China: Why "Hard Discount" Has Become the "Traffic Key" for Small & Mid-Sized Community Malls?
- DRC Discount Retail Consulting GmbH
- 8 minutes ago
- 3 min read
Discount Retail Chain Chaohesuan NB (a hard discount brand under Hema/Freshippo) at the Ku Young Center is already buzzing. Customers like Wang Jianfen are grabbing 1.2kg boxes of chilled beef short ribs for just 29.9 RMB. With 1.5L of premium milk priced at 7.2 RMB (44% below market average) and 24-bottle cases of water for 9.9 RMB, the appeal is clear: unbeatable quality-to-price ratio.
Chinese hard discount format Chaohesuan NB surpassed 400 stores early this year and is now expanding into Southern China and secondary cities like Hefei and Xuzhou. In 2026, its opening speed is expected to double.
The Shift: From "Buying Brands" to "Buying Value"
Over the past two years, Chinese consumers have shifted from mindless spending to "rational calculation." They are no longer willing to pay for brand premiums or fall for complex promotions.
The Hard Discount Model: Originating in Europe (ALDI/Lidl), this model focuses on "less is more." By maintaining only 1,200–1,500 high-frequency SKUs and a high proportion of private labels, they cut middleman costs and pass savings to consumers.
The "Community" Gap: While Sam’s Club and Costco serve the suburbs, there was a vacuum for daily, high-quality, low-price shopping right at one's doorstep. Chaohesuan NB fills this by shrinking the warehouse club experience into a 600–800 sqm neighborhood store.
The "Lifesaver" for Struggling Malls
Traditional shopping centers are finding that hard discount supermarkets are their most valuable asset for driving foot traffic. Some practical examples:
Case A: The Passive Rescue (KUMOLL, Nanjing)
Originally a niche "ACGN" (Anime, Comic, Games, Novel) themed mall, KUMOLL saw its traffic drop by half in early 2025 as the subculture trend cooled.
The Turnaround: After Chaohesuan NB moved in, daily foot traffic surged by 133%, doubling or tripling on holidays.
The Result: The steady stream of grocery shoppers convinced F&B brands to sign leases, transforming a niche mall into a thriving community hub.
Case B: The Proactive Strike (Yaohan, Gaochun)
A decade-old department store faced aging infrastructure and stiff competition.
The Strategy: Management cut inefficient clothing retail space to make room for a 1,000+ sqm Chaohesuan NB.
The Result: In its first month, the mall's overall sales grew by 40%, and traffic increased by 98%. High-profile brands like Lelecha and Xueji Snacks followed suit, achieving 100% occupancy.
The Efficiency Engine
The "Everyday Low Price" (EDLP) in combination with private label isn't a marketing gimmick; it's a result of structural efficiency:
De-intermediation: No "entry fees" or "shelf fees" common in traditional supermarkets.
Private Labels: Account for 60% of inventory, allowing for higher margins at lower retail prices.
Operational Minimalism: Using shipping cartons for shelving and simplified staffing reduces overhead.
Scale Effect: As the number of stores grows, procurement costs for "hero products" (high-volume items) continue to drop.
The 2026 Battlefield: Quality Supply in "Blank Markets"
The top-performing stores during the 2026 Lunar New Year were not in city centers, but in affluent suburbs and "County-level cities" (e.g., Lin'an, Zhangjiagang, Gaochun).
The Opportunity: These areas have high purchasing power but lacked modern retail. Residents previously had to drive to the city for items like HPP juices or fresh salmon.
The Barrier: While giants like JD and Meituan are entering the fray, the real "moat" is the supply chain. Chaohesuan NB has already established vegetable distribution centers in Shandong and Yunnan, compressing the journey from field to shelf.
Conclusion
The rise of hard discount community stores is more than a trend; it is a profound reshaping of the industry. It forces the supply chain to achieve peak efficiency and shifts community commerce from "fighting for traffic" to "creating shared value."
