place in this structure.
