Sample this! Competition between membership stores intensifies

Ding Yining
Competition at membership stores has come down to details as customer experience becomes a top concern for retailers that are trying to lure foot traffic back to physical stores.
Ding Yining

Free sampling has taken competition between membership stores to a new level.

Shoppers in Shanghai can not only enjoy sampling of bakery products, beverages, fruits and ice creams, but also free breakfast at Freshippo X Membership Store as well as American wholesale giant Costco.

Sample this! Competition between membership stores intensifies
Ding Yining / SHINE

Bulk purchase from membership stores has become urban shoppers' preference as they pursue affordable prices for quality products.

Competition at membership-exclusive stores like Freshippo X Membership Store and Costco has come down to details as customer experience becomes a top concern for retailers that are trying to lure foot traffic back to physical stores.

Industry watchers expect the competition will continue for a while, because consumers' preference for high-quality offerings and their cost-saving inclination are becoming more evident in the post-COVID period.

Costco was the early mover for the breakfast service. Two Shanghai Costco stores began offering breakfast in June for members that visit the store without actually buying anything.

Freshippo's free breakfast is for those who have made a purchase at the store.

From bakery products, boiled eggs, beef and desserts, the breakfast comes in a variety of choices.

Shoppers certainly welcome the perk and consider it nice to have some extra benefits.

Sample this! Competition between membership stores intensifies
Ti Gong

Costco was the early mover for the free breakfast service, which started earlier this year.

"It's essential for retailers to differentiate service and product offering as membership stores become a bright spot for hypermarket chains," PwC China Consumer Markets Leader Jennifer Ye pointed out.

Offline shopping experience is a key aspect for membership stores and as they expand into lower-tier cities, it's also important to take into account local shoppers' preferences, she noted.

Some do not give much credit to these promotional activities, regarding them as marketing gimmicks that have nothing to do with the core competence of retailers.

Joan Chen, who first visited the Pudong Costco store earlier this year, has become a loyal shopper and now visits the outlet two or three times a month. She favors cheese and dairy products at Costco compared with other retailers.

"The stable product quality and supply chain capabilities require long-term efforts and when it comes to imported goods overseas retailers usually have a wider choice," she observed.

Sample this! Competition between membership stores intensifies
Ti Gong

Retailers are more eager than ever to crack the code to lure shoppers back to physical stores.

It certainly would motivate more frequent visits to stores and eventually shop for something.

"I hope many more stores would follow suit, which will give more reasons for shoppers to taste and get first-hand feedback for the latest offerings at physical stores," said James Ma, a frequent shopper at Freshippo X.

Currently, breakfast at both Costco and Freshippo is available only on week days.

Diversifying their service also means the stores are likely to recruit more new members who are still hesitant to join.

According to a latest survey of over 1,100 domestic customers by DT Caijing, over half of the respondents choose to pay for membership cards only after they've visited the physical stores and had an actual idea of shopping at one of the clubhouse retailers.

Food, beef and pork, as well as bakery products are still the most popular items and nearly 80 percent say they purchase through both online channels and at physical stores.

Chinese shoppers' embrace of membership stores has long been a "mystery."

Retailers are more eager than ever to crack the code to lure shoppers back to physical stores.

While some customers have become loyal and frequent visitors, some have taken a wait-and-see attitude on whether this could grow into a long-term business.

Sample this! Competition between membership stores intensifies
Ti Gong

Consumers welcome the free breakfast, with many thinking it's nice to have some extra benefits.

Others are more discerning over their purchasing decisions and hope it's worth every penny.

Maggie Chen, who has been purchasing from both Freshippo and American-owned Sam's Club over the past two years, said that some of Freshippo's new offerings had been disappointing.

"I only go for the most familiar products such as milk and beef which I believe can't go wrong, but I seldom pick up new offerings and flavors," she added.

DT Caijing's survey showed that as much as 77 percent of respondents have chosen to renew their membership, thanks to superior product quality. The other important factors for their loyalty are the wide range of product choice, the convenience of delivery service and a high value for cost.

The convergence of online and offline shopping has also required an integrated approach for meeting consumer needs.

Delivery service is already available at all Sam's Club stores and Freshippo membership shops, giving customers the flexibility to choose at their convenience.

Whether the competition is short-term or not, consumers are certainly gaining benefits with shoppers' needs garnering more attention.

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