Core Insights - Hema X membership stores are closing, marking the end of Hema's membership store model in retail within five years of its launch [2][5] - Consumer preferences are shifting towards community-oriented, convenient, and cost-effective shopping options, impacting Hema's strategic adjustments [2][11] Group 1: Hema's Strategic Shift - The closure of Hema X membership stores is seen as a strategic adjustment rather than a contraction, focusing on a broader consumer base instead of a limited membership model [3][6] - Hema's initial rapid expansion of X membership stores faced challenges, including high prices compared to competitors, leading to customer dissatisfaction and a decline in sales contribution [5][6] - The decision to terminate the membership store model is viewed as necessary given the operational complexities and market challenges faced by Hema [6][9] Group 2: Market Dynamics and Competitors - The membership store model is facing difficulties not only for Hema but also for traditional supermarkets like Carrefour and Metro, indicating broader challenges in the retail sector [8][9] - Sam's Club has shown resilience in the membership store market, continuing to expand its presence in China despite facing its own challenges [8][9] - The success of membership stores relies on three core factors: global supply chain integration, complete vertical supply chains, and strong consumer loyalty [8][9] Group 3: Focus on Lower-tier Markets - Hema is shifting its focus to lower-tier cities, aiming to tap into a growing consumer base with a target of achieving 100 billion RMB in GMV by 2025 [11][12] - The company plans to open nearly 100 new Hema Fresh stores, with a significant portion located in second and third-tier cities, reflecting a strategic pivot towards these markets [11][12] - Hema's approach includes the launch of nearly 300 discount stores (Hema NB) aimed at community consumers, emphasizing low prices and convenience [12][13]

Core Insights - The closure of Hema X membership stores marks a strategic shift rather than a mere reduction in scale, indicating a fundamental change in operational logic to cater to a broader consumer base [3][4][10] - Hema's rapid expansion of X membership stores was initially promising, but consumer dissatisfaction and operational challenges led to a decline in performance, with X membership stores contributing less than 10% to overall sales by 2023 [4][5] - The retail landscape is undergoing significant changes, with a shift towards community-oriented and cost-effective shopping options, reflecting evolving consumer preferences [2][8] Company Strategy - Hema's decision to close X membership stores aligns with its new dual-track strategy focusing on Hema Fresh and Hema NB, targeting lower-tier cities and middle-to-lower-income consumers [8][9] - The company aims to achieve a GMV of 100 billion yuan within three years, with a focus on rapid expansion in lower-tier markets, opening 72 new Hema Fresh stores in 2024 alone [8][9] - Hema's approach emphasizes a systematic collaboration across supply chain, retail, and service systems to meet diverse consumer needs, moving away from traditional retail models [10] Market Dynamics - The closure of Hema X membership stores raises questions about the sustainability of the membership store model in China, especially as other traditional retailers face similar challenges [4][5][6] - Sam's Club continues to thrive in the membership store segment, demonstrating resilience and effective market strategies, while Hema's experience highlights the complexities of operating in this space [6][9] - The downtrend in membership stores reflects broader shifts in consumer behavior and market conditions, with a growing preference for accessible and affordable retail options [2][8]