Premium Supermarkets Ebb
News of closures at high-end and premium supermarkets continues to emerge. Earlier this month, the blt supermarket at Tianjin Joy City, operated by China Resources Vanguard, closed, drawing widespread industry attention. Located on the basement level of Tianjin Joy City, the store officially ceased operations on March 9, ending its 16-year run and fully shutting down both online and offline businesses. A customer recalled in an exchange with "Lingshou," "Before the closure, the supermarket did not offer special discounts, and the product range seemed somewhat incomplete, but overall operations remained stable." She noted that as a store with over a decade of history, blt initially attracted consumers with a wide array of imported goods. However, over time, the products and fresh produce gradually lost their initial appeal, while prices remained high. Although blt Tianjin Joy City did not explicitly disclose the specific reasons for closure, its recent operational performance suggests the store faced certain difficulties. In response, China Resources Vanguard stated that the closure was based on an adjustment of overall business strategy. In fact, similar closures have occurred in other cities. In May 2024, the blt supermarket at Hangzhou City West Intime City announced closure after 11 years of operation, which was also blt's only store in Hangzhou. Subsequently, in June 2024, the blt supermarket at Ningbo Universal City also faced closure. Meanwhile, in the Beijing market, China Resources Vanguard's Olé and blt supermarkets total only six stores. On March 20, "Lingshou" conducted an on-site visit to the blt express store at Beijing Dongzhimen Ginza Mall. The store primarily features imported goods and high-quality fresh produce, with particular strengths in imported foods, red wine, cheese, and meat. However, even so, foot traffic on weekdays remained sparse, with only a few customers lingering in the fresh produce section. These closures and market performances indicate that high-end premium supermarkets are facing considerable challenges in the fiercely competitive market. Similarly, in April last year, Shanghai City Shop, a premium supermarket that had operated for 29 years, suddenly announced a full shutdown, ending operations at all its stores. According to a notice issued by Shanghai City Shop, in recent years, the company's operating conditions continued to deteriorate, and despite various self-rescue measures, it failed to reverse the predicament. Ultimately, the company decided to dissolve and officially closed all stores starting April 16. In short, long-term operating losses were the fundamental reason for its closure. Like City Shop, the wave of blt closures reflects the "inadaptability" of high-end supermarkets in the current retail environment. In recent years, many brands have entered the premium supermarket segment, but few have truly established a foothold. For example, Yonghui Superstores' Bravo YH is positioned as a premium supermarket, but its products highly overlap with its Red Label stores (Yonghui's main format), with only price increases. This strategy has made it difficult for the market to accept—middle-class consumers find it lacking in value for money, while ordinary consumers are deterred by high prices. Also, Hema's first high-end supermarket, Premier Black Label, opened in September 2023. According to Hema, the Premier Black Label store showcases the brand's highest-level product capabilities from eight years, with 35%-40% of products being exclusive categories and imported goods accounting for nearly 50%. Notably, since the opening of this first store a year and a half ago, Hema has not expanded the Black Label store layout. Meanwhile, the number of stores for other high-end supermarket brands is also shrinking. Taking the Beijing market as an example, BHG Market Place now has only five stores, including DT51, Solana, and Beijing SKP. The number of stores for Greenland Group's Greenland Select and Greenland Premium supermarkets has also significantly decreased.
External Causes
Once upon a time, premium supermarkets, with their differentiated positioning and high premium space, were considered a "hidden business" in the retail industry. Especially against the backdrop of intense homogenized competition among hypermarkets, the emergence of premium supermarkets injected new vitality into the high-end consumer market. With high-quality products as a selling point, they precisely matched the needs of middle- and high-end consumer groups, thus experiencing a golden period of rapid development. However, as the external environment has changed, the "highlight moment" of this business format has gradually faded. Once, a bunch of Sunshine Rose grapes priced at 399 yuan, or cherries at 1,000 yuan per kilogram—these astonishingly high-margin products were seen as "weapons" to attract middle-class and high-net-worth individuals, and were the core advantage on which premium supermarkets relied for survival. But the success of this model was actually built on a stable economic environment and consumers' sustained pursuit of high-quality products. Once external conditions change, the logic of this high-end retail model is impacted and becomes difficult to sustain. As downward economic pressure intensifies and the spending power of the middle class gradually declines, the high-end positioning of premium supermarkets begins to seem "out of touch." When consumers' spending power and willingness cannot match high product prices, the premium space of premium supermarkets is quickly compressed, and their profit model becomes fragile and unsustainable. The full closure of Shanghai City Shop directly reflects the intensification of this predicament. Epidemic policies, travel restrictions, and declining consumer confidence have led to a sharp drop in foot traffic and sales for traditional offline retail. As one of the representatives of high-end supermarkets, Shanghai City Shop did not escape and gradually fell into operational difficulties. At the same time, the consumer market is quietly shifting from "consumption upgrading" to "consumption downgrading." Consumers' pursuit of cost-effectiveness is replacing their preference for high-end products, a trend that makes the core advantages of premium supermarkets less competitive. Meanwhile, cost pressures have become another important factor crushing premium supermarkets. High rents, labor costs, and logistics costs continue to erode profit margins, further exacerbating operational difficulties. For example, Shanghai City Shop chose to close due to high rent renewal costs, while several premium supermarkets in Nanning also exited the market due to aging properties and increased maintenance costs. The impact of such cost pressures is not limited to individual cases. Taking Shantou as an example, in 2023, competition in the supermarket market intensified, and the Lotus Premium Supermarket at Vientiane City closed due to its high-end positioning and excessive prices. In contrast, the Lotus stores at Xinyi City and Jinxin Pedestrian Street, which are positioned as affordable and price-friendly, continue to operate well. The high-cost model of high-end supermarkets appears particularly fragile in this comparison. Furthermore, the overall competitive environment in the retail industry is changing. The rise of new retail models and the rapid expansion of membership-based supermarkets are gradually squeezing the market share of premium supermarkets. Consumers' strong demand for cost-effectiveness creates an obvious contradiction with the high operating costs and high average transaction values of premium supermarkets. This mismatch has caused premium supermarkets to hit a growth bottleneck, with declining competitiveness. Therefore, from the full closure of Shanghai City Shop to the wave of closures of other high-end supermarkets, these phenomena not only expose the operational problems of individual brands but also reveal that the entire premium supermarket track is undergoing transformation. In the past, premium supermarkets occupied a specific market space through high-end and differentiated strategies, but now, the development of this format is constrained by multiple external factors. From consumption downgrading to high costs, and the dual squeeze of new retail and e-commerce, the survival space of premium supermarkets is being gradually compressed.
Narrowing Perception of Product Differences
After the closure of the blt supermarket at Tianjin Joy City, a customer said, "The market has moved past the stage of 'rich but foolish' consumers. The focus of retail enterprises should not be on how to make more money, but on how to help consumers buy safe and secure products." This statement captures the core change in the current retail market: the emphasis on low prices and better value for money. Even brands like Aldi, which initially entered the Chinese market positioned as an imported premium supermarket, quickly adjusted their strategy to shift toward a more competitive, affordable community supermarket track. In stark contrast, the business model of high-end and premium supermarkets remains "proudly" targeting consumers with higher spending power. This positioning first imposes strict requirements on store location. To attract enough high-end consumers, high-end supermarkets are typically located in bustling commercial areas or near upscale neighborhoods. However, these prime locations come with high rental costs. Additionally, to maintain brand image, high-end supermarkets need to invest heavily in store environment and quality services. These operating costs further raise the profitability threshold for high-end supermarkets. Even so, these carefully chosen locations and high-end operational models still fail to mask the problems with the products themselves—an excessive proportion of imported goods and a lack of cost-effectiveness. Cherries at over a thousand yuan per portion, or strawberries at hundreds of yuan each, were once symbols of high-end supermarkets, but in the current retail environment, they appear increasingly out of touch with reality. Whether traditional or high-end, supermarkets rely on high margins and fast turnover for survival. Clearly, in today's retail market, high-end supermarkets find it difficult to meet these two conditions. Moreover, with the prevalence of online shopping, consumers can purchase imported goods through e-commerce platforms. This not only makes these goods commonplace but also gives them a price advantage, further weakening the product advantage of high-end supermarkets. At the same time, membership-based supermarkets represented by Sam's Club and Costco are rapidly rising, continuously eroding the market share of high-end supermarkets. A retail industry insider commented, "Membership stores and high-end supermarkets overlap to some extent in customer positioning, but they win consumer favor through deep supply chain cultivation and higher cost-performance. Nowadays, consumers no longer simply view imported goods as a symbol of high-end; instead, they pay more attention to reasonable prices for imported goods." It is evident that the product uniqueness on which high-end supermarkets rely for survival is rapidly disappearing. But it is not without solutions. The core competitiveness of the high-end supermarket format should lie in scarce products and efficient supply chains, but in reality, most domestic high-end supermarkets have failed to establish stable direct sourcing systems or develop private labels. This deficiency directly weakens market competitiveness. Without strong supply chain support, the product advantages of high-end supermarkets are difficult to sustain, while high operating costs continue to erode profit margins. Of course, the ebb of premium supermarkets is not accidental but an inevitable result of retail industry transformation, and a natural choice as consumer demand shifts from "high-end" to "cost-effectiveness." Low prices and value for money have become the main theme of the market.