Chongqing—China's hard-discount supermarket race intensifies as the major retail company Freshippo is set to end its membership model in an apparent pivoting effort. 

The Alibaba-backed Freshippo made the announcement on August 6 that it will close the last of its X Membership Stores in Shanghai on August 31, marking a complete exit from the X membership store model.

At its peak, the format expanded to 10 stores with over 3 million members. 

Freshippo opens its first store in Tianjin on June 27, 2025. (Photo/Freshippo)

Xianlei Yan, CEO of Freshippo, stated on August 7 that the move is part of a strategic adjustment, with the total number of store closures not exceeding 2% of Freshippo's overall store count.

Freshippo operates multiple retail formats tailored to different consumer needs. The warehouse-style Freshippo X Membership Store targets middle-class and high-end consumers. Launched in October 2020, the company aims to position X Membership Store as a major growth engine, using paid memberships like Costco and Sam's Club. It offered tiered choices- 258 yuan per year (about 36 USD) for Gold and 658 yuan per year for Diamond.

However, the recently announced move does not signal a full retreat for the Chinese retail giant. On the contrary, the company is accelerating its pivot and expansion toward hard-discount supermarkets, with a plan to open nearly 100 new Freshippo stores for the new fiscal year, and to enter more than 50 additional cities within the year. 

By then, the number of Freshippo stores will exceed 500. According to the company's statistics, as of the end of 2024, Freshippo operated 420 stores.

Freshippo X Membership Store in Shanghai, China. (Photo/Freshippo)

Following a leadership change in early 2024, when former CFO Yan Xiaolei was appointed CEO, Freshippo reoriented its strategy toward profitability. The company now focuses on two core models: Freshippo and Freshippo NB (Neighborhood Business), one aiming for middle-end and high-end retailing, and the other for hard-discount community sales. In the 2025 fiscal year (April 2024-March 2025), Freshippo achieved 75 billion yuan in gross sales and reported full-year profitability for the first time.

Discount retailing has emerged as a hot development trend in China's retail industry in recent years. Tech giants like JD.com and Meituan are rapidly expanding their presence: JD.com will open a 5,000-square-meter hard-discount supermarket in Zhuozhou, Hebei province, in August, leveraging its direct sourcing advantages to offer low prices across the board. Meanwhile, Meituan's "Happy Monkey" discount project is set to launch its first store in Hangzhou by late August, utilizing its delivery network for cost efficiency.

Traditional retailers like Yonghui and Wumart are converting existing stores to discount formats as well, while specialty chains such as "Busy for You" are expanding into full-range discount supermarkets.

Despite intensifying competition, Retail analyst Wang Guoping believes the discount giants haven't yet reached head-on conflict due to product differentiation. "The dominant items still vary across platforms," he added.