China Supermarket: Shifting towards convenience and experience-driven consumption

It is noted that, based on the performance of listed Chinese supermarket companies, the normalization of omnichannel consumption continues to shift towards convenience and experience‑driven consumption.

In FY25 and 1Q26, average supermarket revenue declined by 14% and 15% YoY respectively, mainly due to ongoing store network optimization and low CPI weighing on ticket prices and same‑store sales. Looking ahead, as store remodels deepen and private label offerings expand, it is expected that store productivity will likely recover.

Increase in online sales is a structural shift – The continuous growth in online sales has proven that it is no longer a supplementary channel but aligning with broader consumer trends. For example, Yonghui Group (601933.SH, RMB3.44, RMB31.2bn) saw its online revenue reach RMB10.1bn in FY25, with its online penetration rising to 19%, up approximately 400 basis points YoY.  Likewise, Sun Art Retail (6808.HK, HKD 1.44, HKD13.7bn) reported 6% YoY growth in online B2C revenue, of which its own app accounted for 36.5%. Despite closing loss‑making stores, Sun Art saw growth in its online channel, showing that online demand is independent from physical stores. This also implies that supermarket operators must possess both "store‑based" and "home‑delivery" capabilities. Those that fail to establish online presence will continue to lose market share.

Instant retail disrupts the traditional business model – Instant consumption, characterized by shorter delivery times for online orders, is rapidly spreading from food delivery to broader retail sectors. In FY25, China's instant retail market (via integrated consumption platforms) reached RMB2,985bn, up 21.4% YoY. Against this backdrop, traditional supermarkets continue to face challenges from new competitors such as Meituan's Xiaoxiang Supermarket (小象超市). In response, supermarket like Yonghui has partnered with third-party platforms to expand its home-delivery services, and Sun Art has indicated that it will accelerate its instant retail transformation.

Experience and quality drive consumption – As foot traffic shifts online, in‑store visits evolve from necessity‑driven to experience‑driven and emotion‑driven. Consequently, retailers are realigning theirs store network to cope with the change. Yonghui closed a total of 381 underperforming stores in 2025 (nearly half of its previous total) while renovating some 315 stores and achieved a 76% product refresh rate in fresh food categories to enhance the shopping experience. As a result, its net profit turned positive in 1Q26. It is noted that similar transformation trend is also happening in other consumer sectors such as apparel retail, beverages and restaurants. Meanwhile, experience‑ and quality‑driven consumptions are extending from first‑tier to lower‑tier cities, with 80% of FMCG growth coming from third‑ to fifth‑tier cities.