Sam's Club and RT-Mart M membership stores enter county towns

With the continuous transformation of the retail industry, membership stores are becoming a new market hotspot. As pioneers in the industry, Sam's Club and RT-Mart M Membership Store have begun to extend their reach to China's county markets. This strategic layout not only reflects the trend of consumption upgrading, but also heralds a new trend in retail competition. This article will explore the development prospects of membership stores in county markets and analyze their potential impact on local consumers and the retail industry landscape.

The war among membership stores is spreading to lower-tier markets.

Recently, RT-Mart opened an M membership store in the county-level city of Changshu. At the same time, Sam's Club held a groundbreaking ceremony for its project in Zhangjiagang. Zhangjiagang and Changshu are adjacent to each other and are both county-level cities under the jurisdiction of Suzhou.

In July 2020, Sam's Club fired the "first shot" of its county-level city layout, opening the country's first county-level city store in Kunshan, Suzhou. On the opening day, it set a sales record for newly opened stores at that time, and subsequently opened stores in county-level cities such as Jinjiang.

M Membership Store is the second membership store brand to enter county-level cities after Sam's Club. According to Times Finance, on the first day of opening, the number of customers at Changshu M Membership Store may exceed 30,000, among which gold products were very popular, and some gold items including 500g gold bars were "snatched away".

Shen Hui, CEO of Gao Xin Retail, said that the opening of the Changshu M membership store is a major event in the development history of the M membership store, and it marks the beginning of RT-Mart's layout of membership store formats in county-level cities.

M Member Store members are divided into two levels: ordinary members and black gold members, with membership fees of 260 yuan/year and 680 yuan/year respectively. This also puts higher demands on the consumption power of consumers in the sinking market.

1. Gold at a special price is snapped up

"It feels like half of Changshu's population is here," said Chen Yue, a local resident. On the first day of the M Member Store's opening, the biggest feeling she had was the crowds. "Every tasting booth was packed with people."

Chen Yue told Times Finance that some shelves in the store had been sold out that day, and she came here specifically for the special offer on gold but was disappointed. "Gold items including 500g gold bars were sold out."

According to RT-Mart, there is a Chow Tai Seng store in the Changshu store, and the special gold bars are limited to 8 bars per day in the first three days of opening. On the first day of opening, the gold price of the store's gold bars was 570 yuan/g, and the gold price of gold by gram was 588 yuan/g. Based on this, the price of a 500g gold bar is about 285,000 yuan. In comparison, the gold price on the official websites and stores of Chow Tai Fook, Chow Sang Sang, Xie Ruilin and Chow Tai Seng on the same day was 725 yuan/g.

Since last year, RT-Mart has opened M membership stores in third-tier cities such as Yangzhou and Changzhou. In the fiscal year ending March 31, 2024, the number of paid members of the Yangzhou M membership store has exceeded 60,000.

Sam's Club is also continuing to tap into the lower-tier markets.

On July 29, 2020, its first membership store in a county-level city opened in Kunshan, Jiangsu. According to the official WeChat account of the Kunshan Municipal Government Information Office, "Kunshan Release", as of November of that year, its store sales performance ranked first among new stores in the same period, and multi-channel sales ranked first among the 29 stores nationwide at that time.

According to Times Finance, of the nearly 50 Sam's Club stores that have opened so far, about one-third are in Beijing, Shanghai, Guangzhou and Shenzhen. However, as for the Sam's Club stores that have signed contracts but have not yet opened, most of them are located in second-tier cities, and are located in prefecture-level cities or county-level cities under the jurisdiction of second-tier cities.

In 2020, Sam's Club Ningbo Yinzhou store opened. The 2023 annual bill shown to Times Finance by a local resident showed that she purchased 1,305 items at Sam's Club in 2023, spending a total of 101,276.14 yuan.

2. Who is paying for the membership fee?

Although one needs to pay a high membership fee to shop in a membership store, through communication with several members of the M membership store in Changshu, Times Finance found that many of them hold memberships in multiple membership stores at the same time.

Wang Min, who has memberships in Sam's Club, Costco and M Membership Store, believes that different membership stores have their own characteristics and advantages. She said, "Comparatively, Sam's Club and Costco have better quality, and Sam's Club has a wider range of products. The biggest advantage of M Membership Store is that it is close to home, so you don't have to go to Suzhou specifically to shop, so I will choose to own all of them."

However, due to the high degree of membership overlap, competition among membership stores is also intensifying.

Xu Jing from Changshu is a member of Sam's Club and Metro. She recently applied for membership of M Member Store. She said that M Member Store does not have enough categories and few choices, but the quality is good and there are many additional benefits for membership. Even if you don't buy anything, it is still a good deal. "Being a member will give you shopping card coupons, car wash coupons, children's park coupons, etc."

Another M member told Times Finance that there are many offline group-buying stores in Changshu. He had been buying Sam's products in group-buying stores before. After obtaining membership of the M membership store, he will reduce the frequency of going to group-buying stores.

Jiang Han, a senior researcher at Pangu Think Tank, said that with the continuous development of county-level economy, the income level of residents in county-level cities has gradually increased. They have begun to pursue a higher quality of life and are willing to pay corresponding fees for high-quality goods and services. "The consumption power of the sinking market can support the development of membership stores to a certain extent."

3. The real decline is still on the way

There are more than 2,800 county-level administrative regions in China, and expansion is an inevitable trend for membership stores.

As the density of membership stores in high-tier cities increases, Costco, Sam's Club, Hema X membership stores, etc. are competing head-on in more and more cities such as Shanghai, Beijing, Shenzhen, Suzhou, Nanjing, etc. Compared with first- and second-tier cities, the sinking market with lower rent and labor costs has become a new choice for membership stores.

Jiang Han analyzed to Times Finance that the intensified market competition has prompted membership store brands to seek new growth points. In first-tier cities and major second-tier cities, the membership store market is relatively saturated and the competition is extremely fierce. In order to find new growth points, membership store brands have begun to turn their attention to the potential sinking market and expand their market share by deploying in county-level cities.

According to data disclosed by the County Industrial Economic Development Forum (2023), the GDP of county economies has accounted for 38% of the national GDP. According to a report released by Black Ant Capital in 2022, the average annual household income in counties is about 95,000 yuan, and the annual household expenditure is about 48,000 yuan (about 4,000 yuan/month).

Sam's Club and RT-Mart M membership stores have chosen the most economically developed regions in the Yangtze River Delta. Among them, Kunshan, Zhangjiagang and Changshu are all in the top five of the list of the top 100 counties in the country in terms of GDP in 2023; Jinjiang is also the shoe capital of China, and brands such as Anta and Xtep are all from Jinjiang.

In addition, Jiang Han analyzed that the development of digital technology and the popularization of e-commerce channels also provide strong support for the expansion of membership stores to lower-tier cities. Through digital means, membership stores can better understand the needs of the lower-tier cities, accurately locate target customer groups, and optimize the supply chain and logistics distribution system, reduce operating costs, and improve service efficiency.

Times Finance noted that in December 2023, Sam's Club had launched a one-hour express delivery service in Changshu, Zhangjiagang and other cities. Before the M membership store opened in Changshu, it also opened online services in advance.

However, it is worth noting that although Sam's Club and RT-Mart M membership stores have opened stores in county-level cities, they are still relatively conservative in their selection of county-level cities.

Jiang Han also mentioned that there are certain differences and imbalances in the sinking market. Therefore, when member stores are planning for the sinking market, they need to fully consider factors such as local economic conditions, consumption levels and consumer demand, and formulate marketing strategies and service plans that conform to local market characteristics to ensure the steady development of member stores.

(At the request of the interviewees, all names in this article except Jiang Han are pseudonyms)