China: Hema NB gets competition, Meituan, JD.com, FD and Aldi fight for market share

DRC Discount Retail Consulting GmbH
14 hours ago
4 min read

Discount Retail Community Chains are the new collective format for retail brands in 2025.

At the end of last year, the first store of the "Lianhua Fude (FD)" brand under Lianhua Huashang Group opened in Senhe Plaza, Hangzhou. It has 1,200 SKUs and the store's main products are fresh produce and food, marking the official launch of Lianhua Huashang discount store's new brand "Lianhua FD".

On March 20, Dingdong Outlet Wuxi store officially opened. As a community discount store under Dingdong Maicai, Dingdong Outlet focuses on cost-effective products, effectively solving the problem of low perception of the forward warehouse model and opening up offline consumption scenarios.

On April 12, Walmart opened the Xindejiayuan store in Nanshan, Shenzhen, which almost replicated the structure of HEMA NB and Oleqi 1:1, sparking heated discussions in the industry.

Just a few days later, Hema announced that it had achieved full-year profitability for the first time, and the main driving force behind this important milestone was Hema NB, which has penetrated into the lower-tier markets. This two-year-old hard-discount brand has achieved impressive performance with 234 stores and annual sales of RMB 45 million per store. In particular, the closure of the last Hema X membership store in Beijing proves that the industry's inherent perception of retail formats has changed, and the competitive landscape of community retail is about to be redefined.

With the offline comeback of Meituan Xiaoxiang Supermarket and JD Seven Fresh, community supermarkets have once again become a hot spot that retail giants are vying to seize.

From collapse to fission, is Hema NB getting better?

As soon as the new year ended, Xiaoxiang and Hema started recruiting in full swing. Hema promised five social insurances and one housing fund, paid annual leave, and promotion mechanism , while Xiaoxiang did not set many limits, advocated more pay for more work, and gave priority to experienced people. Both sides were very motivated.

Community discount stores have shown unique advantages in the current retail environment. They are community-centered, close to consumers, and can accurately grasp the daily consumption needs of community residents. Through centralized procurement and efficient supply chain management, they reduce operating costs and accurately provide convenient, low-priced, high-quality product combinations, which are in line with the current consumer's pursuit of cost-effective products.

In addition, the integrated online and offline sales model has further expanded sales channels, allowing consumers to find a shopping method that suits them in community discount stores. This is also an important reason why many retail brands have set up community discount stores. Brands such as Sam's Club , Hema, Meituan Xiaoxiang Supermarket and Dingdong Maicai each have their own layout.

Currently, Sam's Club has more than 500 forward warehouses, and Hema has 430 stores covering 50 cities. Although Meituan Xiaoxiang Supermarket has the advantage of forward warehouses, the break-even line of an average of 1,500 orders per day is a challenge.

Among all the community discount stores, Hema NB is an unavoidable case. It is the product of iteration from failure.

Before deciding to focus on the "hard discount" and "community penetration" models, HEMA had tried a variety of business formats, including fresh food supermarkets , community discounts, membership supermarkets, etc., but all were hindered by high costs and low profits.

The repeated adjustments to operations, systems and models have caused Hema to lose a certain amount of momentum . The dramatic change in Alibaba's organizational structure from "1+6+N" requires each business unit to be responsible for its own profits and losses. Hema was once on the verge of being sold.

It was not until the former CFO Yan Xiaolei took over as CEO of Hema that Hema began to return to its "retail" essence and concentrate resources on expanding basic stores and upgraded Hema outlets.

In March last year, some of Hema's store employees switched to outsourcing and cancelled meal subsidies. In April, the membership store business stopped expanding and about 10% of employees were laid off. These measures brought significant results. At the end of the year, the CEO announced in a letter to all employees that the company had achieved overall profitability for nine consecutive months.

In terms of specific business, Hema began to focus on Hema Fresh stores and Hema NB to further penetrate the sinking market. It has nearly 220 stores in the Jiangsu, Zhejiang and Shanghai regions, including 143 in Shanghai , and the rest in Jiaxing , Huzhou , Wuxi and other cities. It plans to enter Changzhou , Nantong and other places this year.

Hema NB has successfully shortened its replenishment response time from 8 hours to 4 hours through its dual-layer storage system of "city warehouse + community store", and its inventory turnover rate has reached 1.8 times the industry average. Its own brand "Hema NB Premium" accounts for 35% of total sales. With direct sourcing and specification adjustment, the price of its products is 15%-20% lower than similar products in the market.

The success of Hema NB is first attributed to its precise market positioning and unique product selection strategy, focusing on community discount stores, mainly serving residents in densely populated communities and meeting their daily high-frequency needs.

It adopts a dual-track operation model of "self-operation + franchising", with the franchise fee for self-collection points as low as 60,000 yuan, and has rapidly expanded with the help of community fission and private domain operations. Franchisees use the "cross-industry cooperation" model (such as express collection and Meituan Youxuan) to diversify their income, and the average daily sales of some stores have reached 8,000 yuan.

Secondly, Hema NB's strong supply chain advantage is also the cornerstone of its success. Relying on Hema's global direct procurement resources, Hema NB can not only purchase high-quality and reasonably priced goods, but also reduce costs and losses by adjusting procurement specifications. In Shanghai, Hema NB's stores cover a permanent population of more than 100,000 within a radius of 500 meters, and the average customer price remains between 35-50 yuan, meeting the high-frequency daily consumption of families.