Discount stores enter a new cycle — China's retail landscape is changing

Market momentum: scale and speed

Discount retail in China is no longer a niche experiment. Zhiyan Research (智研咨询) estimates the discount retail market reached ¥2.28 trillion in 2025, growing at an 11.0% CAGR from 2022–2025, while community discount stores alone are forecast to exceed ¥185 billion in 2025 with a five‑year CAGR of 28.5%. Investors are taking note: Cai Jingzhong (蔡景钟), founding partner of Wujie Innovation Capital (无届创新资本), has predicted 2026 could be a year of explosive expansion for operators that have proven the discount model.

Big names and fast roll‑outs

Last year saw top players move aggressively from pilots to scale. Aoleqi (奥乐齐) expanded beyond Shanghai into Suzhou and Wuxi and has opened 84 stores. Freshippo (盒马) rebranded its discount arm to “ChaoBoxSuan NB” (超盒算NB) and opened dozens of hard‑discount outlets across the Yangtze Delta, then opened franchising to accelerate growth. Internet giants have joined: Meituan (美团) launched “Happy Monkey” (快乐猴) and JD.com (京东) opened its JD Discount Supermarket (京东折扣超市); both rolled out multiple brick‑and‑mortar stores in 2025. Traditional chains — Wumart (物美), Zhongbai (中百超市) and even Walmart — plus regional chains and startups are experimenting with discount formats, signaling a sector‑wide rethink.

Defining a mature discount chain

What makes a true discount store? Industry veterans say it’s strategy, not simply lower prices. Cai argues a mature fresh‑focused discount chain should meet three thresholds: fresh and frozen goods composing 50–70% of sales, gross margins tightly controlled around 13–15%, and private‑label penetration of 70–90%. Many current entrants, he and other observers say, are still transitional — heavy on promotional pricing or supplier subsidies, light on standardized fresh supply, private‑label depth and low‑cost operations. It has been reported that advances in standardized, factory‑prepared fresh goods and evolving consumer acceptance of pre‑packaged produce are helping discount chains lower store labor and spoilage costs, making the model more viable.

Strategic implications and the road ahead

The shift matters for China’s broader retail ecosystem. Discount chains, by pricing off a cost‑plus formula rather than benchmarking competitors, can compress margins across categories and accelerate store closures among large hypermarkets. The trend also aligns with Beijing’s policy push to stimulate domestic consumption and strengthen supply‑chain resilience amid global trade frictions. International examples — from Don Quijote (唐吉诃德) to OK Supermarket (OK超市) in Japan — show the payoff of clear positioning and tight cost control. Analysts say the segment could produce new ¥100‑billion‑plus retailers; whether China’s players can build the requisite supply chains, private‑label systems and store economics will determine if this is a lasting cycle or another tactical phase.