Here’s how this Henan retailer rivals Sam’s Club at its own game

Pang Dong Lai’s consumer-first model shows how small chains can stand up to global giants.

PwC Strategy& Partner Chik Aun Foo contrasted Walmart-owned Sam’s Club with Pang Dong Lai, a regional Chinese supermarket chain. The two retailers, though vastly different in scale, illustrate how brand-led strategies can succeed in today’s competitive market.

Sam’s Club is the heavyweight. In China, it is a US$5b business that grew 17% last year. Nearly half of its sales (47%) are online, and those digital channels contribute 60% of its profits. Its formula is to excite middle-class shoppers with exclusives, private labels, and imported goods that competitors cannot match.

Pang Dong Lai, by contrast, runs only 13 stores in Henan province. Its CEO insists that “the consumer group will determine what type of product I sell” and that “good category management will define the value of an enterprise.” The chain curates products strictly to match consumer needs, builds private labels, and offers distinctive services such as customised shopping carts and transparent margin disclosures.

Foo described Pang Dong Lai as operating more like a fast-moving consumer goods brand than a grocer, creating loyalty disproportionate to its size. He added that in China’s crowded retail sector, chasing “more, faster, better, and cheaper” leads to “a very tough, bloody fight.” Retailers that thrive, he said, will be those that, like Pang Dong Lai, turn consumer trust and brand identity into growth.

More insights from Chik Aun Foo’s session at the Retail Asia Summit:

"In China, Sam’s Club is doing really well. Walmart’s business in China is a US$5b business. It grew about 17% last year, I need to recheck the numbers. The global average is 5%, and they’re growing at 17%. Who grows at 17% in this kind of economy in China? How does it work?

A couple of facts: 47% of the business is online, and 60% of profits come from online. Why are they so successful? Because we know these people well. They decided to be very brand-led. They know their consumers. They extract everything about their consumer groups, they know exactly which segments — middle class, value-seeking bulk buyers, and those wanting exclusives. They tailor everything. You can see the products: exclusive, newly launched, private labels. They’re operating like an FMCG company with different divisions going after it.

If you look at their business model, they want to excite the middle class and differentiate from the store next door. Exclusive products are very important. They partner with brands and say: if you want to come to Sam’s, you need something the competitor doesn’t have. Sometimes it’s local, sometimes imported. They know what people want and they create these products. This has been a very successful strategy.

In the end, if you want to be a CPG brand and you want to win, you need to work with brand-led retailers and customise your products to their consumers.

Not many people know this company. How many people know Pang Dong Lai, this retailer in China? There’s one. Pang Dong Lai is very famous. They had 13 stores, maybe one or two more now. They chose to operate only in a second-tier city in Henan province. They didn’t want to operate in the capital. They are fixated on their brand, their quality, and their consumers.

The CEO is fixated: “The consumer group will determine what type of product I sell. Good category management will define the value of an enterprise.” These retailers talk like FMCG brands. They say: I need to know my consumer. I will give them the right products. If a product is not relevant, I won’t put it on the shelf. I focus on growing the category. If I want to sell coffee, I think about how to generate demand. I’m not just trying to sell one brand or another, I’m thinking of how to grow the category.

They have been extremely successful. They even do a bit of the Haidilao style — super service. People say: take my money. They have seven types of shopping carts: for families, for two kids, one kid, fast shopping. You thought IKEA was good? This is better. They have their own private label. They tell you their margins. They are upfront with consumers. They have a brand standard and a whole experience.

Snacks are very important in China. People like snacks. In the past, we ate muruku or kachang, but in China it has evolved into something massive. Small snack shops, Ling Shou Xiaodian, have a million types of snacks. They are organised by taste — sweet, salty, spicy. Everything is in small packs, all digital, making it easy to choose and buy. It is a brand experience and has been very successful, killing the stores that just put things on shelves.

Lifen, another snack retailer, developed its own products. They know their consumers, offering tastier, cheaper, better, healthier options. They market directly and now have a cult following. People say: I only buy this retailer’s brand.

The continuum is always channel, shopper, consumer. Retailers need to move from channel to shopper to consumer. Shoppers are value-seeking, premium-seeking, event-driven (Double 11, Black Friday). Consumers require segmentation and differentiation. Retailers must move further towards consumers.

Meanwhile, FMCG and CPG companies have been moving towards channels because of e-commerce and direct-to-consumer. Brands have had to manage channels, worry about performance marketing, and build first-party data. There is convergence, with learning from both sides.

What can both sides do? On the brand side: get under the skin of your retailer. The brand–retailer conversation used to be tiring, focused on trading terms. The good ones now say: let’s talk about growing categories. For example, if you want to grow coffee, I have a coffee brand. Let’s jointly market to grow the consumer base. I’ll put some of my marketing money into this.

On the retail side: sharpen your retail brand beyond value and convenience. Curate more and build CPG-type capabilities. Hire performance marketers, category managers, brand managers. Many retailers now organise by category teams, hiring talent from brands. They build full capabilities across innovation, brand marketing, shopper marketing, and digital.

You can’t do it all yourself. Partnerships are exploding in China. Maotai partnered with Luckin Coffee — unimaginable, but a massive success. Suntory has also partnered with retailers. These brand-led collaborations create new experiences consumers want.

That was a quick share on brand-led retail."