Alibaba to Gradually Close Costco-Style Membership Stores, Focus on Core Retail Operations.

Alibaba plans to close its last few Costco-style membership stores operated by Hema Fresh subsidiary, aiming to streamline operations and focus on expanding its primary chain of Hema Fresh supermarkets, which do not require a membership fee. The company plans to open around 100 new Hema Fresh stores this year, highlighting its intent to concentrate on core retail operations for growth and efficiency.

Alibaba Group Holding Ltd. (NYSE: BABA) is planning to gradually shut down its last few Costco-like membership stores operated by its Hema Fresh subsidiary. This strategic move is part of the company's broader effort to streamline operations and concentrate on expanding its primary chain of Hema Fresh supermarkets, which do not require a membership fee [1].

The supermarket chain Hema has begun shutting down premium "Hema X" outlets, which charge members an annual subscription for access. The last Hema X store in Shanghai is set to close on August 31, following the closure of three outlets in Beijing and eastern Jiangsu province in July [1, 2, 3]. This retreat from the membership model reflects Alibaba's broader strategy to refocus on AI development and compete with JD.com Inc. (JD) and PDD Holdings Inc. (PDD) during a Chinese economic slowdown [1, 2, 3].

Despite closing the membership stores, Alibaba plans to expand its main Hema Fresh chain. The company aims to open around 100 new Hema Fresh stores this year, indicating its commitment to core retail operations for growth and efficiency [1, 2, 3]. This expansion comes as Alibaba has been unwinding years and billions of dollars in investment in physical retail, including the sale of its shares in Sun Art Retail Group Ltd. to private equity firm DCP Capital and the unloading of its Intime department store business [1, 2, 3].

By closing the membership stores and focusing on its core retail operations, Alibaba aims to enhance overall profitability and adapt to the evolving competitive landscape in the Chinese retail market.

References:
[1] https://seekingalpha.com/news/4478183-alibaba-to-close-subscription-based-premium-hema-x-outlets
[2] https://www.bloomberg.com/news/articles/2025-08-05/alibaba-to-shut-costco-like-china-stores-after-rivalry-heats-up
[3] https://www.livemint.com/companies/news/alibaba-to-shut-costco-like-china-stores-after-rivalry-heats-up-11754386873716.html