Following the intense competition in the food delivery sector， major players like Alibaba， JD， and Meituan are now shifting their focus to a new arena: hard discount supermarkets.
Just a few days ago， Meituan’s directly operated supermarket， “Happy Monkey” (快乐猴)， opened its first store in Hangzhou. The launch event was a resounding success， with eager customers， including early-rising seniors and after-work crowds， queuing up from morning till evening.
The store is aggressively pricing its products， offering 24 bottles of mineral water for 9.9 yuan， an Orleans roasted chicken for 16.9 yuan， four egg tarts for 5.9 yuan， and 30 additive-free fresh eggs for just 11.9 yuan. The product range spans from staple groceries like rice， flour， oil， and grains to snacks， beverages， fresh produce， baked goods， and daily necessities， all emphasizing affordability.
The name “Happy Monkey” might be a playful nod to the consumers， adopting a down-to-earth， approachable persona. Hard discount， a retail model gaining traction， is distinct from the “soft discount” approach of selling near-expiry or clearance items. Instead， as the name suggests， hard discount stores aim to offer good quality products at significantly lower prices.
Alibaba and JD.com have also recognized the potential of the hard discount market. In a strategic move， Hema NB， a prominent player， rebranded itself as “Chaohaosuan NB” (超盒算NB) on the very day Happy Monkey opened， signaling a shift in its market approach.
Furthermore， JD discount supermarkets quietly launched in Zhuozhou， Hebei， and Suqian， Jiangsu in August. This influx of major internet giants into the hard discount sector highlights a significant trend in China’s retail landscape.
The prevalence of these tech giants delving into hard discount retail prompts the question: why the strong interest in this particular model? Upon investigation， it becomes clear that the hard discount model possesses inherent market advantages.
Traditional brick-and-mortar supermarkets often operate on a model where shelf space is effectively “rented out” to suppliers. This creates a scenario where supermarkets guarantee foot traffic， while brands pay for prominent placement. Consequently， consumers face higher prices， and the selection of goods is often dictated by which suppliers can afford the highest fees， leading to the common perception of traditional supermarkets as being “overpriced” and offering “homogenized products.”
Moreover， existing retail formats like traditional supermarkets， community group buying， and fresh produce front-end warehouses have struggled to simultaneously meet consumer demands for low prices， high quality， and convenience. The hard discount model， however， appears to address these needs effectively.
Firstly， unlike traditional supermarkets， hard discount stores take direct control of their supply chains. By negotiating directly with suppliers and eliminating numerous intermediaries， they can significantly reduce costs and pass these savings onto consumers. This direct engagement also allows them to dictate what products are sold and at what price.
Secondly， hard discount supermarkets fundamentally simplify their product offerings. For instance， the prominent German hard discount chain Aldi typically stocks around 2，000 SKUs， with about 80% being essential daily necessities. In contrast， a traditional supermarket might offer tens of thousands of SKUs. This curated selection acts as a form of expert curation for consumers. Instead of overwhelming choice， such as ten types of ketchup， hard discount stores offer a select few， carefully chosen for better quality and lower prices.
This streamlined approach simplifies supply chain management， reducing the complexity of inventory and shelf stocking. Furthermore， purchasing in larger volumes for a smaller range of products strengthens their bargaining power with suppliers.
A common strategy for hard discount stores to differentiate themselves is the development of private label brands. Most hard discount supermarkets prominently feature their own brands， though the proportion varies. Building private labels allows these retailers greater control over pricing and fosters brand loyalty among consumers. For example， if a customer becomes accustomed to Chaohaosuan NB’s milk， repeat purchases are more likely.
Analyzing these factors， the hard discount model presents a compelling proposition. It caters to consumer desire for value and， with effective cost control， can operate on a model of high volume and low margins. The investment by these major tech companies in building robust supply chains signifies more than just opening physical stores.
A compelling perspective is that their foray into hard discount retail may be a strategic move to enhance their “instant retail” (即时零售) capabilities. Just two days ago， Chaohaosuan NB announced its integration with Taobao’s flash sales platform， a significant move that could leverage existing e-commerce infrastructure for immediate delivery.
This strategy by Hema is particularly astute. Similarly， JD discount supermarkets can offer same-day delivery services via the JD App. It remains to be seen when the nascent Happy Monkey will integrate its own network of delivery personnel.
Regardless， the hard discount market in China is becoming increasingly dynamic. Aldi is accelerating its expansion in the Yangtze River Delta， while Alibaba， JD， and Meituan appear poised for a significant push.
However， this new competitive landscape differs from the subsidy-driven “delivery wars.” A successful hard discount supermarket relies heavily on its selection capabilities， supply chain management， cost control， and the development of private label brands. The ultimate winner remains uncertain. For consumers， the specific hard discount store they frequent is less important than the potential for these disruptions to drive down prices across the entire retail sector.
