Members-only warehouse stores thriving in China

Members-only warehouse stores have been mushrooming across China in recent years, as a slew of established players have accelerated their expansion and new players have emerged.

Photo shows a members-only outlet of Hema Fresh, Alibaba’s fresh food chain, in east China’s Shanghai. (Xinhua/Liu Ying)

Sam’s Club, a membership warehouse club of US retail giant Walmart, is set to open its largest flagship outlet in Shanghai. Rooted in China for several years, Sam’s Club is looking to have 40 to 45 clubs in operation or under construction by the end of 2022.

Another US retail giant, Costco, opened its first brick-and-mortar membership warehouse store in Shanghai in 2019. After the success of its first store in China, Costco confirmed its plans to open up another store in the metropolis and two more in the nearby cities of Suzhou and Hangzhou.

Other retail enterprises, such as Alibaba’s fresh food chain Hema Fresh and Germany-based Metro, have opened their own membership-only warehouse stores in order to capture a bigger slice of the emerging segment. Besides, new players, including the Beijing-based Hualian supermarket and French supermarket giant Carrefour, have announced plans to open stores as well.

Some membership warehouse stores have reaped huge rewards so far. For example, Hema Fresh’s first X members-only outlet, which opened last year in Shanghai, became profitable in only two months, with each customer spending nearly 1,000 yuan ($154.4) on average per visit three months after its opening. Benchmarking that success, the retailer plans to expand further to reach 10 new membership stores in the country this year.

Large-sized membership warehouse stores have been gaining popularity among Chinese consumers due to their distinctive advantages. Most of them have developed an unmistakable presence in suburbs that offer lower land prices, said Zhao Ping, vice president of the Academy of China Council for the Promotion of International Trade, noting that they offer a more limited range of products with larger packaged volumes and competitive prices compared with traditional supermarkets.

Photo shows a membership warehouse store in Beijing. (People's Daily Overseas Edition/Li Jie)

According to Zhao, these stores’ in-house brands and cost-effective products are trusted by customers. Selected commodities, imported goods and exclusive high-quality products provide better shopping experiences and make these stores attractive to bargain hunters.

Zhao added that increasing vehicle ownership in China makes it more convenient for customers to shop in these warehouse outlets.

Furthermore, increasingly more customers are willing to pay for membership fees in recent years, which creates a sound environment for the expansion of warehouse clubs in the country, Zhao said.

Industry insiders pointed out that warehouse clubs need to continue to provide excellent services and top-quality goods for their members and guarantee their supply chains to encourage them to renew their memberships.