At the beginning of the new year, competition from member stores continues. On January 12th, Costco's Kaishi Ke membership store (hereinafter referred to as "Kaishi Ke") will officially open in Longhua, Shenzhen. Meanwhile, Sam has recently launched a nationwide free shipping service.
In recent years, the weakness of the supermarket industry has been evident, with losses and bankruptcies constantly occurring. In the context of the overall decline of the retail industry, many supermarket enterprises have begun to seek ways out, and in this regard, member stores have become the target of enterprise pursuit. While Wal Mart China has been reducing its retail stores in recent years, it has significantly increased its investment in member stores. Last year, RT Mart parent company Gaoxin Retail also began to layout member stores.
However, as an industry with high entry barriers, membership stores are not easy for businesses to operate well. No matter Carrefour or Yonghui Supermarket, they did not shine in the membership store field. Recently, Hema's implementation of discount reform has also made the development prospects of member stores uncertain.
Opening a store and free shipping
The popularity of membership stores in China continues to rise. After settling in Hangzhou, Shanghai, Suzhou and Ningbo, the market opener once again entered South China. Its Shenzhen store opened on January 12 is the first offline store of the market opener in South China, which is also its sixth store in Chinese Mainland. On January 11th, a reporter from Huaxia Times learned from the opening customers that they still have a Nanjing store waiting to open.
Not only the opening customers, Wal Mart's Sam's Club also recently launched related promotional activities. On January 9, the reporter of the Huaxia Times learned from Wal Mart China that Sam currently launched a national package mail service with a time limit of 299 yuan or more. If it is less than 299 yuan, a delivery fee will be charged according to the weight. Its national distribution service covers nearly 2000 commodities, mainly dry goods, personal care, home cleaning, mother and baby, and some home appliance technology products.
Regarding this, new retail expert Bao Yuezhong also analyzed with our reporter that Sam's nationwide free shipping policy is a very good attempt, and member stores also need to establish omnichannel channels because this is the current demand of consumers. Member stores not only need to meet the needs of customers to purchase in store, but also need to meet the needs of members to come home.
Compared to the expansion of opening customers and Sam's Club stores, Hema, which has been making great strides in the membership store field in the past two years, has a somewhat ambiguous attitude towards membership stores. The paid members of Hema can be used for both fresh stores and X member stores, but the paid members that were previously available directly on the Hema Fresh app are currently suspended. According to insiders and media sources at Hema, starting from December 13th, the Hema app will adjust its membership policy and stop opening new paid members.
Our reporter found that as of January 11th, new paid members cannot be opened on the Hema app, and members that have not yet expired cannot be renewed. If you want to become a member of Hema X membership store, you can directly go to the offline store and find staff to open it.
In China, the membership store is not a new thing. As early as 1996, Wal Mart opened the first Wal Mart shopping mall and Sam's Club in Shenzhen, China. However, for a long time afterwards, the membership store did not get much development. Until recent years, the membership store world began to rise and rise.
Many supermarkets are rushing to go
Affected by internet e-commerce, the survival of offline supermarkets has become increasingly difficult in recent years. Many enterprises have taken warehouse membership stores as an opportunity for supermarket transformation and upgrading. Both local and foreign supermarket enterprises are competing to layout the new business model of warehouse membership stores.
The first is the foreign-funded enterprises led by Wal Mart and the market opener. In recent years, with the weakness of supermarket formats, Wal Mart China has continuously reduced its retail supermarket formats. In contrast, the wholesale formats, including warehouse membership stores, have also continued to rise. According to the annual report, the number of Wal Mart's retail stores in China was 412, 403, 361 and 322, and the number of wholesale stores was 26, 31, 36 and 43, respectively, during the period from 2020 to 2023 as of January 31.
In 2023, Wal Mart again increased its investment in membership stores. On December 28, 2023, the 6th Sam's Club in Shanghai opened in Jiading. On January 10, our reporter learned from Wal Mart that as of January 10, 2014, Sam had opened 47 stores in China, four more than the 43 stores on January 31, 2023, and planned to open 6 to 7 new stores in the Chinese market every year in the future.
Compared to Sam, the opening customers entered China later. The company is the largest chain membership warehouse and storage store in the United States. It was founded in 1976 and only entered China in 2019. It opened its first store in Minhang, Shanghai, and its second store in Suzhou in 2021. In 2023, it accelerated its opening speed and opened three stores in one go. As soon as 2024, its sixth store landed in Shenzhen.
Local supermarkets such as Gaoxin Retail and Hema are also expanding their membership stores. On April 28, 2023, Gaoxin Retail's first M membership store landed in Yangzhou, Jiangsu. This membership store was transformed from RT Mart's Yangzhou Jiangyang store. On December 30 of the same year, the second M membership store launched a trial operation in Changzhou. In October 2020, Hema's first warehouse style membership store, Hema X Membership Store, opened in Pudong, Shanghai. According to its official website, it currently has 10 X membership stores.
Membership stores are not a panacea
However, it is not so easy to cross membership stores.
Previously, in May 2021, Yonghui Supermarket experimented with the water storage membership store model, and as of the end of 2021, it had opened a total of 53 stores. But the warehouse membership store did not shine in the hands of Yonghui Supermarket. In just over two years, its warehouse membership store underwent adjustments. At the 2023 semi annual performance meeting in August 2023, the company replied that there are currently 44 warehousing member stores. At the same time, apart from the 2021 financial report, Yonghui Supermarket has not updated the relevant progress of its warehouse membership stores in subsequent financial reports.
Similarly, the process of Carrefour China Club is not smooth. In April 2023, Carrefour China closed two member stores in succession, the Chengshan Road store in Shanghai and the Zhongshan Park store in Shanghai. Lin Xiaohai, Executive Director and CEO of Gaoxin Retail, publicly stated in April 2023 that M Club has just entered the membership system track and will focus on learning first. With a reverence for its members, it will strive to provide good membership value and services. As a long-term investment in the future, it does not plan to make a profit within three years.
With the rise of discount formats, discount stores have become a new target for many supermarkets to transform. On October 13, 2023, Hema officially launched a discount transformation, which aims to lower product prices through comprehensive optimization of the supply chain, sell good products at a lower price, and create classic products through strict selection, education, and sales. At that time, Hema CEO Hou Yi stated that in the future, Hema would achieve a "753" price system, where KA products would be 70% off the market price, self owned brands would be 50% off the market price, and expired products would be 30% off the market price.
Regarding the de membership of Hema Fresh, insiders of Hema believe that the ultimate goal of Hema's de membership is to ensure a "dual line price reduction" for Hema Fresh stores. The core benefit of paying members is an 88% discount on member days, which corresponds to the platform selling 12% of its gross profit. The comprehensive discount implemented by Hema is "about 20% off, and there are still some products that can go up to 70% off.", Hema's sales profit margin has been compressed even more.
In addition to Hema, Yonghui Supermarket has also turned its attention to discount stores. In October 2023, Yonghui Supermarket publicly announced that it would add "genuine discount stores" to its nationwide stores and synchronize its online app. In November of the same year, the discount store "Haohuixing Haohuo Discount Store" of Jiajiayue Supermarket opened two consecutive stores in Yantai, Shandong.
Regarding the future development prospects of member stores, Bao Yuezhong analyzed to our reporter that, "In recent years, with the entry of major supermarkets into the membership store field and the improvement of China's consumer environment, membership stores have become an important form of current development. In the future, they will become one of the business forms in the retail, especially in the supermarket field. However, the development will not be too large. In the comprehensive development pattern of supermarkets, discount stores, and convenience stores, membership stores will not account for more than 10%."