Research: There's an interesting shift happening in retail China in 2026

A few years ago, everyone was bending over backwards to court the young middle class — refined packaging, online delivery, paid memberships, practically stamping "premium" on their foreheads. This year, several major players have suddenly turned around together and dived into communities, working hard for grandma and grandpa's grocery baskets.

Leading the charge is Chao Hesuan NB. The name sounds bold, and after a year of operation, they've genuinely backed it up.

While others shrink, this one expands — the numbers tell the story

Traditional hypermarkets have had a rough couple of years. Public industry data shows that in 2025, the total store count of China's top 100 supermarkets kept declining, with some leading brands closing ten to twenty stores in a single year.

Chao Hesuan NB has moved in almost the opposite direction. Since last year's relaunch, its store count jumped from just over 300 to more than 550, with over 40 new stores opened in August alone, and nearly 50 more added around the "Super Neighborhood Festival." Second- and third-tier cities like Wuhu, Lu'an, and Taizhou have all been won over. That pace is rare in physical retail.

Then there are the financials. Hema's overall GMV broke through 107 billion RMB in fiscal year 2026, with adjusted EBITA positive for two consecutive years. Super Boycom NB alone sees roughly 150,000 RMB in daily sales per store, with total GMV exceeding 10 billion RMB. What does that mean? By industry association standards, that alone would rank it among the top 15 supermarkets nationwide. By comparison, ALDI has been in China for seven or eight years and still hasn't hit 100 stores — which really puts Chao Hesuan NB's expansion into perspective.

Not chasing the middle class — chasing "people who know how to live well"

The core of Chao Hesuan NB's success comes down to one thing: targeting the right customers.

Their target demographic has a specific label: "pragmatic families." In plain terms — people willing to put thought into their three daily meals, for whom careful budgeting is instinctive, but who are absolutely not just chasing the cheapest option. They care whether the food is fresh and clean. They don't buy into "as long as it fills you up," nor do they buy into "nice packaging is worth paying extra for."

One key figure stands out — 90% of Chao Hesuan NBs spending happens offline.

While many supermarkets are rushing to push online orders, hoping to get online sales up to 40%, only to find that delivery costs alone run 7-8 RMB per order — losing money on every sale, Chao Hesuan NB has grandmas and grandpas strolling the aisles, squeezing tomatoes at the stem, feeling cucumbers for their spines, and carrying out exactly what they picked. That cuts out both customer acquisition costs and delivery rider costs. Retail margins are already thin, so every cent saved is real profit.

Private label makes up 60%, not just rebranding, but "customization"

The average private-label share among domestic supermarkets is under 8%; even Yonghui just barely passes 10%; Costco, the pioneer of the model, sits around 30%. What about Chao Hesuan NB? Over 800 SKUs, with private label making up more than 60% of sales, putting it in the same league as ALDI. That essentially means they're running a supermarket while also running their own consumer goods company with an annual output of 10 billion RMB

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A small example: their private-label fresh milk sells 10 million bottles a year, roughly 27,000 bottles a day. If you handed that order volume to a top dairy company, they'd need to dedicate an entire production line just for you. Once single-item volume reaches a certain scale, you gain control over both cost and quality.

Their product philosophy is called "narrow selection within broad categories", sounds fancy, but it's actually quite practical. There might be twenty brands of noodles out there, but instead of making you agonize over the choice, they pick the best two and put them on the shelf. Customers save decision-making time, purchase volume per item goes up, and prices can be pushed even lower. Everyone wins.

Build the warehouse first, then open stores, one warehouse covers 200+ locations

Their expansion strategy is equally grounded. When entering a region, they build a large warehouse first, one warehouse can service 150-200 stores, then densely cluster stores around that warehouse.

Traditional retail logistics costs typically run 15-20% of sales. Through this dense-cluster approach, Super Boycom NB has pushed fulfillment costs down to single digits. Without regional density and warehouse-to-store efficiency underpinning it, "low prices" simply couldn't be sustained.

Site selection doesn't chase prime real estate, they specifically target community malls and street-level retail. Being an anchor tenant in a community mall lets them cross-promote with family entertainment and dining venues. They now operate in 24 cities, with nearly 200 stores densely packed in Shanghai alone, achieving near-full coverage.

Competition is arriving — the real test is still ahead

Chao Hesuan NB isn't the only one who's caught the scent of this opportunity.

Meituan's "Happy Monkey" grew from a dozen or so stores in March to 68 by August, with more than 20 additional stores in the pipeline. JD's discount supermarket is also accelerating its store rollout. Beijing's market has become crowded, with Chao Hesuan NB, Happy Monkey, JD Discount, and Wumart Supervalue all competing in the same space.

One figure from an industry report is worth noting: the penetration rate of pan-hard-discount retail in China's grocery sector is only 8%, compared to 42% in Germany and 31% in Japan. That puts the overall addressable market at around 580 billion RMB, with a projected 23% compound annual growth rate over the next three years. There's clearly room to grow, but going forward it will come down to real operational strength.

There's a first-mover advantage — more stores, wider coverage, stronger supply chains. But having a big footprint and staying alive long-term are two different things.

Several hard problems remain. First, prime locations are limited, whoever claims them first wins, but whether they can quickly recoup investment after claiming them comes down to internal execution. Second, there are only so many contract manufacturers, your "NB" brand milk and a competitor's "Happy Monkey" brand milk might come from the very same factory. When products can't be meaningfully differentiated, it comes down to who's sharper with margins and faster to market. Third, being cheap alone isn't enough anymore, customers also need to feel they're getting "value."

Someone inside Chao Hesuan NB put it this way: "We can afford to keep lowering prices long-term because as scale grows and costs drop, we pass those savings back to consumers." That's a candid statement, and it also nails the core logic of hard discount retail — scale drives down costs, lower costs translate into price advantages, price advantages bring in more customers, and more customers support even greater scale. Once that flywheel gets going, it's hard for others to break in.

Going from 300 to 550 stores in a year, Chao Hesuan NB has given Chinese retail a vivid lesson: stop staring only at the middle class's wallets. The pragmatic families who budget carefully every single day are the real foundation, they just hadn't been properly tapped into before.

The anniversary celebration is over. What comes next is the real fight. Who ultimately wins grandma and grandpa's grocery basket, that remains to be seen!

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