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Column<From Overseas Office> [China] Sam's Club, membership-only warehouse club retail stores doing well in China
China is currently experiencing a slowdown in income growth due to the economic slowdown caused by the real estate recession and other factors, and we are seeing more and more articles about how consumption is less vigorous than before. On the other hand, however, we also hear about the growth of membership-only warehouse club retail stores in the retail industry. Among them, "Sam's Club" (hereinafter referred to as "Sam's") has made a remarkable leap forward, and in fact, it has a good reputation among Chinese users around me. So this time, I joined Sam's and actually visited the store.
(Left) Sam's Club Shanghai Waigaoqiao Branch (photo by the author) / (Right) Inside the store (from the official website)
■Sam's Club and China
Costco is the most famous membership-only warehouse club retail stores in Japan, but Sam's is a Wal-Mart-owned membership supermarket that currently operates 46 stores in China and 5 stores in Shanghai. The company entered China in 1996, but an online news article at the time in 2019 stated that "Sam's China performance has yet to show growth," and at that time, the company did not yet appear to be making any significant strides in China. However, the company has since grown steadily, reaching 40 stores by 2020. 2019 was also the year Costco entered China, and perhaps it was around this time that membership-only warehouse club retail stores began to gain popularity in China as well.
【Number of Sam's Club stores in China】 (as of December 2023)
Source: 2021 China Store Consumption New Trends Insights Report for China (see official website for 2023 figures).
■Tried Sam's Club.
Most of Shanghai's membership-only warehouse club retail stores are located in relatively suburban areas, and in the case of Sam's, the majority of visitors go there by private car. I visited Sam's this time in late November 2023, and as I stepped into the shopping zone inside the building, the first thing that caught my attention was the display of Christmas goods and camping equipment. The warehouse-style store offers a wide variety of products, including home appliances, clothing, and daily necessities, but the main focus is on food. In particular, people are concentrated in the meat and seafood sections. One of the attractions of Sam's seems to be the ability to purchase large quantities of high-quality U.S. beef and seafood at reasonable prices, and indeed, the beef section of the store was filled with U.S. beef on display, and many people were reaching for it.
A cart of customers using Sam's. People buying beef, bread, juice, eggs, side dishes, etc. were noticeable. (From official Wechat)
■Tastings were very popular
In the food area, there were many tasting corners. Parents and their children were not hesitant to take multiple tasting plates by themselves, but there is an orderly line for all the tastings, and lines were maintained. Many parents and their children were moving around with their children in carts, and many customers were seen browsing around the store while their children ate the various tasting items in the carts. This time we visited three Sam's stores in Shanghai, and all of them were very lively and bustling. Just walking around a vibrant supermarket is an uplifting experience. On the first floor of the Sam's building, there was a cafe operated by Sam's (location varies by each store). While Costco and Hummer X also have snack corners inside their stores, I was impressed by the signage at Sam's cafes that proclaimed the use of the highest quality ingredients even on the menu items offered at the store.
Tasting corner. Especially the beef steak tasting has a long line. Many customers put their children in carts. It bothered me a little that they all let their children ride on the carts with their dirty shoes on.
Sam's Cafe. No tables and chairs are available on purpose.
Sign explaining that the beef rolls are made with the highest quality imported beef, cheese and fresh vegetables. (Photo by the author)
■Tried Costco
This time, in addition to Sam's, I also visited Costco and Foo Mar X. Costco also had a lively atmosphere. Costco also had a lively atmosphere inside the store, but it was a bit dimmer than Sam's, perhaps due to the difference in lighting, giving it more of a warehouse feel (as an aside, the two Costco stores in Shanghai both had the exact same interior structure). The major difference from Sam's is that there is no online supermarket delivery service; in China, where e-commerce is firmly established, not being able to buy online is still an inconvenience.
Costco Shanghai Pudong store (photo by the author)
■Tried Foo Mar X
And another competitor, Foo Mar X, has a completely different atmosphere than Sam's or Costco. First of all, the ceiling inside the store is low (the same height as that of a regular supermarket). And the products sold give the strong impression that it is just a regular supermarket selling large-volume items. Although there was a strong presence in areas where Hummer excels, such as fish and shellfish sold live in tanks, most of the products were domestic private brands, and only domestic beef was available. Note that in September 2023, Hummer opened the first "Hummer Premier" store, a new concept, in Zhongshan Park in the city center. I visited this store in November and found it to be extremely vibrant. The store offers a wide selection of imported products, many of which are Japanese. Despite the upscale line, the store has a discount section for products nearing their expiration date and an eat-in corner where customers can enjoy side dishes they have purchased, giving the impression of a store that is designed for easy access.
[Comparison of major membership-only warehouse club retail stores]
■Reasons for Sam's popularity
According to a survey conducted in September 2011 by the DT Research Institute, a Chinese data research institute, paying members of each supermarket were asked "Have you renewed your membership card? “ (or do you plan to renew?), Sam's had the highest renewal rate. And when those who intended to renew this membership card were asked the reason for doing so, the top reason was "good quality and guaranteed shared source of product”. In the case of Sam's, some articles commented that one of its major strengths is its ability to manufacture and sell large quantities of high-quality products and offer them to consumers at affordable prices through the power of its parent company, Wal-Mart.
[Supermarkets that Customers have renewed or plan to renew their membership cards of] (interviewed paid members of each supermarket)
[Reasons for wanting to renew membership cards] (interviewed by those renewing memberships at each supermarket)
Data: Survey results published by the DT Research Institute (survey date: September 2011)
https://weibo.com/ttarticle/x/m/show#/id=2309404950254926561353&_wb_client_=1
■Saving money, but wanting high quality products.
According to a colleague (a member of Intage China), the recent recession has made consumers more budget cautious, and as a result, more people are eating out less than before. One of the reasons for the popularity of Sam's seems to be that instead of eating out, people can buy quality ingredients and cook them at home, which satisfies such needs by providing good food at a reasonable price. Indeed, colleagues of other Sam's users said that their quality of life has improved because they can get the same quality by cooking Sam's beef at home instead of having to go out to eat at a high-end steak restaurant.
While the high quality and cost performance are certainly appealing, after looking around Sam's, Costco, and Foo Mar X (and later Metro and Carrefour), I felt that Sam's was the store that would most likely enrich my life as a whole. I can't really put it into words, but I had a feeling that I would be able to have many experiences that would enhance the quality of my life.
I have a feeling that this attitude of checking out and buying quality products while keeping your budget tight will continue for some time to come, and not just for food. I would like to continue to pay attention to the future of membership-only warehouse club retail stores in China.
(Left) A Sam's delivery man often seen in Shanghai. (Photo by the author)
(Right) A Sam's product I ordered online. It was delivered within an hour of ordering. The beef steak weighs 800 grams and costs about 3,000 yen. It is tender and delicious. (Photo by the author)
Postscript
When I think of the supermarkets I visited only from Shanghai, Metro and Carrefour gave me impression of desertedness the most.
Carrefour, in particular, had almost no products on display, and I thought it was only a matter of time before it would disappear.
China is a country that is changing at a rapid pace, and I would like to continue to keep my eye on it.
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Author profile
Motoki Takahide
Joined Intage in 2006. Long been involved in research in Japan, mainly in the media and advertising fields, and has been assigned to Shanghai since 2023.
Likes to wander around supermarkets in Shanghai.
- Dec 28, 2023
- 2235 Views