Alibaba’s supermarket Hema X membership stores, once regarded as the “second growth curve” by Alibaba, has now been completely terminated. Following the closure of stores in Beijing, Suzhou, and Nanjing on July 31, the last Hema X membership store in the country – the Senlan store in Shanghai has confirmed that it will cease operations on August 31. This signifies the formal end of Alibaba’s membership-based supermarket strategy that was initiated four years ago.
Hema X, a supermarket under Alibaba, opened its first store in Pudong, Shanghai in October 2020 as an independent membership-based business model separate from Hema Fresh. It was positioned as a localized attempt, aiming to compete with Costco and Sam’s Club by offering two membership levels of 258 yuan and 658 yuan annually, targeting mainly middle-class and high-net-worth families.
However, the project did not meet expectations and quickly shifted from expansion to contraction. According to reports from Economic Observer, on July 29, the Hema X membership store at the Shijiezhizhihua store in Beijing had a massive clearance sale with shelves mostly empty, only featuring discounted toys and small appliances. Employees revealed that the closure was part of a strategic adjustment at the Hema headquarters, deciding to abandon the membership store business. On the same day, the stores in Suzhou and Nanjing were closed as well.
A former employee, Ms. Zhang, of the Hema Fresh store on Jiangcheng Avenue in Wuhan shared her experience. She recalled that the store she worked at closed in early 2024 due to high rent and operational losses. She said, “My monthly salary was only 2,000 yuan, the company started laying off staff and closing multiple stores last year.” According to her understanding, most of the 300+ Hema stores nationwide did not turn a profit, with seven to eight stores closed last year and dozens more in the first half of this year, some even evacuated hastily without notice.
Although there has been no official announcement from Hema, insiders told Economic Observer that this move is a proactive business optimization by the company, aiming to concentrate resources on developing core areas such as Hema Fresh and Hema Ole, to enhance fresh supply chain efficiency and immediate delivery capabilities.
Yao Li, an industry insider engaged in supermarket procurement in Beijing, analyzed that membership-based supermarkets are still in the early stages in China. He told Epoch Times, “Hema tried to challenge Costco and Sam’s with Internet thinking and local supply chains, but Chinese consumers’ habits of paying for memberships have not yet formed. Coupled with inadequate product and price advantages and limited supply chain integration capabilities, it led to an awkward position.”
Furthermore, changes in the consumer environment have exacerbated the operating pressure on membership stores. With China’s overall economic growth slowing down, household income growth decelerating, some middle-class consumers becoming more cautious, it directly impacted the customer flow and membership renewal rate of membership-based supermarkets. The younger generation of consumers are more sensitive to shopping experiences and prices, preferring flexible and diverse shopping methods over high-threshold membership systems.
Founded in 2015, Hema serves as Alibaba’s core experimental platform for the “new retail” strategy, entering the market by leveraging the Hema Fresh brand focusing on high-quality fresh products and instant delivery, adopting an online-offline integrated operating model with “store as warehouse.”
Mainland consumer economy researcher Ma Zhanwen (pseudonym) pointed out that the failure of Hema’s membership stores stems from both corporate strategic haste and reflects the instability of brand loyalty in China’s membership-based retail market. He stated, “High-threshold membership systems require long-term cultivation, but Hema was evidently impatient for success. In comparison, Costco has taken a steady expansion strategy in China, with ‘one city, one strategy,’ making the pace more controllable.”
Ma further added that during the pandemic, there was a brief surge in fresh e-commerce and membership interest. However, with consumers returning to rational consumption, companies faced profit pressures: “The complete withdrawal of Hema X membership stores can be seen as a phase adjustment of Alibaba’s new retail strategy.”
Since 2020, Hema has been diversifying its layout, covering various formats such as Hema Ole (discount model), Hema mini (community stores), among others. After the termination of X membership stores, Hema will return to its core business of “fresh + instant delivery,” optimizing cost structures and improving service efficiency. Currently, Hema operates over 200 Hema Fresh stores nationwide and continues to promote the expansion of the Ole model.
A retired civil servant in Tianjin told reporters that offline retail is universally facing reduced customer traffic: “Even regular supermarkets have few customers, Hema’s exit is not just a strategic issue but is also related to the overall tightening consumer environment. Youth unemployment rates are high, consumption is cautious, affecting the entire retail industry.”