Once seen as a premium supermarket built for urban professionals, Alibaba-backed Hema (河马) is now gaining momentum in county-level markets – places not previously considered its natural territory. The shift marks a decisive break from Hema’s earlier strategy.
The company has long positioned itself as something of a domestic answer to Sam’s Club, experimenting with paid memberships and targeting middle-class consumers in top-tier cities. That approach struggled to gain traction. Membership uptake remained limited, and operating costs high.
In 2023, Hema changed course. It deprioritised membership privileges, rolled out widespread price reductions across thousands of products, and leaned into a simpler value proposition: reliable quality, transparent pricing and convenience. By 2025, its remaining membership-only formats were phased out entirely.
The results are now visible in lower-tier markets. In 2024, roughly 30% of Hema’s new stores opened in third-tier cities and county towns – the highest share in five years. Some town-level locations, opened since this Hema county push, have delivered sales volumes that rival, and in some cases exceed, stores in major cities.
The striking of such supermarket gold reflects broader shifts in China’s consumption landscape. County-level households increasingly have stable incomes, high savings rates and strong demand for food quality, health and family-oriented spending. Younger consumers, many with experience studying or working in cities, are reshaping expectations when they return home – seeking urban-style retail without urban-level costs.
Hema’s standardised supply chain, fresh food focus and integrated delivery services fit neatly into that gap. The company hasn’t diluted its offer, just extended it. Now they bring city-grade retail promises into markets long underserved by modern supermarkets.
Competitors from Sam’s Club to RT-Mart are also pushing into county towns. The next phase of China’s retail competition is taking shape well beyond first-tier cities. The countryside is no longer a backwater market to be forgotten about in pursuit of big-city profit. In a mature Chinese market, it’s a new frontier.
