Alibaba’s ‘new retail’ concept may prosper in Indian market: experts

Alibaba’s “new retail” strategy could be soon exported to markets such as India, said experts, as the company revealed results of this strategy at an investors’ meeting on Monday that show its innovative physical shops are starting to bear fruit.

Hou Yi, Alibaba’s vice president and CEO of its new retail supermarket chain Hema, said that the company has opened 64 Hema supermarkets across China. Average daily sales per store exceed 800,000 yuan ($116,600) per day, far above traditional supermarkets, proving the viability of the “new retail” concept.

Alibaba’s bet on this form of online-to-offline retail has attracted global attention, especially for its potential in emerging economies with less established retail industries.

“Indian retail is going through a big wave of investments by foreign players to gain a stronghold in the world’s second-largest market by population,” Neil Shah, research director at Counterpoint Research in Mumbai, told the Global Times on Tuesday.

Alibaba-backed Indian e-commerce operator PayTM this year opened a physical store in New Delhi, with e-commerce features similar to Alibaba’s Hema grocery stores.

“Walmart has acquired a stake in Flipkart and Alibaba has a stake in PayTM. There’s also talk of Amazon looking to invest or acquire a stake in physical retail such as Bharti Retail or Future Group. Further, Alibaba is proposing to form joint ventures with Reliance Retail, a sister arm of the disruptive 4G operator Reliance Jio,” added Shah.

“India’s middle class is growing, and the nation’s proportionally younger population means that innovative business models such as ‘new retail’ are likely to prosper,” said Shah.