Source | Lingshou ID | lingshouke Author | Qingshan
Local Discount Stores Surge "5,000 square meters, 5,000 SKUs, nearly 3-4 times the size of a traditional discount store in the industry." For the newly opened JD Discount Supermarket at Zhuozhou Junyue Plaza, industry insider Zhang Ming (pseudonym) was amazed by the store's scale. As a veteran with 15 years in the retail industry, Zhang Ming has witnessed the rise and fall of many business formats. But the scene before him still felt unusual. "This is completely different from what we imagine a discount store to be," Zhang Ming told the author. Traditionally, discount stores are small community formats, covering a few hundred square meters with SKUs kept under a thousand. JD Discount Supermarket, however, chose the opposite path. In August this year, JD.com simultaneously opened five discount supermarkets in Suqian, Jiangsu, and Zhuozhou, Hebei. This is what JD.com claims to be the "first large-scale discount supermarket format in China." Unlike existing small-store, low-SKU discount supermarkets, JD Discount Supermarket leverages its supply chain advantages to adopt a large-store, multi-SKU operating model. According to JD.com, the first store in Zhuozhou covers 5,000 square meters, featuring over 5,000 high-cost-performance daily necessities, covering all categories including daily necessities, fresh food, FMCG, and beverages. This scale is nearly 3-4 times that of traditional discount stores. JD.com's ambition does not stop there. According to information disclosed by JD Discount Supermarket's official account, in 2025, JD Discount Supermarket will start from Beijing and rapidly expand into lower-tier markets in Hebei, Tianjin, Jiangsu, Anhui, and Shandong. From an industry perspective, JD.com is not fighting alone. Around the same time, Meituan's discount supermarket project "Happy Monkey" also surfaced. On August 29, Happy Monkey's first store officially opened in Gongshu District, Hangzhou, covering 1,000 square meters with over a thousand selected products. It is understood that Meituan Happy Monkey's initial goal is to open 1,000 stores, with early expansion plans focusing on cities like Hangzhou, Shanghai, Beijing, and Guangzhou. Not only internet giants, but some traditional retail enterprises are also increasing investment in discount stores. On July 25, Wumart Group's hard discount store "Wumart Chaozhi" opened its first six stores simultaneously in Beijing, covering core areas such as Xicheng, Dongcheng, and Tongzhou. According to plans, 25 stores will be opened in Beijing by the end of the year. Meanwhile, Hema NB, after being renamed to Super Hema NB at the end of August, has been accelerating expansion. According to the National Business Daily, Super Hema NB is opening stores at a rate of more than 20 per month, with the current number of stores exceeding 350; Dingdong Maicai is also developing its discount supermarket stores. For a time, the hard discount track became extremely crowded. Challenges for the "Textbook" Representative of Hard Discount Compared to the rapid expansion of local enterprises, foreign discount brands are moving much more cautiously in the Chinese market. German discount retail giant ALDI has been in China for five years, but its store count remains limited. On April 19, ALDI opened simultaneously in Suzhou Fangzhou Neighborhood Center and Wuxi Yuanrong Plaza, marking its first expansion outside Shanghai, achieving the "first dual stores outside Shanghai" layout. As the "textbook" representative of global hard discount, ALDI has over 4,000 stores in Germany and a total of 13,000 stores worldwide. However, its strong global position has not been well replicated in the Chinese market. From an industry perspective, ALDI's model has been successful in Europe and the US, but it has faced challenges in China due to differences in consumer habits, difficulties in localizing the supply chain, and insufficient brand awareness. The difference in consumer habits is the most obvious. ALDI's global "minimalist SKU" strategy has encountered challenges in the Chinese market. German consumers are accustomed to making decisions with limited choices, but Chinese consumers prefer a wider variety of products. An industry analyst noted, "In Germany, an ALDI store may have only 900-1,000 SKUs, but Chinese consumers feel there are too few choices." Supply chain localization is a deeper challenge. First, logistics costs are high; logistics costs for stores outside Shanghai are significantly higher than in Shanghai, which to some extent weakens its price advantage. Additionally, in China, ALDI's fresh and ready-to-eat products account for nearly 50% of its offerings. While this attracts foot traffic, it also brings higher logistics costs and spoilage rates, directly impacting price competitiveness. As expansion accelerates, ALDI has also faced complaints. According to the International Finance News, in July this year, a Shanghai consumer, Wang Zheng (pseudonym), purchased fruits that were severely rotten and an egg tart with a bug through the mini-program. During subsequent rights protection, the store manager not only denied relevant laws and regulations but also treated the consumer with a perfunctory and tough attitude. Furthermore, insufficient brand awareness also restricts ALDI's development. Compared to its well-known brand status in Germany, ALDI is relatively unfamiliar to Chinese consumers. A Shanghai consumer said, "I know ALDI is cheap, but I don't know much about the brand's background and philosophy." Similar to ALDI, other foreign discount brands have also performed mediocrely in China. British discount retailer Iceland Lab opened its first store in Beijing at the end of June, focusing on frozen food and innovative live-streaming formats, but it is still in the trial stage. Whether local or foreign, the rise of discount supermarkets points to the same core logic: China's retail industry is shifting from a "traffic war" to an "efficiency war." According to data from Zhiyan Consulting, the scale of China's discount retail market in 2023 was approximately 1.79 trillion yuan, accounting for about 3.8% of total social retail sales. Caitong Securities predicts that by 2025, the scale will reach 2.28 trillion yuan, with a compound annual growth rate of 11.0% from 2022 to 2025. Behind this growth rate is a profound change in consumer mentality. More importantly, consumers' understanding of "cheap" is also changing. It is no longer simply low prices, but rather a requirement for better cost-performance while ensuring quality. This is the core concept of the hard discount model. The industry's consistent view is that "hard discount is not about selling cheap goods, but about selling good goods cheaply." That is, hard discount achieves low prices by optimizing the supply chain, reducing intermediate links, lowering gross margins, and simplifying operating costs, regardless of product quality. Attractions and Shortcomings Compared to the cautious attempts of foreign brands, the most obvious difference with local discount retail enterprises is the speed of expansion. For example, JD.com recently opened five stores at once in Jiangsu, Hebei, etc., and Meituan and Wumart also adopted a strategy of opening multiple stores simultaneously, while ALDI took five years to expand beyond Shanghai. In this regard, industry insiders believe that local enterprises better understand the needs of Chinese consumers and have shorter decision-making chains, while foreign enterprises often need to make decisions at the global headquarters level, whereas local enterprises can respond more quickly to market changes. In terms of product strategy, local enterprises have shown greater flexibility. Unlike ALDI's insistence on "minimalist SKUs," JD.com, for example, chose a "large-store, multi-SKU" model, which is more in line with the habit of "one-stop shopping" among Chinese consumers. From the perspective of consumers' attitudes towards local discount supermarket products, they present a complex and mixed feeling. For example, at JD Discount Supermarket, some consumers say they are enthusiastic about the low prices and cost-performance, but on the other hand, they have doubts and dissatisfaction with the quality, quality control, and shopping experience of some products. Consumers say they are satisfied with the prices of core discount products such as fresh produce (e.g., durian at 19.9 yuan/jin) and private label products. However, some products in the deli section are "not cheap" and "taste average." Additionally, in terms of shopping experience and service, long queues and overcrowding during openings or promotions are common pain points. At the same time, some consumers believe that some products "lack differentiation" compared to other supermarkets. In this regard, industry insiders believe that consumers choose JD Discount Supermarket mainly driven by the pursuit of ultimate cost-performance, which also reflects the current widespread "price rationality awakening" consumption trend. Despite attractive prices, JD Discount Supermarket's quality control issues, such as consumers complaining about finding "cardboard scraps" and "plastic threads" in pre-packaged "durian mille crepe" and "Korean-style rice bowl," as well as problems exposed in the experience, directly affect consumer satisfaction and repeat purchase intention. Looking at ALDI, from the consumer perspective, although ALDI is attractive in price and convenience, it does have shortcomings in some aspects, mainly in product quality, store experience, and product variety. For example, some media reported that some bread labeled as "baked fresh" or "freshly out of the oven" is actually frozen dough thawed and re-baked, which falls short of consumer expectations. Some consumers have reported that its low-priced sandwiches have "stuffed edges," meaning the edges have filling but the inside has less. Additionally, some consumers say that some stores are small, making them crowded and noisy during peak hours. Also, the parking lot design or surrounding traffic conditions of some stores cause inconvenience to driving customers. Because it focuses on streamlined SKUs (about 2,000), the selection is not wide enough for consumers seeking variety. Moreover, quality control risks during expansion have increased complaints—with store expansion, especially in 2025, the proportion of complaints about food safety has risen. In supply chain construction, from the perspective of local enterprises, JD.com and Meituan have existing supply chain systems and logistics networks that can quickly integrate into the discount supermarket format. In contrast, foreign brands need to build a local supply chain from scratch, which requires significant time and capital investment. Efficiency War Although local enterprises currently have an advantage in store opening speed, the final victory in discount retail will depend on who can truly excel in "efficiency." The core of the hard discount model lies in supply chain efficiency. Whether it is product procurement, warehousing and distribution, or store operations, the optimization of each link directly affects the final cost and price competitiveness. In this regard, the experience accumulated by foreign brands should not be underestimated. ALDI has a century-long operating history globally, and its capabilities in supply chain management, private label development, and cost control have been proven in the market. In this regard, industry insiders believe that what ALDI needs to do is combine its global experience with the characteristics of the Chinese market. Once ALDI completes its localization transformation, its competitiveness should not be underestimated. In fact, facing local players who are not only faster in expansion, have strong capital, and are better at flexible market strategies, ALDI is also promoting a series of changes to break the deadlock: accelerating expansion in the Yangtze River Delta, with a target of 200 stores by 2026; building a "Shanghai R&D + Jiangsu production + regional distribution" supply chain closed loop to reduce costs; and continuing to deepen localized operations by integrating over 80% of local supplier resources to ensure agile response to the local market, while relying on its high-standard international quality control capabilities to ensure product quality. However, it must be said that the time window for ALDI is narrowing. The next two years will be its lifeline. If it can successfully achieve its expansion goals, effectively reduce logistics costs, and stabilize its quality reputation, it still has hope to occupy a place in China's hard discount market. Otherwise, it may be gradually marginalized under the squeeze of giants. From the perspective of local enterprises, although they have an advantage in expansion speed, they still need to learn from foreign brands in refined operations and cost control. "Doing discount retail is not just about lowering prices, but about achieving sustainable profitability while ensuring quality," said a retail industry insider. This requires excellence in multiple dimensions, including product development, supply chain management, and store operations. In other words, the core of discount retail is not simply low prices, but achieving a sustained and stable balance between quality and price at controllable costs. From the consumer perspective, whether local or foreign, whoever can provide higher cost-performance will win the market. "I don't care whether the store is Chinese or foreign; the key is whether the products are good, cheap, and how quality control and service are," said Ms. Wang, a consumer shopping at JD Discount Supermarket, to the author. "If the quality is the same, I will definitely choose the cheaper one." This may be the truth of the discount retail market: in the face of cost-performance, brand origin does not matter. What matters is who can truly understand the needs of Chinese consumers and meet them in the most efficient way. At the current stage, local enterprises are temporarily leading with their keen market insight and rapid execution capabilities. But in the long run, discount retail competition is about systematic capabilities—from product development to supply chain management, from store operations to brand building, every link must be done to perfection. In this "efficiency war," the ultimate winner may not be a single enterprise, but the maturity of the entire Chinese discount retail ecosystem. Both local and foreign enterprises will continuously optimize their capabilities through competition, providing consumers with a better shopping experience. For the entire retail industry, the rise of the discount model marks the arrival of a new era: shifting from scale competition to efficiency competition, from traffic orientation to value orientation. In this new era, whoever can better balance quality and price will win the hearts of Chinese consumers.