Membership Stores Grow 40% as China Supermarkets Decline

China's fast-moving consumer goods market is undergoing a significant channel shift, with membership stores growing 40% year-over-year in 2025 while traditional supermarkets declined 1.5%, according to Bain & Company and Worldpanel data released this month.

Discount and Specialty Formats Drive Growth

Discount stores surged 92% year-over-year as Chinese consumers prioritized value for household essentials. Snack collection outlets expanded 51%, particularly among younger shoppers in lower-tier cities seeking affordable, healthier options.

Membership stores now represent 18% of hypermarket sales, driven by bulk value propositions and localized cold chain infrastructure. Sam's Club opened its largest Beijing store in 2025, featuring 4,000 square meters of cold chain capacity, while achieving a 5.2 percentage point penetration increase in East and South China regions.

Small-format stores now comprise 52% of modern retail, reflecting consumer preference for convenience and proximity over one-stop shopping destinations.

Lower-Tier Cities Fuel Market Expansion

Tier three to five cities contributed approximately 80% of market expansion in the first three quarters of 2025, benefiting from urbanization and broader brand availability. These markets experienced volume growth of four to six percent, while Tier one to two cities remained flat as consumers traded down amid slower economic recovery.

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Overall FMCG spending rose 1.3% in the first three quarters of 2025, driven by volume growth despite average prices falling 2.4%. Packaged food and home care products grew 3.4% and 3.3% respectively, while beverages declined 1.1%.

Digital and Delivery Channels Gain Ground

E-commerce penetration reached 39% in 2025, with Douyin Group and PDD Holdings accounting for over 40% of FMCG online sales through short-video commerce and group buying models.

Online-to-offline platforms rebounded with 7.9% growth in the third quarter, led by dark store networks offering 30-minute delivery for nonperishable items including bread, juice, and nutritional supplements. Freshippo and JD Daojia expanded coverage to lower-tier cities, reaching 553 million users combined.

Private label FMCG sales grew 44% over two years as retailers like Hema transitioned from distribution partners to brand creators, offering exclusive products at competitive price points.

Strategic Implications for Brand Owners

"Channels are no longer simple points of sale. They have evolved into active, data-driven ecosystems that both capture and shape consumer demand," according to the Bain & Company and Worldpanel report.

The structural transformation requires brands to understand purchase drivers across different channels and integrate offline stores, digital platforms, and delivery services. Success depends on tailoring product offerings, investing in personalized services and convenience, and deploying data-driven promotions to build loyalty rather than simply closing transactions.

Marketing communications executives face strategic decisions on trade marketing investments and channel partner selection as growth migrates from traditional supermarkets to membership clubs, discount chains, and digital platforms across China's diverse tier-level markets.