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The latest data from China shows key indicators of consumption fell to its lowest level in nearly three years. But it doesn’t cover the whole story.

America’s members-only warehouse clubs tell a more subtle story: They succeed in attracting consumers willing to pay high membership fees in exchange for quality goods at reasonable prices. Best of all, these stores offer a no-frills “treasure hunt” shopping experience to add to the excitement of the transaction.

Walmart’s members-only warehouse retail subsidiary Sam’s Club opened a new store in Beijing last month and opened another store in Shanghai on Tuesday. them Attracting a large number of people to watch, Traffic jam for hours And keep consumers queuing up.

Walmart plans to open 10 new Sam’s Club stores in China this year Fastest expansion ever – and is Track to achieve this goaland The 10th store opens in Guangzhou next week.

Warehouse stores like these have long been known as places where you can buy a lot of household essentials at cheaper prices.

Although this is less common in China where grocery habits have a long history Biased towards high frequenciessmall basket shopping, this retail model is starting to find customers.

“Here, they do buy it because of its value and niche product,” said Cameron Johnson, a Shanghai-based senior partner at consulting firm Tidal Wave Solutions. He said residents in his compound often ask others in group chats if they would like to split oversized packages.

Sam’s Club has leaned into this proposition: a different shopping experience and product lineup from traditional supermarkets and online retailers, and annual membership fees of 260 yuan to 680 yuan ($37 to $97). Shoppers can get modest discounts, but the bigger draw is access to curated items they can’t find elsewhere.

“This is a membership model where consumers pay membership fees in advance to get a full set of services,” said Han Weiwen, a partner at Bain & Company in Hong Kong.

Walmart’s success

Walmart entered China in 1996 The first large supermarket and Sam’s Club warehouse chain in Shenzhen.

But the big-box model—a combination of supermarket and department store— As digital retail takes off, it has lost steam. Huge online marketplaces such as Alibaba and JingdongWith deep discounts and convenience, it has squeezed out traditional grocers and foreign players such as France’s Carrefour.

Since 2020, Walmart has closed nearly 150 hypermarkets in China. Only 279 stores As of July, the number of operations was down from 412 in 2020.

But Sam’s Club has proven the company’s enduring strength. The chain has turned warehouses into shopping destinations and e-commerce delivery centers, while stocking shelves with products consumers can’t easily compare elsewhere, including exclusives from its own brands, Member’s Mark and Marketside.

In addition to online grocery ordering and delivery, Han said the clubs offer an offline experience where shoppers can browse and “treasure hunt” — something that local e-commerce businesses will find difficult to replicate.

The bet is paying off. Sam’s Club has become one of the fastest growing foreign-owned retailers in China 56 outlets nationwideCompared with Costco’s seven stores in the country. The market also helped drive Walmart’s strongest net sales growth globally. Walmart’s net sales in China in the third quarter Increased 21.9% year-on-year to US$6.1 billionexceeding Wal-Mart’s international business average growth rate of 10.8%.

“Let’s go to Disneyland”

The combination of curated products and digital convenience helps explain why the model is popular with affluent shoppers and why a single store visit can be converted into multiple online orders.

Many shoppers don’t come back often in person. They would browse once and then rely on the mobile app for five to 10 deliveries from the same store, said Curtis Alan Ferguson, former president of Coca-Cola Greater China and Korea and now a managing partner at Ventech China, a venture capital firm focused on consumer startups.

For some, the appeal lies in the outing itself—a carefully crafted, predictable version of discovery shopping. “It was more like… ‘Let’s go to Disney,'” Ferguson said.

Walmart said that in addition to the physical shopping experience, speed is also part of the stickiness. “Our team in China delivers very quickly, with nearly 80% of digital orders delivered within an hour,” Walmart CEO Doug McMillon said on the company’s third-quarter earnings call.

Suppliers also like working with Sam’s Club because volume can justify unique packaging or sizes, Ferguson said. “People go out of their way to give (Sam’s Club) the quality they want,” he said. “If you have … Sam’s or Costco pulling your brand … it gives you some other prestige.”

Difficult to replicate – even with local muscles

Few local rivals can truly challenge Sam’s Club and Costco in membership retailing — and not for a lack of trying.

Alibaba-owned Hema is the Chinese tech giant’s grocery business. Closed the last membership store August.

However, Pang Dong Lai, a regional chain that started in Xuchang, in the heart of Henan, is widely regarded as a huge success.

Olivia Plotnick, founder of Shanghai-based marketing agency Wai Social, said Pang Dong Lai’s appeal lies in its “people-oriented philosophy” in which emotional value and trust are more important than scale.

But the Henan store has been trying to expand beyond its headquarters. Its unique culture and high operating standards may be difficult to replicate and defend in larger, more competitive cities, Plotnick said.

“Consumers who really want high value are still willing to pay, but those looking for sensible, low-price essentials are turning to discounts,” Plotnick said.

As China’s consumption slump continues, warehouse clubs that offer high-quality goods at reasonable prices and offer a store experience that online rivals can’t easily match are becoming rare bright spots in the industry.

Shares of Chinese chipmaker MetaX soared nearly 700% on its first day. The company began trading in Shanghai on Wednesday, with shares rising from 104.66 yuan ($14.86) to 829 yuan. MetaX Integrated Circuits develops semiconductors for artificial intelligence applications.

China’s economic slowdown intensified in November. Consumption, investment and industrial output growth did not meet expectations And it’s worse than the previous reading.

Government jobs attract large numbers of young Chinese. Up to 3.7 million applicants The race is on for one of 38,100 entry-level government jobs starting next year. The decline in private sector jobs is drawing people into the civil service.

Chinese markets were higher on Wednesday. Hong Kong Hang Seng Index Chinese chipmaker MetaX Integrated Circuit surged nearly 700% on its first day of trading, driving the CSI 300 Index up 0.82% and the CSI 300 Index up 1.83%.

The Hang Seng Index is up nearly 26% so far this year, while the CSI 300 Index is up 16.39% during the same period.

The offshore yuan was last at 7.0421 against the US dollar.