Membership-only wholesale stores emerge in China

Costco’s market entry in 2019 drew the attention of local retailers.

Membership-only wholesale stores are on the rise amongst China’s retail companies, with Yonghui, Suning-Carrefour and fudi riding the wave with a local twist following Alibaba’s example, IGD reported.

Yonghui has upgraded one of its Bravo YH supermarkets in Fuzhou to a wholesale store. With an area of 11,000 sqm, the warehouse-style industrial shelves display goods in bulk packages. In-store communication is centred around everyday-low-price.

The retailer has set up unique services, such as staff riding electronic balance bikes inside the store whilst assisting customers, answering queries and providing support. It also incorporated door-to-door home delivery and shuttle buses to provide customer transportation.

Meanwhile, local retailer fudi opened a membership store in Chaoyang District, Beijing, in a four-story building. On the first floor, the sales area is about 6,800 sqm, divided into several zones such as fruit and vegetable, seafood, ready-to-eat and snacks etc.

The store carries over 20,000 SKUs, with 70% composed of directly-sourced fresh products. Its private label goods account for 25% of the range, and the goods are sold in large packages and full boxes, suitable for family purchases.

The annual membership fee starts at $57.11 (CNY365), and member benefits include free parking, free car wash, birthday gifts and other value-added services. Its WeChat mini program also offers door-to-door delivery services.

Yonghui has expressed plans to open four more wholesale stores in the summer, two in Fuzhou and two in Chongqing. Two more fudi stores will also be open in 2021, and the retailer plans to expand the store network to 20 over the next three years.

Suning-Carrefour CEO Tian Rui also announced that Carrefour will open a membership store within 2021. Unlike Sam’s Club and Costco, Carrefour’s membership store will be “physically close to consumers”.

It will not necessarily be a warehouse style. The planned range is positioned around the lifestyle of local residents, consisting of 5,000 to 6,000 SKUs. The store envisages two target groups, namely family shoppers and virtual family groups that are made of friends.

Its home delivery range will not cover the whole city, but to serve consumers within 5-10 kilometers radius.

IGD noted that Sam’s Club introduced membership-only wholesale stores to China, but it is Costco’s high-profile market entry in 2019 that ultimatly drew the attention of local retailers who are starting to test the waters.

In particular, Alibaba is planning to open 10 more Freshippo X Stores in 2021. The positioning and retail model of wholesale stores are in line with China's family consumption concept, a format likely to be accepted by more customers in the country, IGD said.

At the same time, Sam’s Club is speeding up the new store openings, aiming to have 40 to 45 stores by 2022. Costco has ongoing store planning in multiple locations, including Nanjing, Ningbo, Guangzhou, Shenzhen, Hangzhou, Suzhou and Shanghai.