Positive Comments: Strategic Focus and Model Innovation, Hema Regains Growth Momentum in Adjustment
Hema’s decision to close its X-member stores may seem like a “retreat” on the surface, but in fact, it is a strategic recalibration based on market rules and its own capabilities. Judging from the results, this adjustment not only helped Hema achieve its profit target but also enabled it to find a growth path more in line with Chinese consumption needs in the new battlefield of instant retail.
First of all, strategic focus is the key for Hema to turn losses into profits. Previously, Hema operated 12 formats simultaneously, which led to inefficient resource allocation. The “strategic wavering” of the member stores (trying to replicate Sam’s Club’s high – end route while also attempting a low – price strategy) exacerbated the imbalance between costs and customer experience. For example, the Jianguolu store in Beijing was closed after only 7 months of operation due to the contradiction between high rent (15 yuan per square meter) and low customer unit price (only 600 yuan). After closing the member stores, Hema concentrated its resources on two core businesses, Hema Fresh and Hema NB. In fiscal year 2025, its GMV reached 75 billion yuan, and it achieved annual profit for the first time, proving that “doing subtraction” can release enterprise vitality more effectively than “spreading out”.
Secondly, the adjusted business is more in line with the real needs of the Chinese consumer market. The large – packaged products in member stores do not match the habits of “small – sized families” (the average household size is 2.62 people) and “instant consumption” (the demand for 30 – minute delivery has increased significantly) in China. In contrast, Hema Fresh’s 30 – minute delivery network (covering 50 cities with an online transaction ratio of over 60%) and Hema NB’s community hard – discount model (with 1000 – 1200 SKUs and a customer unit price of 35 – 50 yuan) exactly meet the core requirements of “small – portion, near – field and instant” consumption. For example, by directly connecting with upstream suppliers (such as the Kunshan Tanghe Factory, which can achieve “production – delivery to Jiangsu, Zhejiang and Shanghai within 24 hours”), Hema NB has reduced the cost of its private – label products by 50%, supporting its “everyday low prices” commitment and becoming an ideal vehicle for community penetration.
Moreover, the synergy effect of the Alibaba ecosystem has injected new impetus into Hema. On August 4th, Hema was officially integrated into the Taobao 88VIP system (with 50 million high – value members). Users can get a 90 – day free membership of Hema, which directly introduced a high – viscosity traffic pool to Hema. In the future, Alibaba plans to establish a new membership system that integrates resources from Ele.me, Fliggy and other platforms, which will further strengthen Hema’s penetration in the “shopping + takeaway + travel” scenarios. In contrast, the previous member stores relied on independent customer acquisition, which was costly and limited in user growth. Ecosystem synergy is obviously more efficient.
Finally, Hema NB’s hard – discount model shows the potential of the sinking market. With a lightweight store of only 1000 square meters (1/20 of that of a member store), through streamlining SKUs and an efficient supply chain, it has opened 143 stores in Shanghai and has become a “sharp weapon” for exploring third – and fourth – tier cities. This model not only conforms to the current consumption trend of “value for money first” but also reduces logistics costs through a regional supply chain (such as the Kunshan factory covering Jiangsu, Zhejiang and Shanghai), giving Hema an edge in the competition with Meituan’s “Happy Monkey” and JD Seven Fresh in the sinking market.
Negative Comments: Hidden Worries of the Member Stores’ Exit and the Unfinished “Localization Experiment”
Although closing the member stores is a rational choice for Hema, the hidden worries behind it cannot be ignored. The failure of this “localized member store experiment” has exposed multiple challenges in retail innovation and left worthy topics for the industry to reflect on.
First of all, the brand image and user trust are facing challenges. Hema entered the market with the slogan of “China’s own member store”, benchmarking against Costco and Sam’s Club, and even set a goal of opening 100 stores in 3 years. Now that all the stores are closed, it is inevitable to be interpreted as a “strategic failure” by the outside world, which may affect users’ confidence in its long – term planning. For example, some paid members (over 3 million) have been lost due to the “closure of member stores”, and some users may have a negative perception of “diluted membership value” because of the 90 – day free membership rights of 88VIP. This is a blow to Hema’s brand premium ability.
Secondly, it is difficult to recover the sunk costs of the previous investment. From the opening of the first store in 2020 to the full closure in 2025, Hema made huge investments in site selection (such as high – rent stores in Beijing’s CBD), supply chain (private label “Hema MAX”) and membership system construction of the member stores. Take the Jianguolu store in Beijing as an example. It was closed after only 7 months under high – rent pressure, and it was almost impossible to recover the previous decoration, equipment and labor costs. Although these sunk costs do not directly affect the current profit, they are a waste of resources in the long run.
Thirdly, Hema has missed the window period to compete with international brands. Sam’s Club and Costco are continuously expanding in the Chinese market (Sam’s Club has over 4 million members and plans to open 20 new stores in 2025). Their model of “high – repurchase private label + global direct procurement” has proven to be feasible in China. Hema’s withdrawal from the member store track means giving up the opportunity to layout in the high – end membership retail field. If it wants to re – enter in the future, it will need to reinvest in supply chain construction (Sam’s Club’s Member’s Mark accounts for over 30%, while Hema has only achieved partial private label in 5 years) and user education, and the cost and difficulty will increase significantly.
Finally, the “strategic wavering” has exposed the decision – making shortcomings in innovation. The failure of Hema’s member stores is not entirely due to market mismatch but more due to unclear internal positioning. It tried to replicate Sam’s Club’s high – end route while also trying to fight a low – price war with “rock – bottom prices”, resulting in homogeneous products (“Hema MAX” has the same products as ordinary stores but different prices) and confusing user experience. This “wanting it all” strategy reflects the lack of a clear core positioning in the early stage of the innovative business, and finally fell into a dilemma of “neither high – end nor low – end”.
Advice for Entrepreneurs: Insights on the “Giving Up” and “Gaining” in Entrepreneurial Strategy from Hema’s Adjustment
Hema’s journey of “closing stores and focusing” provides multi – dimensional inspiration for entrepreneurs. In a business environment with increasing uncertainty, how to balance “innovation experiments” and “strategic determination” and how to find a balance between “market demand” and “self – ability” are issues that every entrepreneur needs to think about.
- Strategic focus is more important than blind expansion: Hema’s experience shows that operating multiple formats simultaneously is likely to lead to resource dispersion. Entrepreneurs need to regularly evaluate business performance and abandon inefficient tracks in a timely manner. The key is to clarify the “core capabilities” – Hema’s core lies in the fresh food supply chain and instant delivery, so it focuses on fresh stores and NB stores. Similarly, entrepreneurs need to concentrate resources to strengthen their irreplaceable advantages (such as technology, channels or user insights) instead of chasing “popular tracks”.
- Precisely matching needs is more crucial than “replicating models”: The failure of the member stores is essentially a mismatch between the “American model” and Chinese consumption habits (large – packaged products vs. small families, stockpiling vs. instant shopping). Entrepreneurs need to conduct in – depth research on target users, avoid “copying successful cases” and pay attention to local innovation. For example, Hema NB meets the needs of the sinking market through the “community hard – discount + 24 – hour delivery supply chain” model. This “demand – oriented” model design is worth learning from.
- Supply chain capability is the core of long – term competitiveness: Hema has reduced the cost of its private – label products by 50% through the Kunshan Tanghe Factory, which supports the “everyday low prices” of NB stores. Sam’s Club’s global direct – procurement system (developed over 30 years) is the key to its member repurchase. Entrepreneurs need to attach importance to supply chain construction, improve efficiency through direct procurement from the source, regional warehousing and digital management, and form a differentiated barrier of “cost – quality”.
- Ecosystem synergy improves risk – resistance ability: Hema’s integration into the 88VIP system has brought 50 million high – value users, which is essentially leveraging the traffic and scenario advantages of the Alibaba ecosystem to reduce customer acquisition costs. Entrepreneurs can actively integrate into platform ecosystems (such as e – commerce and local – life platforms) or industry alliances, enhance anti – competition ability through resource sharing (such as delivery and membership rights) and avoid the high – cost risks of “fighting alone”.
- Maintain strategic flexibility and beware of “path dependence”: Due to management changes (Yan Xiaolei took over), Hema shifted from “growth – first” to “profit – first” and quickly adjusted its business, which reflects the organization’s agility. Entrepreneurs need to regularly review their strategies, adjust directions in a timely manner according to market changes (such as consumption trends and competition patterns) and financial conditions (such as cash flow and profit models), and avoid falling into “path dependence” due to “previous investment” or “success experience”.
Conclusion: Hema’s closure of member stores is not a “failure of innovation” but the beginning of “returning to the essence of retail”. In the new battlefield dominated by instant retail and community consumption, Hema has found a new growth logic through “focus + synergy + localization”. For entrepreneurs, this tell us that business success often starts with “giving up” – giving up tracks that do not match their own abilities; and ends with “gaining” – gaining from the precise grasp of market demand and the continuous deepening of core capabilities.
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