This trend is part of a broader shift within the retail industry.

Yu said that the rise of private labels is not isolated to one retailer, but is indicative of a larger market shift. Small retailers, in particular, are using private labels to overcome pricing challenges and compete with larger, established brands.

As China's manufacturing sector matures, e-commerce platforms have enabled small manufacturers to deliver high-quality products at lower costs. Consumers, in turn, are increasingly looking for "comparable quality at lower prices", alongside fresh, innovative experiences that offer convenience, Yu added.

The holiday season also sees more demand for retailers and products that provide convenience.

Walmart is expanding its community stores, designed to meet the fast-paced needs of urban families. With four new locations opening in Shenzhen in December 2025, Walmart continues to scale its "small, refined, and nearby" store model, offering a range of products catering to busy shoppers. These stores focus on fresh produce, bakery items, ready-to-eat meals, and snacks, all with an emphasis on value and quality.

Walmart's community stores underscore the growing importance of convenience and value. Offering around 2,000 SKUs across multiple categories, these stores have received positive customer feedback, with increased foot traffic and repeat purchases reflecting the appeal of their "10-minute walkable living circle" concept, said the company.

The company's most recent financial results highlight the significance of optimizing its supermarket format.

For the third quarter, the company reported net sales of $6.1 billion, a 21.8 percent increase year-on-year, with comparable sales up 13.8 percent, largely driven by its membership store (Sam's Club) growth and strong e-commerce performance.

Meanwhile, the broader retail landscape is experiencing rapid growth across new channels.

Membership-based retailers, snack chains, and discount formats have seen year-on-year expansions of 40 percent, 51 percent, and 92 percent, respectively, according to Kantar. This reflects a deeper consumer trend toward value, convenience, and experience, with shoppers increasingly prioritizing affordability without sacrificing quality, said Kantar.

"Channels have become active demand generators rather than passive sales endpoints. Brands need to rethink how they partner with retailers and platforms — treating each channel as an ecosystem for innovation, engagement, and value creation," according to Derek Deng, head of Bain & Company, in China Shopper Report 2025.

Retailers and brands that can successfully integrate these insights into their product offerings and go-to-market strategies will be the ones to lead the next phase of FMCG growth in China, said Deng.