maybefalse
Chinese e-commerce giant Alibaba (NYSE:BABA) intends to gradually close the last of its Costco-like members-only stores, underscoring its retreat from a highly competitive Chinese retail space, Bloomberg News reported.
The company’s supermarket chain Hema has started shutting down premium “Hema X” outlets, which charge members an annual subscription for access, the report added citing a person with knowledge of the matter.
Alibaba did not immediately respond to a request for comment from Seeking Alpha.
Alibaba is staking action to shore up overall profitability, the report noted. The impending shutdowns were first reported by local media including Jiemian.
The move marks a strategic retreat from a model which failed to gain traction against Walmart’s Sam’s Club and Costco Wholesale Corp. that have proven popular with Chinese consumers looking for exclusive products and bulk bargains. It also indicates a broader effort to refocus on AI development and vie with JD.com (JD) and PDD (PDD) to attract consumers during a Chinese economic slowdown, the report noted.
Alibaba had started closing Hema X outlets over the past year or so, pulling back from an expansion that started around 2020. The last Hema X store in Shanghai will be shut on Aug. 31, after three closed in Beijing and eastern Jiangsu province in July, local media reported.
Alibaba still plans to expand its main Hema chain, which helped set up a supermarket model combining fresh produce, a restaurant concept and fast delivery in 2015. The company also plans to add about 100 Hema stores this year, the report added.
More broadly, Alibaba had started to retreat from physical retail even before going all-in on AI, unwinding years and billions of dollars in investment. This year, the company agreed to sell its shares in Sun Art Retail Group to private equity firm DCP Capital. Earlier, it struck a deal to unload its Intime department store business, the report noted.