Just entering February, RT-Mart's parent company, Sun Art Retail, made a major move. On February 1, it announced on its official WeChat account that it will open the country's first "M Membership Store" in Yangzhou, Jiangsu, with an official opening on April 28. This will also be Yangzhou's first membership store. According to Lianshang.com, the "M Membership Store" will operate as a new independent brand alongside the main brand "RT-Mart," with a dedicated business team [1]. Project General Manager Yuan Bin joined RT-Mart in 2000 and is a veteran; Operations Director Li Xinlin previously held senior positions at Sam's Club and Carrefour membership store projects; and Merchandise Director She Xianping served as Senior Purchasing Director at Hema Fresh. With this leadership team, M Membership Store will offer consumers over 200 exclusive private-brand products and has already established partnerships with brands such as Lay's, Corona, President, Swisse, and Kiri. [2] Image source: WeChat official account @M Membership Store Founded in 1998, RT-Mart has been aggressively exploring new business models since 2013, from initial e-commerce platforms, to instant retail and unmanned convenience stores in 2017, to medium-sized supermarkets in 2020, and now membership stores, but has yet to find a truly successful model. So, can Sun Art capture the membership store segment that many players see as a "hot potato"? Entering Membership Stores Was Premeditated M Membership Store is actually a renovation of RT-Mart's Yangzhou Jiangyang store, a key project introduced by Yangzhou in 2023, covering a total area of approximately 35,000 square meters. Image source: Yangzhou Life Network As early as July 2022, the Jiangyang store closed for renovation. On November 1, it officially launched member recruitment [3]. Sun Art's decision to enter the membership store format was made early last year. The Sun Art project team conducted a year of exploration. As CEO Lin Xiaohai said, this is not a hasty decision but "a strategic decision based on the group's business development needs," and he candidly noted that the membership store market is highly competitive, saying they "have always maintained reverence and attention." [1] This shows that Sun Art's move into membership stores was premeditated. Sun Art's connection with Yangzhou began 21 years ago. In 2001, the first RT-Mart supermarket in Yangzhou opened, then called "Guangrunfa." According to Yangzhou Life Network, RT-Mart has now expanded to 8 stores, covering Hanjiang District, Guangling District, Jiangdu District, and Baoying County [2]. In Yangzhou, Sun Art has a solid customer base. But this is not the only reason Sun Art chose Yangzhou for its first store. More notably, Yangzhou residents' per capita disposable income reached 42,287 yuan in 2021, 20% higher than the national average. And Sam's Club, Costco, Metro, Hema, and Carrefour have not yet opened membership stores in Yangzhou. Sun Art's Strategy In terms of store location, M Membership Store's first store is located in Hanjiang District, the central urban area of Yangzhou, not the suburbs, only 3.8 kilometers from Wenchang Pavilion. In addition to the 35,000 square meter area, it also has 800 parking spaces. Image source: M Membership Store In terms of products, it is reported that M Membership Store will cover 20 categories including fresh food, bakery, general merchandise, and mother and baby, offering over 200 exclusive private-brand products, and has already established partnerships with 30+ domestic and international brands such as Lay's, Corona, President, Swisse, and Kiri. [3] The first store's promotional post also featured rare items such as Norwegian imported salmon fillets, Japanese Tiger rice cookers, matsutake mushrooms from Shangri-La, Yunnan, and black abalone grown on volcanic rocks in Antarctica. Image source: WeChat official account @M Membership Store Its membership fee model mainly comes in two types: a Black Gold membership card at 680 yuan/year and a regular membership card at 260 yuan/year, prices exactly matching Sam's Club, which has the most membership stores in China, but slightly higher than Hema, Carrefour, and Metro. Additionally, regardless of which M Membership Store card you activate, you get an extra companion card. In terms of transactions, like Sam's Club, there are both in-store shopping and online ordering with home delivery. In terms of delivery fulfillment, there are hourly delivery and half-day delivery for different delivery radius areas, with the latter still being planned. Image source: M Membership Store Growth Bottleneck "Anxious" Sun Art Retail Since 2014, Sun Art Retail's revenue has entered a phase of slowing growth, and even negative growth since 2017. In 2022, its revenue was 88 billion yuan, a year-on-year decrease of 29.12%, and it suffered a loss of 826 million yuan. It is precisely because of the difficult situation that Sun Art's exploration has appeared somewhat "anxious." At the end of 2013, RT-Mart launched its self-operated B2C e-commerce platform Feiniu.com, beginning its "Internet + retail" exploration, which ultimately led to losses. In 2017, Sun Art launched the "Youxian" business for 1-hour delivery within 3 kilometers of stores, and also launched unmanned convenience stores under the "Auchan" brand, but neither made much of a splash. In November of the same year, after Alibaba's investment, the digital transformation of stores began, which may be the most successful exploration in recent years. In the past two years, Sun Art seems to have bet on "small and medium formats" and "membership stores." As of the end of fiscal year 2022, the total number of "Zhongrunfa" stores reached 9; "Xiaorunfa" opened a total of 103 stores. Now, "M Membership Store" has taken the first step into membership stores. From the currently announced store location, product structure, signature products, partner brands, and fee model, M Membership Store's value to consumers is almost comparable to European and American membership stores like Sam's Club, Costco, and Metro, as well as domestic ones like Hema. However, the membership system's strong emphasis on product quality requires retailers to have strong product selection and development capabilities and domestic and international supply chain capabilities. In these two aspects, can Sun Art surpass Sam's Club, which has been operating in China for nearly 27 years? Can it turn losses into profits with the high-margin membership store business? This remains a huge question. References: [1] CC, Gao Xin Retail CEO Lin Xiaohai first talks about M Membership Store: Becoming a better membership store, February 1, 2023, Lianshang.com [2] RT-Mart M membership store comes to Yangzhou, suspected renderings exposed! Location is..., November 6, 2022, Yangzhou Life Network [3] Dongfang, RT-Mart enters membership store business, November 11, 2022, Lingshou Recommended Reading