Fu­tur­is­tic shop­ping

How Alibaba’s Hema gro­cery stores are turn­ing the re­tail sec­tor up­side down in China and be­yond

Global Times – Metro Beijing - - FRONT PAGE - By Ka­trin Büchen­bacher

In China, tech and in­no­va­tion seem to be part of peo­ple’s DNA. Hav­ing the new­est gad­get is not only some­thing for geeks, but for ev­ery­one, as “con­ve­nience be­comes the

new re­li­gion,” the Fi­nan­cial Times wrote in a re­cent re­port.

Ex­pats liv­ing in China also em­brace the fact that tech is not locked away in some sci­ence park or in­no­va­tion lab, but part of their daily lives.

Bei­jing res­i­dents al­ready use their phones as pub­lic trans­porta­tion cards, to rent on-de­mand bikes and to or­der food. Even the street food ven­dors and beg­gars are us­ing QR-code pay­ments.

But now, an­other ma­jor part of daily life will be swal­lowed by the dig­i­tal rev­o­lu­tion – gro­cery shop­ping.

In­ter­net com­pa­nies open­ing off­line stores is a ma­jor trend of 2018, with “in­te­grated re­tail” be­ing the buzz word. Off­line re­tail­ers are look­ing at how they can blend con­sumers’ on­line and off­line ex­pe­ri­ences.

How­ever, brick-and-mor­tar stores are not go­ing to van­ish soon. Af­ter all, 85 per­cent of all sales still hap­pen in phys­i­cal stores, ac­cord­ing to Bos­ton Con­sult­ing Group.

Ama­zon, the US re­tail gi­ant, opened up its cashier less stores in Jan­uary. The stores are equipped with cam­eras that au­to­mat­i­cally charge a per­son’s Ama­zon ac­count for the prod­ucts they choose.

China’s e-com­merce ti­tan Alibaba in­tro­duced its “new re­tail” con­cept a month ear­lier, and its ser­vices com­bine Alibaba’s as­sets and lo­cal pref­er­ences.

The stores are named Hema, which means box horse or, sim­i­larly pro­nounced, hip­popota­mus – the cute logo of the fu­tur­is­tic re­tail chain.

Hema heav­ily re­lies on big data to op­ti­mize the store’s of­fer­ings. All the shop­pers have to use the store’s app in or­der to ben­e­fit from the ser­vices.

The app can build on the al­ready wide­spread use of Alibaba’s mo­bile pay­ment ser­vice, Ali­pay.

Cus­tomers can ei­ther pay for the prod­ucts by scan­ning them at the check­out coun­ters and pay­ing us­ing the store’s app or the prod­ucts can be de­liv­ered to them free of charge. Shop as­sis­tants will col­lect the prod­ucts for them in a bag that they can con­nect to an in-house trans­porta­tion sys­tem that is spread like a net­work across the store’s ceil­ing.

How­ever, Hema only de­liv­ers to cus­tomers who are liv­ing within a ra­dius of 3 kilo­me­ters from their stores.

Alibaba has al­ready opened up 10 stores in Bei­jing, with 20 more to come in 2018, which will cover most of the city with the de­liv­ery ser­vice, the store’s manager Li told Metropoli­tan.

“In tra­di­tional su­per­mar­kets, there are usu­ally goods on sale due to over­buy-

ing, in and the staff has high work in­ten­sity,” he ex­plained. “But in Hema, H af­ter our analysis, we will fur­nish prod­ucts fre­quently in small batches each time, ac­cord­ing to the up­dated sales per­for­mance,” he added.

It’s a smart store that rec­om­mends prod­ucts for shop­pers based on their pre­vi­ous pur­chases.

By scan­ning the bar­code of a prod­uct, clients will get all the in­for­ma­tion about it, just like they would if they vis­ited an on­line store.

Alibaba is the pi­o­neer, but other stores and shop­ping malls in China have fol­lowed, pro­vid­ing clients with a dig­i­tal shop­ping ex­pe­ri­ence and gain­ing de­tailed in­sight into their con­sump­tion pat­terns and pref­er­ences to draw more cus­tomers in. But data can also help to op­ti­mize pro­cesses in the op­er­a­tion of phys­i­cal stores.

“The point is not the trove of data it­self, but to iden­tify prob­lems and make changes ac­cord­ingly,” said Feng Yu­jian, the chief ex­ec­u­tive of Bei­jing Cap­i­tal Grand, a com­pany that runs sev­eral shop­ping malls and out­lets in China, in an in­ter­view with the South China Morn­ing Post.

“For ex­am­ple, the route data shows some places are ‘dead corners’ with few vis­i­tors, and we have got to fig­ure out why. Two stores stand door-to-door but their sales per­for­mance varies. Why? Is it be­cause the poor per­former has few new prod­ucts, or is the pric­ing a prob­lem? We can help them an­a­lyze this.”

Hema has made it­self a name for an­other ser­vice that is deeply en­trenched in the Chi­nese food cul­ture – fresh­ness. Shop­pers can pick their food and have it cut or even cooked by chefs on the spot. This ser­vice is es­pe­cially pop­u­lar for the vast se­lec­tion of live seafood avail­able at Hema.

Mrs Zong, who only wanted to give her sur­name, came to the store on her day off to treat her par­ents and her daugh­ter to a meal.

“The seafood here is very fresh and de­li­cious,” she said.

While Bei­jing su­per­mar­kets are usu­ally crowded, Hema in Bei­jing’s Chaoyang district out­side the Fifth Ring Road is un­usu­ally calm on a Wed­nes­day af­ter­noon.

Did the lack of scream­ing discounts or the new tech­nol­ogy scare the shop­pers away?

Zhang came here with her hus­band, and even though she is al­ready re­tired, she en­joys the cash­less su­per­mar­ket.

“It’s very con­ve­nient. My cell phone can solve all my prob­lems nowa­days,” she said.

Photo: Ka­trin Büchen­bacher/GT

Con­sumers em­brace or­der­ing food or pay­ing by scan­ning QR codes when din­ning.

Photo: Ka­trin Büchen­bacher/GT

A scene in a Hema store in Chaoyang district

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