From Amazon to Alibaba, grocers’ pain is endless
13.7B
$
spent by amazon to acquire Whole Foods
Want to know what amazon. com will be doing in physical retail tomorrow? Look at what is happening in China today.
If you’d taken this advice, you wouldn’t have been surprised when the behemoth spent $13.7 billion last year buying Whole Foods. Eighteen months earlier Alibaba Group Holding had launched Hema, a technologically advanced blend of online grocery shopping, dining and bricks and mortar.
Alibaba currently has 57 Hema stores, and plans to have 100 by the end of its financial year in March 2019. In five years there could be as many as 2,000. Rival JD.com has already launched its high-end response, 7Fresh, with two locations in Beijing offering all three services. It could have hundreds over the next few years.
If Amazon is chasing Alibaba, and Alibaba’s watching JD. com, grocers in the US and Europe need to pay attention to all three.
Hema is a digital venture at its heart. It includes a traditional supermarket, but the locations also fulfill online grocery orders and offer restaurants. The Hema app, which connects to a customer’s Alipay account, is the glue that holds all the different elements together.
China may have got there first in debuting alternatives to the traditional grocery store. BingoBox, which dispenses with the usual checkout lines, opened in southern China in mid-2017, ahead of the January 2018 public launch of Amazon Go.
But the lead is a short one. Amazon’s answer to cashierless shopping is more advanced than what BingoBox, Hema or 7Fresh currently offer. The Seattle shop uses a mobile app and some of the same sensing systems used in self-driving cars to track what customers have picked from shelves. When they leave, purchases are billed to their Amazon account. However, China’s Internet giants are catching up fast. Alibaba is experimenting with grab-and-go technology at a corporate souvenir shop at its Hangzhou headquarters, and both it and JD.com are using facial recognition to smooth the payment process. The latter already has about 20 unmanned stores across China, and has teamed up with real estate developer China Overseas Land & Investment to open hundreds more.
The lesson for US and European supermarkets is not just that they’ll need to throw capital at updating payment processes. Chinese companies are already making other breakthroughs that have the potential to upend multiple parts of the traditional store, forcing competitors into even more investment.
Chinese companies are already tackling other pain points, such as difficulties with store navigation and unruly shopping carts. Their progress hasn’t always been straightforward. JD.com has introduced a robotic cart that follows customers around the store. Shoppers weren’t as keen on them as the company had hoped, and it is now upgrading them to address their feedback.
A Hema supermarket in Shanghai recently launched a robotic restaurant, where customers can pick their main course from the grocery aisle (or just use their phone to order), and check in at their table with the app. If diners have, for example, chosen their own live fish, staff send it to be cooked via an overhead conveyor belt. Robots transport the meal from the kitchen to the customer. It’s an entertaining dining experience. —