“New retail” has been a hot topic for a long time, but there were not many successful business cases in the market until Alibaba launched its new-edge supermarket chains Hema (Chinese word for “hippo”) supermarkets to redefine the grocery shopping.

Nowadays when you visit China, besides the cashless culture, you’ll also be able to see that many people queue in the giant supermarkets dining area waiting for their fresh food to be cooked by the chefs.

In a traditional supermarket, the user flow is pretty simple. Pick up items and then check out. Differences between supermarkets are mainly about products offered and store format.

So what are the differences in the “new retail” supermarkets? Here’re some cool features:

  • Customers can trace the origin and backstory by scanning the QR code of every product
  • Customers can have their seafood cooked immediately. After selection, customers can send those lobsters or crabs to the kitchen and it will be ready to eat in the restaurant area when customers complete the shopping journey.
  • Both the selection and payment process can be done using smartphones only. Based on customers’ shopping history and preferences, the shopping app will recommend personalised offers and suggestions.
Hema staff is helping customers use app to pay

Besides, if customers live within a 3km radius, they can order groceries (including semi-finished products) online for delivery in under 30 minutes.

Customers can order those semi-finished goods or seafood directly from the app. Left: Thai curry chicken. Right: Fresh crab

Within 2 years, Alibaba has opened over 70 supermarkets across China. Other big players such as JD.com and Yonghui (one of the largest traditional supermarket chains in China) also opened their new retail store “7Fresh” and “Super Species” to capture the market share.

7Fresh, JD’s high tech supermarket

Why is “new retail” booming in China?

The growth of ecommerce in China is getting slower these years. It’s not surprising to see many companies start to expand business overseas or look for new opportunities in China. Though ecommerce penetration in China is the highest in the world, the traditional offline retail still accounts for more than 80% of its total retail sales, which brings a great opportunity for them to tap into this market. With the well-developed mobile and payment behaviours in China, educating the market about this new concept is actually not a very difficult thing.

Besides, consumption upgrade is a trending phrase in China. An emphasis on quality and experience are growing among middle to upper-class consumers. These new retail supermarkets provide an engaging and convenient consumer experience that many traditional retailers don’t have. Moreover, they offer a wide range of imported seafood at competitive prices, such as Australia lobsters, Japanese spider crab and so on, to meet the increasing demand for goods that are not available domestically in China.

Opportunities in Southeast Asia? Still too early.  

As what we mentioned in our previous article “Where did RedMart go wrong, and why did Lazada buy it?”, the infrastructure and consumer behaviours in Southeast Asia are very different from China. Don’t be too eager to solve a problem that not exist.  

Not to mention that Southeast Asia’s ecommerce industry is still in its early stage. There are many other problems to solve first and opportunities to grow before tapping into this new retail concept.

It is too early for SEA, but it could be an interesting case for Amazon (which acquired Whole Food last year) to learn from.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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