Chinese commerce giant Alibaba’s Hema Xiansheng stores are the showpiece of what it calls “New Retail,” the seamless blending of the digital and physical experience. “Consumers don’t think about the world online versus offline,” says Alibaba Group president Michael Evans. “Neither should brands and retailers.” The grocery-restaurant hybrids—there are more than 100 in 19 Chinese cities—have captivated consumers with their tech-powered ordering and delivery and richly satisfying in-store experiences. The annualized average sales per square meter in mature Hema locations exceeds $7,300, making it one of the more valuable retail environments. Here’s how Alibaba is making the future real.
1. The App Starts It All
Hema stores, which debuted in 2016, are designed to offer an enhanced experience via a mobile app. In the store, users can scan items to get information about their provenance and freshness and, ultimately, pay for them. Eleven million people have signed up for the app, which accounts for 60% of customer orders.
2. Fresh Direct
Local produce and poultry are trucked in daily from nearby farms. The English brand name is Freshippo, which explains the mascot.
3. A Good Kind of Overhead
The array of conveyor belts snaking above shoppers isn’t just for dramatic effect. Hema stores double as fulfillment centers for deliveries, and the conveyors, which dip into parts of the sales floor, allow employees to pick items for to-go orders that can’t be obtained from the stockroom—without getting in the way of customers. Deliveries are then assembled behind the scenes.
4. Fruitopian Greetings
Hema leverages data from its digital orders to help determine what to stock each day, reducing waste and enabling what it calls “one-day farm to table.” Fruits such as the funky durian are stocked near the front to fragrantly announce their freshness to shoppers.
5. A Show and Then Dinner
The centerpiece of the in-store Hema experience is the fresh meat and seafood. People can pick what they want from the live fish market, then take their selection to the dine-in checkout and choose how they want it prepared à la minute. Some meat can also be cooked to order, and live demos on weekends showcase butchering skills. Diners can also choose from a buffet and local restaurant outposts.
6. Starbucks to Go
In August, Alibaba and Starbucks partnered to give the global coffee chain a delivery option in China. “Starbucks delivery kitchens” are being added within Hema stores to fulfill digital orders using Hema’s infrastructure, and Starbucks will harness ordering data to help choose future locations for its cafés. Hema intends to offer its platform to other businesses as well.
7. Thirty Minutes and It’s Free
For residents who live less than 2 miles from a Hema, delivery is complimentary with app orders. They’re fulfilled by Alibaba’s squadron of food-delivery drivers on motorbikes.
8. Pay, Go
Physical cash is not accepted; most customers use Alibaba’s digital payment network, Alipay. Some stores offer customers payment via facial recognition: Hema’s 3D checkout kiosks scan a shopper’s face, then ask for a phone number for added security.