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28

2022

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Members-only Supermarkets Becoming Popular in China amid Consumption Slowdown

Source:

Global Times

Domestic and overseas supermarket brands are speeding up the opening of members-only supermarkets in China following the business success of leading members-only supermarkets like Sam's Club and Costco, undeterred by the ongoing coronavirus situation which has cast a shadow on China's consumption sector.

 

Domestic and overseas supermarket brands are speeding up the opening of members-only supermarkets in China following the business success of leading members-only supermarkets like Sam's Club and Costco, undeterred by the ongoing coronavirus situation which has cast a shadow on China's consumption sector.

 

Alibaba's supermarket chain Hema Fresh has announced it will open its eighth Hema X members-only outlet on Friday.

 

Located in Shanghai and with a size of more than 16,000 square meters, the new outlet offers many imported or exclusive goods, like bluefin tuna imported from Japan, oysters shipped from France or snacks for the World Cup, the Global Times observed on site.

 

The outlet also has several experience zones where customers can play video games.

 

Hema Fresh is the first Chinese supermarket brand that entered the members-only supermarket sector in China. The concept is still new to many Chinese people but is maturing fast following the opening of several famous US members-only supermarkets like Costco and Sam's Club, which have won the hearts of many middle-class clients.

 

Hema, which has developed into one of China's most well-known grocery brands in a relatively short time, has shown a very ambitious attitude in tapping this business field.

 

Sun Shuo, general manager of Hema X members-only outlets, disclosed on Thursday that Hema Fresh will continue to open such supermarkets in first-tier cities next year, particularly in Shanghai and Beijing, and will also move to second-tier cities starting from the end of 2023.

 

He also noted that Hema Fresh plans to open its first self-constructed membership supermarket next October.

 

According to a report by New Consumer Daily, hypermarket chain RT-Mart is also planning to open a members-only supermarket in Yangzhou, East China's Jiangsu Province next April.

 

Metro supermarket also opened its first membership supermarket store in Shanghai recently, while Costco is expected to open its second one in Shanghai next year.

 

The rise of the members-only supermarket is considered by many market observers as a way for traditional supermarket brands to pursue transformation, amid the impact of the coronavirus, intensifying competition in the retail industry and the shift in consumption modes from brick-and-mortar stores to online shopping.

 

"This is a very wise tactic, as this strategy not only allows supermarkets to adopt a business shift that combines online and offline shopping; it also lets them give full play to their comparative advantages in physical stores," Chen Jia, an independent international strategy analyst, told the Global Times on Thursday.

 

Although the shift toward membership supermarkets looks like something of a gamble considering the challenges facing China's consumption, businesses are still confident that the sector has great market potential.

 

"From our perspective, the market [for members-only supermarkets] is big enough. And though the general market environment is not very good now, we as a part of it still see a lot of room for future growth," Sun said.

 

He also noted that although China's consumption sector is undergoing challenges right now, people are still increasing their spending on certain categories of products like beef, and therefore the supermarket will also adjust its inventory based on changes in consumer demand.