On November 27,a significant leadership transition was announced within Walmart China,as its president and CEO,Zhu Xiaojing,revealed that Wern Anders,the President of Sam's Club and Vice President of Walmart China,has decided to retire.His departure marks the end of a notable career that has greatly influenced the direction of Walmart in China,concluding on January 31,2025.

Anders has been with Walmart for 12 years,playing a vital role since he was one of the top executives at Sam's Club from its inception in China.Under his stewardship,Sam's Club has accomplished remarkable feats,contributing two-thirds of Walmart China's overall performance and reaching record sales peaks.In 2023 alone,Sam's Club generated over 80 billion yuan in revenue.During Q3 of the fiscal year 2025,the membership income from Sam's Club rose by over 30%.Currently,the number of opened Sam's Club locations stands at 51.

The trajectory of Sam's Club looks optimistic as the brand continues to expand and thrive in the Chinese market.

Since 2019,the warehouse membership store sector has become increasingly competitive.The entry of Costco into China that year was a pivotal moment,followed by local retailers like Hema and Fudi expanding into this format.By 2021,Metro,primarily known for its B2B operations,ventured into the C2C membership store space,planning to convert all of its 100 stores in China into member-based operations.By 2023,traditional retail players such as RT-Mart also launched their own M member stores.Other cross-industry contenders like Dongfang Zhenxuan and Laiyifen have since entered the fray.

Sam's Club has remained a benchmark in the industry,often emulated by newer entrants.However,with several years of fierce competition now behind us,how have these warehouse membership stores evolved?

While Sam's Club continues to surge ahead,many domestic competitors find themselves stagnating.

The first wave of warehouse membership stores in China emerged in the 1990s,when Metro entered the market in 1995,becoming the first internationally recognized chain approved by the Chinese government.Sam's Club followed suit in 1996 with its first location in Shenzhen,followed by the opening of the first membership-based hypermarket,Pullsmart,in Beijing in 1997.

However,the turn of the millennium brought disappointment for warehouse members as many faced performance declines and store closures.Puma,a local competitor,started closing stores extensively in 2004 and declared bankruptcy in 2005 due to financial difficulties.During the same period,Sam's Club also struggled,converting locations in Kunming and Changchun into Walmart stores because they couldn't sustain membership numbers.Meanwhile,hundreds of large hypermarkets were being opened nationally.

This marked the beginning of a “frozen” period for warehouse membership stores in the Chinese market,which lasted until 2019,when Costco broke the ice with its entry into mainland China.The economic downturn and challenges posed by e-commerce,community group buying,and the pandemic pushed many traditional retailers to seek new growth avenues,thus reigniting interest in warehouse membership models.

A second wave of enthusiasm for warehouse membership stores took hold and exploded in 2021,with a surge of developments from both foreign entities like Sam's and Costco and local retailers such as Yonghui Supermarket,Fudi,and Carrefour.According to incomplete statistics from Yilan Commercial,over 100 new warehouse membership stores opened across the country between 2021 and the end of March 2022.

During the period of heightened competition,membership stores can be categorized into three main camps.

The first includes established foreign players like Sam's Club and Costco that have mastered the warehouse membership model over the years.These companies have entered a phase of scaling,rapidly expanding their operations.Sam's Club opened six new outlets in 2022,sustaining this momentum,and currently boasts 51 stores,while Costco has added three stores,totaling seven locations in China.

These longstanding brands are often regarded as the standard bearers,with robust membership bases and exemplary performance metrics.As of November 2024,Sam's Club achieved sales reaching 90.6 billion yuan for the year,excluding its global purchase operations,suggesting a local sales figure of about 85 billion yuan and a membership count close to 8.6 million.In contrast,Costco's revenue in China totaled around 5.5 billion yuan for 2023.

The second group comprises traditional hypermarkets transitioning to warehouse membership models,such as Yonghui,Carrefour,and Beijing Hualian.While late to the game,these businesses have expanded rapidly by simply converting their existing stores.For instance,Yonghui transformed its operations to launch 55 new membership stores in just ten months,while Carrefour quickly iterated to a 2.0 version of its membership store model within a year.

This superficial transition has led to many such stores disappearing: in 2023 alone,Carrefour,Beijing Hualian,Jiayijuan,and Beiguo Supermarket shuttered their membership locations.Yonghui announced during its 2023 mid-year earnings call that it had 44 warehouses and would not focus on expanding the format in the near term.

Interestingly,the M membership store has shown promise despite entering the market later,quickly establishing a unique model that led to rapid expansion and currently operates seven locations.Online reports noted that M membership store has about 360,000 members,suggesting potential growth for this fledgling brand.

The third group is represented by native forces like Hema's X Membership and Fudi,which have outperformed others in learning and innovation.Backed by substantial capital investment,they have quickly established differentiated operational models,giving them a perceived edge in the membership landscape.

After just three years,Hema's X Membership store expanded to ten locations,reportedly reaching over three million members by 2022.Fudi has also expanded to four stores within two years,eyeing a broader national footprint beyond Beijing.

Overall,while numerous retail giants have entered the warehouse membership sector,the actual competition narrows down to major brands like Sam's,Costco,Hema X Membership,M Membership,Fudi,and Metro.Current data shows that China has at least 82 warehouse membership outlets,with Sam's holding the lion's share at 62.20% of total locations.Hema X Membership ranks second with eight outlets,while M Membership and Costco trail with seven each.

A comparative analysis clearly illustrates that across various metrics—store count,membership numbers,and revenue generated by members—Sam's Club maintains an undisputed lead with overwhelming advantages.

Furthermore,Sam's has announced plans for establishing 22 new stores,while many competitors are either stagnant or retrenching.In 2023,Fudi did not open any new locations; Hema X Membership closed two stores; and multiple Metro locations have been announced for closure and remodeling,which has yet to be realized.M Membership opened five new outlets this year but may not pursue large-scale expansion in the short term due to pending corporate restructuring issues.

Years have passed,yet the challengers have struggled to catch up with Sam's “hem.” Why aren't domestic warehouse membership stores thriving?

Typically,the essence of warehouse membership services lies in providing select products at competitive prices with excellent service.However,many domestic warehouses fail to deliver on these fronts.

To start,most domestic warehouse membership stores operate with a supermarket mindset.They might label themselves as “warehouse membership stores,” but the essence remains akin to hypermarkets.

Numerous local brands have converted their existing hypermarkets into warehouse models,merely replacing display shelves with warehouse-style merchandise without establishing an independent operational structure.The management teams often mirror those of their original hypermarkets,leading to inefficiencies within the combined systems.Product offerings are similarly unvaried,continuing to draw on the same supply chains from their hypermarket days—with any scalability or differentiation being negligible.If customers can find these products elsewhere,why would they pay a fee to acquire them at your store?

Competitively,product quality is foundational to supporting membership stores; yet,domestic counterparts suffer from substantial product homogenization.As per Yilan Commercial statistics,both Hema X Membership and Metro Plus stores boast in-house product ratios of approximately 40%,while Sam's,Costco,and M Membership hover around 30% in-house product sales.Despite being competitive,many in-house items merely imitate well-known Sam's products,lacking distinctiveness aside from price variations.

By the end of 2023,rising tensions between Hema and Sam's over product imitation became apparent,with Hema launching promotional pricing on popular products typically offered by Sam's.This tit-for-tat approach extended even to mainstream supermarkets.

Such homogenization is largely attributed to insufficient supply chain capabilities among domestic warehouse membership stores.Despite an abundance of suppliers within China,many are drawn to Sam's due to its substantial procurement volumes.Sam's has established its “Sam's Standard,” which guarantees a solid purchasing framework for suppliers,potentially yielding hundreds of millions in sales for successful products.

In cases where a sourced brand fails to meet Sam's standards,the company creates its product specifications,collaborating with capable suppliers to develop Sam's exclusive new offerings.Although development timelines vary from six months to several years,a reliable stream of suppliers remains eager to work with Sam's.

From a supplier's perspective,the scale and volume generated by Sam's outpace others,rendering it significantly more appealing for partnerships.Simultaneously,Sam's reputation for “exceptional quality” reinforces its desirability,granting suppliers a perceived endorsement.

Faced with choices between Sam's and other competitor brands,suppliers are drawn toward Sam's,fortifying its marketplace presence,resulting in a cycle where higher customer preference translates into increased sales and further supplier relationships development.

Furthermore,as instant retail rises,consumer expectations have grown,demanding not just quality products but also convenience—preferably delivered to their homes at no additional costs.

Sam's has excelled in online business compared to other warehouse membership stores.Data shows that Sam's has emerged as the leading self-operated instant retail store,achieving an online sales figure of 40 billion yuan annually,underscoring its preferred status in the sector.

Retail experts emphasize that the purpose of stores is fundamentally to serve consumer needs,which encompasses various buying methods.Within warehouse member stores,only Sam's has formed an integrated operation that combines physical stores with online offerings.

Notably,relative to Sam's,domestic counterparts lack substantial brand recognition.Industry insiders reveal that while retail giant Hema Retail may match Walmart structurally,it significantly trails when it comes to brand influence.The name “Sam's” alone generates substantial traction,defining it within the popular culture even as a “must-visit” destination.

This poses the question: Can China produce its own version of Sam's Club?

Many competitors analyze Sam's,aiming for replication in the domestic market,but thus far,no one has succeeded.Sam's is on an ambitious expansion path,with plans for its first stores in lower-tier cities already extending into 2027.

Despite rapid advancement,the swift expansion has not been without its difficulties.In November,Sam's faced a fine from the Shanghai Pudong New Area Market Supervision Administration for expanding the categories unsuited for its seven-day no-reason return policy; issues such as product mislabeling and customer complaints about food quality have surfaced,signifying lapses in both surveillance and quality control practices.

Meanwhile,M Membership is utilizing the strengths of its parent company,RT-Mart,to enhance competitive positioning in the marketplace,demonstrating early successes.Similarly,Miniso,having taken stakes in Yonghui,is eyeing improvements to its business operations.

Collectively,these developments could herald opportunities for the emergence of a Chinese equivalent to Sam's Club.Nevertheless,unless domestic brands overcome critical challenges,particularly those related to supply chain infrastructure and product differentiation,replicating Sam's success remains a distant objective.