Summary of Key Points
National retail giants (Sam's Club, Hema, and Qixian) are employing new strategies to enter the Jinan market, challenging local supermarkets such as Jiajiayue. In the past, supermarket competition focused on who was closest to consumers; now, it's about who understands them best. These giants are not relying on traditional large stores but are using membership programs, instant delivery, and small satellite stores to target the core strengths of local supermarkets. Although local supermarkets have years of experience and a network of stores, their advantage of being close to home is being eroded, and they must optimize their products, supply chains, and operations to stand out.
1. The Giants' Three Different Approaches
Each of the three giants is approaching the Jinan market in a unique way, targeting different weaknesses of local supermarkets:
- Sam's Club: It focuses on creating a unique shopping experience that encourages customers to make a special trip. Its large stores (80,000 square meters) offer 1,100 parking spaces and are not competing on convenience. Sam's Club specializes in weekend shopping experiences, with carefully selected products (e.g., a limited selection of bottled waters to reduce choice) and its own brands (such as Sam's Club Roast Chicken). Additionally, it has started selling local products from Shandong, directly competing with local supermarkets on their knowledge of the local market.
- Hema: Hema has launched online delivery before opening its physical stores. Customers can place orders through the app, and the goods are delivered within 30 minutes. Its approach is to treat the store as a warehouse and the phone as the entry point, meeting customers' daily needs rather than large weekend purchases.
- Qixian: Instead of opening large stores, Qixian has started with 4 small satellite stores, leveraging JD.com's logistics and central supply chain to deliver goods within 30 minutes. It provides a more convenient shopping experience by delivering products directly to customers' homes, eliminating the need to leave home or queue.
2. How Long Can Local Supermarkets Maintain Their Advantages?
Local supermarkets like Jiajiayue once had clear advantages:
- Wide Network of Stores: With over 1,000 stores across Shandong, they were accessible to customers in both communities and towns.
- Local Knowledge: They knew what Shandong residents liked and had good relationships with local suppliers.
However, these advantages are becoming less effective:
- Convenience is No Longer Enough: Giants can deliver goods within 30 minutes, making their service more convenient than local supermarkets.
- Lack of Product Differentiation: Local supermarkets often offer a wide range of products, which can be overwhelming for customers. Giants, on the other hand, focus on a limited selection of high-quality items.
- Inefficient Stores: Jiajiayue closed some inefficient stores in 2025; these stores were becoming a burden due to low foot traffic.
However, local supermarkets are not completely out of the game. For example, Jiajiayue's fresh food sales still increased by 3.17% in 2025, indicating that customers still value their fresh and affordable products. The key is to leverage these advantages effectively.
3. The Supply Chain is the Real Battle Ground
Behind all these giants is a robust supply chain:
- Sam's Club: Its global procurement capabilities allow it to source cheaper products.
- Hema: It integrates its fresh food supply chain with store operations and delivery, ensuring that fresh seafood is delivered intact.
- Qixian: By using JD.com's logistics, it doesn't need to stock large quantities of goods at each satellite store, reducing costs.
Industry data supports this trend: The number of stores in the top 100 supermarkets nationwide decreased by 5.4% in 2025, but sales increased by 5.4%, indicating that only the most efficient supermarkets will survive. Efficiency is driven by the supply chain.
Local supermarkets face challenges because they traditionally relied on distributors for goods, leading to a lack of product differentiation. For example, their milk products are no different from those of giants, but giants can offer them cheaper and faster. Local supermarkets need to shift from having many suppliers to offering unique and valuable products (such as their own brands or local specialties).
4. The Path to Survival for Local Supermarkets
To survive, local supermarkets need to:
1. Eliminate Inefficient Stores: Jiajiayue improved 44 key stores in 2025, resulting in increased sales and profits. It's better to focus on a few well-managed stores rather than opening many unprofitable ones.
2. Strengthen Product Quality: By developing their own brands (e.g., freshly baked buns and pickled vegetables), local supermarkets can create a loyal customer base.
3. Embrace Instant Retail: With online sales growing by 29.2% in 2025, local supermarkets should embrace digital platforms to meet customer needs. By improving delivery, they can compete with giants.
Conclusion: Jinan is Just the Beginning
The competition in Jinan reflects the broader trends in the national supermarket industry. Giants are using new models, and local supermarkets must evolve. The future winners will not be those with the most stores but those who understand customer needs the best. Giants need to understand local preferences, while local supermarkets must improve efficiency and offer unique products. The ultimate question is simple: Why should customers choose them over their competitors? The one that can answer this question effectively will win.