In the post-pandemic new normal, value-for-money consumption is increasingly evident across all consumer segments, especially among the middle class targeted by warehouse membership stores, who now prefer quality at affordable prices, fueling the boom of this retail format. After Costco's explosive debut in Shanghai in 2019, warehouse membership stores have become a hot track. Local retailers have followed suit, and since 2020, companies like Hema, Metro, Carrefour, and fudi have entered the fray. Sam's Club and Costco, under Walmart, are the most seasoned and powerful foreign brands on the field. Warehouse membership stores originated in Europe and the US. How can local players learn and eventually "wrestle" with international giants? Hou Yi, president of Hema Fresh, once famously said: "Copy, operate, surpass." Latecomers must learn the business model, master operations, build products, and finally achieve overtaking. Currently, after "copying homework" and "practicing," new local players have begun exploring warehouse membership stores with a "Chinese narrative." After all, understanding the essence, highlighting local style, and differentiating positioning and supply to compete with giants like Sam's and Costco can make it easier to stand out.

The New Wave of Membership Stores: What's Notable About M Membership Store? Among local retailers, the latest player to join the bustling track is Gaoxin Retail, parent company of RT-Mart. After a year of preparation, it opened its first M Membership Store in Yangzhou, Jiangsu, just before the May Day holiday in 2023, as a sibling to RT-Mart. Based on a pre-opening visit by "Retail Kr Planet," objectively speaking, as a "primary school student" in membership stores, M Membership Store has demonstrated strong learning ability in many dimensions.

The first M Membership Store was renovated from the original property of RT-Mart Jiangyang Store in Yangzhou, with a business area of 12,000 square meters. The main sales floor is on the second level, while the first level houses the self-operated M Food Court, dining, and a rental area for new energy vehicles. Inside, it closely resembles foreign membership stores: industrial style, wide aisles, tall shelves with warehouse-style displays, and prominent product stacks. Additionally, there are abundant tasting stations, and even chef cooking stations offering guidance on preparing premium ingredients like steak and salmon. In terms of experience, ambiance, and membership services, M Membership Store has also absorbed the recent iterations of foreign membership stores, with thoughtful store design. Optical, hearing experience centers, gaming experience centers, and themed areas for toys, outdoor sports, and camping are all carefully arranged to meet the needs of members' families for a better quality of life.

Highlight 1: Relatively Strong Fresh Food Capability, Emphasizing Curation and Regional Features She Xianping, head of merchandise at M Membership Store, introduced that the SKU count is approximately 3,000. Among them, private brand products account for about 10% (Hema X Membership Store: 40%, Sam's: 30%), covering categories such as fresh fruits and vegetables, seafood, meat, poultry, eggs, dairy, bakery, and deli. M Membership Store curates products from the global market, with its Global Selection products imported from over 30 countries and regions, including Thai Golden Pillow durian, New Zealand Zespri kiwifruit, and Australian 150-day grain-fed black beef. She emphasized that from a product selection perspective, M Membership Store focuses on three directions: First, it places great importance on product freshness. Many fresh and daily-supply products sold in the store are only sold on the day they arrive, with same-day delivery. "We apply all our supply chain experience to establish strict standards, for example, vegetables must be grown in very close proximity, and after harvesting and processing, they enter the store as quickly as possible." Second, it focuses on safety and health. M Membership Store products advocate for clean ingredient labels, ensuring the entire chain from production to transportation to store is safe through strict quality control and self-inspection. Third, it uses craftsmanship and artisan spirit to create deeper quality. In She's view, to achieve true product differentiation, M Membership Store must truly understand member needs, "reflecting differentiation through the details and quality of product creation." An example: vegetables sold at M Membership Store are air-dried to remove surface moisture, commonly known as "dry vegetables," which extend shelf life at home. For delicate fruits and vegetables, such as Philippine super sweet bananas, the team ensures minimal human handling from harvest to store to reduce bruising. "We don't deliberately emphasize exclusive products, but we hope to think more for our members and do better in details." M Membership Store values "quality-price ratio," "ensuring quality meets standards, then optimizing the supply chain to achieve price advantages."

Highlight 2: Committed to Opening Stores in the "City Center" The membership store format requires extremely low operating costs to maintain low gross margins. Sam's and Costco, when entering China, mostly follow their international practice of locating in remote suburbs, building low-cost structures through relatively low property prices. In recent years, with the emergence of local membership stores, the suburban location model is loosening. Hema and fudi are experimenting with renovating city-center properties, and even Sam's Club is testing "entering the city." Yuan Bin, general manager of Gaoxin Retail's M Membership Store division, revealed that in the short term, M Membership Store mainly chooses city-center locations, "We want to bring more convenience to members, reducing their travel time and decision costs to visit the store." Gaoxin Retail currently operates 500 RT-Mart stores in 240 cities nationwide, of which over 170 are self-owned properties. Backed by a retail giant, M Membership Store could have a significant competitive advantage if it can combine low-cost properties with proximity to consumers. According to current plans, M Membership Store will open 3 stores in 2023, with the second store in Nanjing after the Yangzhou debut. In the longer term, M Membership Store will focus on the Yangtze River Delta market—also the main battleground for Costco, Sam's, and Hema X Membership Store.

Highlight 3: A New Wave Membership Store Born with a "Golden Spoon" of Omnichannel and Digitalization The advantage of the new wave is the ability to "copy homework" from the best practices in the market and leverage the latest technology and commercial infrastructure. As a native digital enterprise, M Membership Store has digitized its membership and stores from the start. The benefit is more efficient digital operations for stores and members, enabling multi-touchpoint services for consumers and more precise insights into loyal member needs. Yuan Bin revealed that member operations began six months before the store opened, "All members are digital and will install the APP." The first M Membership Store combines store and warehouse, launching ultra-fast delivery at opening, with delivery within a 5-kilometer radius in as fast as one hour. Subsequently, M Membership Store will gradually expand delivery range up to 30 kilometers. For large items like fitness equipment and home appliances, the merchant ships directly, providing home installation for members. If applied properly, these late-mover advantages will allow local players to offer more frequent and efficient services and iterate faster.

Local Membership Stores Explore Chinese Approaches Beyond imitating foreign brands, local membership stores already have many advantages, such as digital capabilities, solid fresh food supply chains, better understanding of local consumers, and location advantages. However, to adapt to the local market and competitive landscape, local membership stores still need finer polishing in terms of customer positioning, specific products, and service construction.

First, target customer group and positioning of local membership stores. Local membership stores must decide whether to target first- and second-tier elite middle class, consistent with top brands like Sam's and Costco, or strive to cover a broader middle-class population, establishing a differentiated niche. The annual membership fee is a threshold that helps membership stores precisely segment and "intercept" members, and also provides a stable user base and precise user profiles for product selection. Currently, among local players, Metro's regular membership fee is 199 yuan/year, Hema's is 258 yuan/year, M Membership Store's is 260 yuan/year, and fudi's regular annual fee is the highest at 365 yuan/year. An investor who has long studied the membership format believes, "We must adhere to the principle that membership fees match product quality." In his view, local membership stores should not immediately benchmark their fees against Sam's and Costco. "Every 10 yuan increase in the annual fee will block a large wave of potential users. If we cannot provide products and services consistent with the giants, close combat will easily lose advantage." South Korea's local warehouse discount store TRADERS WHOLESALE CLUB charges an annual fee of 30,000 KRW, equivalent to less than 160 RMB. Thailand's largest food retailer Central Retail opened Tops CLUB in 2022, with a premium membership annual fee of 799 baht, about 160 RMB. In the US market, Costco's regular membership is $60/year, and executive membership is $120/year. Sam's Club also strives to differentiate its membership fees from Costco. Last October, Sam's raised its regular membership fee from $45 to $50 and executive from $100 to $110. A detail reflecting Sam's cautious positioning of the fee threshold is that the previous fee had been maintained for over nine years.

Second, how do local membership stores "localize"? In the early stages, local membership stores typically first introduce categories and products that are widely accepted, essential, and already validated. For example, Swiss rolls, butter croissants, durian mille crepes, American roast chicken, and cheese beef rolls—these internet-famous items popularized by Sam's and Costco—invariably appear on the shelves of most local membership stores. However, as more players enter, building differentiation becomes urgent. This includes quickly discovering distinctive products that cater to the "Chinese palate" of a larger population base, and reconstructing localized offline services and experiences. M Membership Store is making efforts in two dimensions: on one hand, learning from Sam's and Costco by investing heavily in fresh food categories that are essential, high-frequency, and easy to compare; on the other hand, focusing on regional specialty products. "Retail Kr Planet" noticed that the first M Membership Store recommended three private brand products: customized M Premium 4.0 refrigerated Jersey milk; M Premium Grain Eggs (30 pieces) priced at only 19.9 yuan, benchmarking Sam's MM Selected Fresh Eggs (30 pieces) but 3.9 yuan cheaper; and M Premium Small Lime Juice, with 100% juice imported from Vietnam. "There are some hard goods," commented an industry insider who visited the store, "Fresh food, for now, is not inferior to Sam's." In his view, M Membership Store doesn't have many customized items, but the heavyweight customized products "are ordered in batches of millions, and quality is very competitive." "Curated SKUs and local specialties will definitely become two additional values for members, building on the basic advantage of fresh food." She Xianping emphasized that M Membership Store's fresh food aims to highlight curated SKUs and local specialties. For example, Yangzhou salted goose, known locally as "old goose," is a product M Membership Store is considering. Currently, M Membership Store's fresh products, accounting for about 10% of SKUs, mainly come from high-quality production areas within 200 kilometers in Jiangsu, and it uses the Changzhou warehouse, about 100 kilometers from Yangzhou, which is the largest in Gaoxin Retail's fresh food warehouse network. She revealed that during the over one-year preparation period, the team traveled extensively across the country, especially to high-quality production areas in Jiangsu and Zhejiang, to find specialty products. A typical example is the East China Sea bamboo shrimp, larger than a palm, which is only available in small quantities for about 20 days between January and February each year. They are flash-frozen in a live state, and after thawing, they are almost identical to fresh ones. Highlighting fresh food is a typical feature of local membership stores like fudi, Hema X, and M Membership Store, and it's the easiest category for them to excel in. Geographic location and consumption habits determine the proportion of fresh food in Chinese and foreign membership stores. From a location perspective, large European and American membership stores are located in remote areas, with members primarily doing weekly shopping, which is not suitable for large amounts of fresh food. Local membership stores are based in city centers, around densely populated communities, suitable for daily fresh food purchases, which also brings stickiness. "Warehouse membership stores can be redesigned," noted Wu Sheng, founder of Scene Lab. On Dianping, fudi became the TOP1 destination on Beijing's "Supermarket Convenience Popular List" in 2022. After visiting, he found that fudi is a very localized membership store with Chinese narrative capability, where fresh food is a differentiating feature, and the store is more down-to-earth. However, a report by China Merchants Securities suggests that in the face of economic downturn and increasingly fierce competition in the fresh food sector, it is still difficult for fresh food categories to single-handedly drive same-store growth in membership stores. To build a wider moat, local membership stores need to create anti-cyclical product and service matrices, comprehensively enhancing overall product and service capabilities. But relatively speaking, solid fresh food capabilities will give local membership stores a time window to build product strength in non-food categories and develop global supply chains. In some membership stores, Chinese cuisine has become a signature. For example, Guoshuhao, which just transformed into a membership store, has highly recognizable Chinese-style large fried dough sticks and colorful pancakes. Some netizens on social media said, "Guoshuhao's pancakes don't need to improve; just don't raise prices or stop production." Others praised its dragon fruit pancake as "the most luxurious and highest-value jianbing guozi in the capital." The consumption upgrade of the local middle class is not just about enjoying Western-influenced butter croissants, American roast chicken, and Australian steak, but also needs more substantial and delicious local cuisine, such as roujiamo, xiaolongbao, salted duck, and Hainanese chicken... And services that effectively solve the pain points of local middle-class life may more tightly bind their wallets. The exploration and creation of more detailed and localized specialty products and services will also become a symbol of the rise of local membership stores.

Local New Players Different from Sam's and Costco In the view of Gu Junhua, investment director at AngelVest, after thoroughly understanding the essence of the membership store model, some local retailers can completely create local membership stores that differ from Sam's and Costco, with differentiated supply in positioning, products, and services. In this way, even when competing head-on with Sam's and Costco, they can survive and develop based on differentiated positioning, a different assortment, services, and experiences. In the US market, there is also a third-largest warehouse membership store, BJ's, which differs from Costco and Sam's. In Deloitte's 2023 Global Powers of Retailing, BJ's ranks 72nd. BJ's, known as a "budget version of Costco," was founded in 1984 and currently operates in 17 US states. As of January 2022, BJ's had 226 warehouse stores, ranging from 6,000 to 15,000 square meters. Costco and Sam's Club are BJ's main competitors, but BJ's also offers supermarket-like products and services, with smaller packaging, deli, and fresh-cut meats. In the view of Gu Guojian, a professor at Shanghai Business School, China's urbanization rate is growing rapidly, and the larger the city, the more consumer stratification, with each segment having a scale-like total consumer population. For a new retail format, establishing accurate user positioning and refined operations becomes extremely important. In the Chinese market, there will definitely be membership store brands similar to BJ's in the US, with unique local products and services, targeting a broader local middle-class population. In an article titled "Explaining Hema's Underlying Logic Once and For All," the author argues that Hema X Membership Store's strongest competitors are Sam's, Costco, and Metro. "From a global supply chain perspective, Hema must humbly learn from these three; the global product capabilities built over decades cannot be broken in a few years, but retracing their old path will never catch up. After all, there are differences in Chinese and foreign consumer tastes, and oversized packaging may not universally suit Chinese families. Moreover, young Chinese families may be the most discerning consumers globally." This judgment also applies to other emerging local membership stores. In the short term, the giants' flagship products are indeed stronger, but the long-term decisive factor cannot rely on just a few dozen SKUs to satisfy Chinese consumers; that is the long-term opportunity for local membership stores.

Thinking further ahead, just like opening a coffee shop, local player Luckin Coffee did not replicate Starbucks' third-place experience path. Instead, it thought outside the box, leveraging the mobile internet wave, and restarted the game with a "coffee only, no space" approach, cultivating a new consumer market and embarking on its own path to surpass the giant.

Returning to the essence, membership stores are by no means limited to a single form.