Warehouse clubs in China mainly sell high-end imported daily necessities, such as fresh fruit and vegetables, to middle class consumers, which differs from the cheap bulk purchasing models in most developed countries. With the growing demand for higher-quality products from the affluent population and the rapidly expanding middle class, and the desire for a family-oriented in-store shopping experience, warehouse clubs enjoyed strong retail current value growth pre-pandemic.
In line with the rising mainstream consumption of good-quality products at affordable prices, warehouse clubs represents a new battlefield for retail companies. Local brand Freshippo, the retail unit of Alibaba Group, opened its first Freshippo X membership store in Shanghai in October 2020, and plans to reach 10 new membership stores.
Sam’s Club entered the Chinese market 25 years ago, and in 2021 it opened first flagship membership club in Shanghai, which is now the largest Sam’s Club in the world. The brand is also speeding up its opening of other outlets across China, expecting to have 40-45 stores nationwide either operational or under construction at the end of 2022.
Although most Sam’s Club outlets are currently large stores in the suburbs, where it is easier and less expensive to set up stores, it intends to open more stores in urban hotspots in first- and second-tier cities. Its owner Walmart China recognises members’ ever-increasing need for convenience and the need to position Sam’s Club stores closer to members living in downtown neighbourhoods.
Warehouse clubs are not about offering consumers cheaper prices. A pure value for money strategy would lead to a price war, and it is difficult for warehouse club retailers to compete on price with e-commerce retailers.
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Warehouse clubs are chained outlets that sell a wide variety of merchandise, typically situated in out-of-town locations, with a selling space of over 2,500 sq metres (and invariably over 4,000 sq metres in total size). Customers have to pay an annual membership fee in order to shop. The clubs are able to keep prices low due to the no-frills format of the stores and large volume SKUs. Example brands include Costco, Sam’s Club (Walmart), and Atacadão. Excludes sales attributable to membership fees and business-to-business sales. Also excludes cash & carry and warehouse outlets (which are typically oriented towards businesses, rather than consumers). Note: Local variants, such as atacarejos in Brazil, are included in this channel.See All of Our Definitions
This report originates from Passport, our Warehouse Clubs research and analysis database.
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