China's supermarket giants tap store brands to lure frugal shoppers

The cheap croissants and no-name detergents that power discount grocers in the United States and Europe are now filling shelves in China, where struggling chains are betting on store brands to lure back shoppers.

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Once dominated by sprawling hypermarkets packed with name-brand goods, purveyors from Walmart and Wumart to Alibaba Group Holding’s Freshippo are streamlining: cutting clutter and pushing their own lines, a category known as “private label”, that can match or beat the quality of established brands.

They are betting that a playbook honed by the likes of German discounters Aldi and Lidl, and even Amazon.com’s Whole Foods which has rolled out its budget 365 by Whole Foods Market brand as far as Singapore - can revive an ongoing slump as economic uncertainty sees consumers pull back. Sales at China’s top 100 operators were flat in 2024, while store counts fell nearly 10 per cent, according to the China Chain Store & Franchise Association.

Store brands often sell for less than name products by skipping middlemen, including distributors, and keeping packaging simple.

“Chinese consumers are becoming more sensitive to prices as they expect to earn less in the slowing economy,” said Mr Jason Yu, Shanghai-based managing director of CTR Market Research.