Alibaba to roll out Hema Xiansheng 2.0

Hema Xiansheng (盒马鲜生), the Alibaba-owned online-to-offline supermarket chain, will roll out upgraded versions of its physical stores in the near future, according to a Sina report. Li Bing, general manager of Alibaba Cloud’s new retail supermarket division, revealed at the recent 2018 China Smart Retail Conference that Hema will open new “Hema 2.0” supermarkets in Shenzhen after some internal upgrades. Li said, on average, Hema supermarket’s online sales surpass offline sales after 3 months of operation. Hema’s current priority is the internal system upgrade. Since digitization is key to new retail, Hema will focus on putting data first.

Video: Alibaba’s Hema supermarket is changing China’s retail game

Alibaba didn’t reveal exactly what Hema 2.0 will look like. But very likely, it would put more emphasis on its online services, instead of offline stores. And as aspects of operations integrate more tightly with technology, product prices are expected to be drop. Optimizing supply chain management and improving efficiency would all help bring down total operation cost. In addition, the size of Hema 2.0 supermarkets is expected to shrink. Even though stores offer less product variety, cities would be more densely penetrated with Hema supermarkets. Li hinted that the “Hema 3.0” will focus on realizing new retail in Hema’s smaller supermarkets.

Hema supermarkets were first introduced in 2015, and they have since become central to Alibaba’s new retail push. In an effort to blend in online with offline experiences, Hema allows shoppers to use their smartphones to shop and pay for their groceries at the supermarkets. Grocery shoppers can also place there order online for delivery in under 30 minutes. It was previously reported that Hema plans to open 2,000 new stores in China within the next three to five years.

China’s new retail market is expanding at a staggering pace. Latest new retail industry report shows that new retail will continue to grow at CAGR of over 100%. And the market size is expected to reach RMB 1.8 trillion in 2022, becoming one of the main drivers of consumption growth in China.