Chinese retailers accelerate private-label push, with 2025 sales hitting 380 billion yuan

Introduction

A prevailing judgment is circulating in the retail industry: if a retailer's private-label products account for less than 30% of its offerings, it may be eliminated from the market within the next five years.

This assessment carries a sense of urgency. But a look at store shelves confirms that change is already underway.

At Sam's Club and Hema, consumers now make special trips for Member's Mark and Hema Workshop products. On Xiaoxiang Supermarket, Chef Elephant has carved out its own space. In the past, people would first recognize a brand and then find a place to buy it. Today, a retailer's own products are becoming a reason for consumers to place an order.

This shift extends far beyond supermarkets. Mingming Henmang, through centralized procurement and collaborative customization, now influences what street-corner snack shops sell. Miniso has put its own brand on daily necessities, turning product development into a core part of its store business.

According to industry data, in 2025, private-brand sales across China's supermarket chains exceeded RMB 380 billion, a year-on-year increase of 17%. As consumers scrutinize every expenditure more carefully, retailers are also recalculating the cost of moving goods from factory to shelf.

Private labels are not a new concept. But when retailers begin using their own products to attract customers, how will competition in the industry change?

01 Top Retailers Are Taking Charge of Their Products

In April 2024, Walmart launched bettergoods, a food private brand — its largest food brand launch in two decades. The plan includes approximately 300 products, most priced under $5.

This move might seem redundant. Walmart already has about 40 private labels, with over 190,000 products developed cumulatively. Its private brand Great Value alone covers nearly 10,000 food and household items, generating annual sales of over $27 billion last year.

In terms of product count, bettergoods' 300 items are a drop in the bucket. In terms of suppliers, Walmart commands a global procurement network built over decades. In terms of pricing, "Everyday Low Prices" is practically its invention. By any measure, bettergoods appears unnecessary.

The answer lies in the products themselves.

What bettergoods puts on shelves includes cardamom rose raspberry jam, fire-roasted salsa, plant-based cheese, and oat milk ice cream. These products seem more at home in Whole Foods or Trader Joe's, exuding an upscale supermarket aura — yet priced "very Walmart."

Walmart specifically noted in its launch that many bettergoods items have no directly comparable national brands; consumers can only find these products at Walmart.

Consumers are responding to this deeper retailer involvement in products.

According to Circana data released by the Private Label Manufacturers Association, in 2025, U.S. private-brand sales reached $282.8 billion, up 3.3% year-on-year, while national brands grew 1.2% over the same period. Looking at 2021–2025, private brands' share of sales rose from 19.1% to 21.3%.

When macro data translates into corporate actions, the results become more concrete. Consider Aldi in Germany, Costco in the U.S., and Mingming Henmang in China.

These three companies differ vastly in store format, customer base, and even store ownership structure. Yet they are all doing the same thing: taking increasing control of the products on their shelves.

| Company | Store Format | Customer Base | Ownership Model | Private Label Strategy | |---------|-------------|---------------|-----------------|------------------------| | Aldi | Discount grocery | Price-sensitive, quality-conscious | Company-owned | Over 90% exclusive brands; limited SKUs per category | | Costco | Membership warehouse | Middle-to-high income, bulk buyers | Company-owned | Co-exists with national brands; Kirkland as trusted alternative | | Mingming Henmang | Snack stores (franchise) | Lower-tier cities, towns | Franchisee-operated | Centralized procurement; ~34% co-customized products |

According to Aldi's U.S. website, over 90% of its store products are exclusive brands. Most come from supplier factories, but quality reflects directly on Aldi's reputation. Food items must pass through a test kitchen before hitting shelves, with repeated taste tests afterward.

Aldi achieves both high quality and low prices through its selection strategy. In any given category, Aldi typically offers only a few choices. For ketchup, a regular supermarket might stock at least 10 varieties; Aldi offers just two: regular and organic.

The result: orders concentrate on the few remaining items. With higher volume per product, Aldi gains leverage to negotiate lower prices with suppliers. By operating its own stores, procuring its own goods, and setting product standards, Aldi connects these各个环节 seamlessly.

Costco tells a different story. Its shelves feature both manufacturer brands and its own Kirkland Signature label. Consumers can buy familiar big brands or choose Costco's own products. Once customers grow accustomed to the quality and price of a Kirkland food item, the same name earns trust when they shop other categories.

Harvard Business School retail professor Rajiv Lal and scholar Marcel Corstjens studied this dynamic: when consumers value quality and have habitual purchasing patterns, high-quality private labels help retailers differentiate and build store loyalty. The value of one product thus extends to the next shopping trip.

In China's counties and towns, Mingming Henmang offers a third model. Consumers see "Snack Henmang" or "Zhao Yiming Snacks" on street corners. Most stores are run by franchisees, but the products are centrally procured by headquarters and supplied to each store. Individual stores have no bargaining power, but once the store network reaches scale, headquarters holds the leverage to negotiate with upstream suppliers.

This influence extends to how products are sold. According to disclosures, over 40% of products in stock are sold by weight in bulk, and co-customized small packaging lowers the barrier to trying new items. Faced with an unfamiliar snack, consumers might hesitate to buy a full bag, but picking up two small packs is much easier.

As of September 30, 2025, Mingming Henmang had over 3,900 SKUs in stock, covering more than 750 brands, with approximately 34% coming from co-customization with manufacturers.

In other words, the manufacturer's name may remain on the packaging, but the retailer participates in product development.

Who runs the store and who organizes the products can take different forms. What consumers see is more private labels and customized products on shelves; behind the scenes, retailers are taking on a greater share of procurement and development work.

02 Why Retail Platforms Are Stepping Forward

In fact, Chinese retailers are no strangers to these practices.

When foreign supermarkets entered China, centralized procurement and private labels came with them. Local supermarkets also accumulated experience in fresh produce procurement and supplier management over time. However, early private-label products were mostly concentrated in basic categories like tissue paper and trash bags, with the main selling point being value for money.

Back then, supermarkets could cover new customers simply by opening a store. Product development, by contrast, required long-term investment with slow returns. Retailers preferred to channel resources into expansion. Private labels made it onto shelves but mostly remained at the "slightly cheaper than big brands" stage.

But as shopping channels multiplied and supply far exceeded demand, products that failed to meet diverse consumer needs struggled to sell — even relatively inexpensive food or household items.

In The Philosophy of Retail, Suzuki Toshifumi recorded a puzzle that baffled him: Japanese consumers displayed a contradictory "duality" in their thinking — even in an era of material abundance, they were reluctant to open their wallets; though affluent, they were particularly sensitive to "differences."

Here, "differences" refers to people caring more about the experiential nuances that details create.

So when consumers flocked to Sam's Club for Swiss rolls, Hema for strawberry box cakes, and Xiaoxiang for milk salt cheese sticks, competitors were inspired: consumers will make a special trip for a single product, and product development can drive new foot traffic to stores.

Walmart increased investment in its Marketside brand. Pangdonglai's DL beer and other private-label products also attracted customers to visit specifically. Yonghui, which has been learning from Pangdonglai, launched "Quality Yonghui," with 57 products on shelves by the end of 2025, and plans to develop 500 private-label products over the next five years.

This round of investment in local retail also includes platform self-operated models.

| Platform | Starting Model | Key Features | |----------|---------------|--------------| | Hema Fresh | Store-warehouse integrated (large stores) | Same store serves as retail space and warehouse; in-store shopping + online fulfillment | | Qixian | Leveraged JD.com's supply chain | In-store shopping + online ordering with 30-minute delivery; integrated with dark stores in 2024 | | Xiaoxiang Supermarket | Community dark stores (front warehouses) | Mobile ordering, in-warehouse picking and delivery; leverages Meituan's delivery network |

As instant retail expanded from food delivery to daily shopping, retail platforms began directly procuring goods and stocking nearby, applying their existing delivery capabilities to a broader business — each starting from a different point:

• Hema Fresh started from large store-warehouse integrated stores. The same location serves as both a retail space and a warehouse. Customers push carts to shop while pickers move between shelves to fulfill online orders. Try before you buy, then reorder online. The store becomes an ideal testing ground for new products, with fresh produce and daily meals driving continuous product development.

• Qixian took over JD.com's supply chain. JD.com spent two decades building the procurement and logistics capabilities to deliver nationwide. Qixian leveraged this system to bring supermarkets closer to consumers. When its first store opened in 2018, customers could shop in-store or order online for delivery within 30 minutes. In 2024, Qixian further integrated dark store operations, connecting store and warehouse product management.

• Xiaoxiang Supermarket started from community dark stores. Consumers order on their phones, and the warehouse picks and delivers. Ensuring an order arrives on time at a nearby resident's door is Meituan's long-standing specialty. The real new challenge is procurement: knowing what nearby households need to restock in their refrigerators, and how much.

Different operating models naturally require different products. In 2025, Meituan launched a cooperation plan for foreign trade enterprises, inviting source factories to participate in developing private labels such as "Chef Elephant," "Xiaoxiang," and "Xiang Xiaojia." Cooperation has extended from buying ready-made products to discussing with suppliers what a product should look like.

This overlaps with what local supermarkets are doing: organizing procurement based on consumer needs, then incorporating insights from sales into the next product.

When the same branded product appears in several apps, consumers can easily compare prices and switch orders. But stable quality and everyday prices require long-term supply arrangements. If the shelves also feature several exclusive food items that customers have grown accustomed to, retailers have a chance to secure a more fixed shopping list.

03 The Next Competition: Who Can Master the Hard Work

In 1937, economist Ronald Coase asked a question in The Nature of the Firm: if the market can organize transactions, why do firms exist?

Finding trading partners, negotiating, and monitoring contract performance all incur costs. By bringing some work in-house, firms can save these expenses — but organizing internally also comes at a cost. The extent to which a firm can expand depends on comparing these two accounts.

Nearly 90 years later, retailers deeply involved in product operations still face this calculation.

Direct factory procurement can reduce some distribution costs, but a few inventory missteps can wipe out the negotiated price advantage. Sustaining long-term low prices requires support from inventory turnover and loss management.

This is driving deeper cooperation between retailers and factories.

In September this year, Yang Hongbin, Vice President of Junlebao Dairy Group, explained at a Xiaoxiang Supermarket supplier conference that the two sides adjusted dairy products based on consumer demand data, launching products like Xiaoxiang A2 fresh milk. Junlebao then coordinated production capacity across its national factories, arranged dedicated production plans, and shifted distribution from regional warehousing to direct dark store delivery.

For factories, such cooperation means greater certainty about sales channels. For retailers, reducing intermediate transfers and improving the match between orders and production creates opportunities to embed cost improvements into everyday pricing.

Such cooperation is entering the plans of more local retail enterprises.

In 2025, Pangdonglai's private-brand sales reached RMB 6.4 billion, accounting for about 30% of total sales. Metro's private-brand sales maintained double-digit growth for four consecutive years, reaching 30% of its business serving individual consumers.

Once private labels reach this scale, ongoing operations require sustained investment. Products that have achieved sales volume must maintain quality, while new product development needs dedicated teams. Dingdong Maicai established a "Private Brand Strategy Committee" led by core executives. Yonghui proposed creating 100 billion-yuan-level single products within three years, embedding product development into its growth plans.

For local supermarkets undergoing restructuring, this is harder than introducing a few best-selling products. It tests a company's product development and ongoing operational capabilities: finding the right factory is just the beginning. Deciding whether to reorder after a trial sale requires the procurement team to make judgment calls and bear the inventory risk of wrong decisions.

Competitors are already using these capabilities to win customers: Mingming Henmang turned supermarket snack business into a specialized chain; Miniso develops products around daily necessities; Xiaoxiang Supermarket moved household grocery shopping onto mobile phones. The same household's shopping list can now be split among several retailers.

For traditional supermarkets, convenient locations and wide product selection are no longer enough to meet all consumer needs.

This competition will also influence which factories get production capacity: retailers with sustained sales volumes are better positioned to offer long-term orders, making suppliers willing to adjust production for them. Traditional supermarkets and expanding retail platforms are both competing for these upstream cooperation opportunities.

From Yonghui writing big single products into its growth plan to retail platforms co-developing products with factories, local retail enterprises are extending their reach further upstream. To become consumers' first choice, retailers must rely on specific products to bring them back again and again.

There is no doubt that private labels will increasingly shape the retail business. Retailers are beginning to participate in deciding how products are made — and also bearing the risk of products not selling. The next industry ranking will be determined in these daily operations. Where customers spend their money will ultimately decide whose shelves continue to expand.

Header image source: AI-generated