Since the rise of retail e-commerce, more and more Chinese consumers are having online retailers deliver their groceries and other daily necessities to their homes. As a result of this new competition, traditional supermarkets have been losing their edge in both price and product range, and have begun to fade from the public eye.  

Counter to this trend of abandoning brick-and-mortar supermarkets is a growing group of Chinese who, driven either by novelty or the pursuit of a bargain, prefer to drive to membership-only wholesalers on weekends to stock up on items for the coming week. 

In recent years, these wholesalers have been multiplying across China, despite the strain COVID-19 placed on in-person retail. As is the case in their US counterparts, these chains offer access to an assortment of well-chosen products in larger packages at wholesale prices in exchange for an annual membership fee, usually a few hundred yuan (a few tens of dollars). 

According to data analysis provider iiMedia Research, the value of the membership-only wholesale industry reached 30.4 billion yuan ($4.41 billion) in 2021, a 12.3-percent increase year on year. It is expected to hit 40 billion yuan ($5.80 billion) in 2025.   

More than shopping  

Cui Kun is a frequent shopper at Sam’s Club, the high-end, members-only outlet of US-based retailer Walmart. “It’s not a single person-friendly place,” the 30-year-old who works at an Internet company in Beijing joked. 

Cui said he used to shop at the store with colleagues who are members to avoid paying the annual membership fee of 260 yuan ($37.6) himself, as visitors in small groups need only one membership card to gain access. Unlike his married colleagues, who made a lot of purchases for their families, Cui only bought an imported cut of black wagyu, known as snowflake steak, and sometimes shared some bulk-packaged cakes with his colleagues. In general, most of the wholesale packages are too big for a single person to get through. 

“Steak from Sam’s Club is highly cost-effective,” Cui said. “More importantly, I could finish them (normally three pieces in a package) by myself within a week.” As a meat lover, he compared meat quality and price from many different sources and reached a conclusion - “You don’t need to think twice about buying fresh meat from Sam’s Club.” 

Cui did not see the 20-minute drive to Sam’s Club to buy three pieces of steak as a waste of time because, in his opinion, the outlet was a place for relaxation more than buying groceries. “I have liked hanging around in supermarkets on weekends since childhood. Sam’s Club, which is more spacious and has a wider variety of goods rarely seen in regular supermarkets, including food, home appliances and trending outdoor equipment, offered me a new experience,” he said. 

After meeting his girlfriend in 2021, Cui has forged a closer bond with Sam’s Club. He is now a member and often buys large-sized instant hotpots and snacks. Sometimes they also meet up with friends at the wholesaler before going on camping or hiking trips. 

Strolling around members-only wholesalers is becoming a lifestyle for more Chinese consumers like Cui. They are becoming new destinations for couples to date, for parents to take a fun walk with their children and for families to discover an ocean of new products. 

Entering the Chinese mainland market in 1996, Sam’s Club did not become well known until 2016, when there were still only 15 stores in total. Since then, the number has more than doubled and, in 2022 alone, it opened six new stores. To date, Sam’s Club operates 42 stores in 25 cities on the Chinese mainland, with more than 4 million members, according to Walmart. 

In contrast, Walmart, French retailer Carrefour and Chinese brand Yonghui Superstores have been closing their stores in recent years. In 2021, Walmart alone shut down 30 of its superstores. 

“The essence of the members-only business model lies in locking in a group of target consumers,” Li Xinlong, deputy secretary general of the Brand Committee of Van Sound Club, a business salon organiser, told Beijing Review magazine. “Together with dynamic supply chain management, the products have higher cost performance, which constitutes the basis for the model’s booming growth.” 

“For some popular products, membership-only wholesale operators will pay full price to suppliers and sell them with only a low profit margin in order to attract more customers,” Li said. “This has overturned the traditional business model of supermarkets.” 

Carving the cake  

New entrants to the market are increasing. Major players in China include the industry-leading US chain Costco, Sam’s Club, German brand Metro-Ag, and Hema X Member Store, a new retail outlet of Hema Fresh, affiliated with Chinese e-commerce giant Alibaba. Traditional supermarkets, including Carrefour and Yonghui Superstores, are also transforming their business models. 

In 2021, Zhang Xin paid 99 yuan ($14) for a membership of Fudi Membership Store, a local bulk retailer established by an agricultural company. The company established its first wholesale store in Beijing’s Chaoyang District that year and offered a discounted membership fee, which is usually 365 yuan ($53) per year, to its first customers during its opening season. 

The 33-year-old white-collar worker was already a member of Sam’s Club, but he was curious about the new local store, which was walking distance from his house. 

“It stocks more local brands than Sam’s Club and the vegetables there are cheaper,” said Zhang. He added he prefers to drive to Sam’s Club on weekends to purchase dairy products, fresh meat and desserts.  

Last year, Zhang did not renew his Fudi membership. “The vegetables and seafood are indeed fresh and cheap but they come in bulk packages and sometimes I don’t need that much, so I prefer to shop online from Meituan Maicai (a grocery shopping app).” But he has always extended his Sam’s Club membership. 

“Domestic brands like Fudi and Hema X are in their fledgling stages and there is still a gap between them and their foreign-owned counterparts,” Li said.  

Even though the emerging industry has gained increasing traction in the country, consumer debate on, for example, whether the membership fee is worth it remains a challenge for all the brands competing for a share of the Chinese market. In response, some companies, such as Yonghui Superstores, are now attempting to develop a new model - operating members-only stores without actually charging a membership fee. 

“All the market players still have a long way to go,” Li said.