Chinese online retail giant Alibaba gas has indicated that it will accelerate its push into offline retail by adding 30 new brick-and-mortar retail outlets in Beijing. The retail outlets will fall under Alibaba’s Hema brand name. In its ‘new retail’ strategy the Chinese e-commerce leader has been integrating digital shopping with traditional retailing in a bid to boost convenience for shoppers as well as sales.
“As we enter into 2018, we are proud to announce that Hema has found the Sunflower Bible of New Retail, as we rapidly expand nationally and globally. Opening 30 stores is a commitment we’re making to consumers in Beijing,” Hema’s chief executive officer, Yi Hou,said.
Alibaba unveiled the Hema chain of supermarkets two years ago and at the moment there are 25 of them. In Beijing there are currently five Hema outlets. Currently Shanghai has the majority of Hema stores with 14 of them already operating. There are two Hema stores in Ningpo while there is one each in Guiyang, Suzhou, Hangzhou and Shenzhen. Alibaba is also planning to open outlets in Guangzhou, Chengdu and Fuzhou.
According to Hou Beijing will be used as a testing ground for a concept Alibaba is experimenting with regards to the ideal living community radius. Under this concept Alibaba aims to create communities which are empowered by ‘click-and-mortar’ services that are ideally located within three kilometers.
Efficiency and convenience
The ‘new retail’ concept of Alibaba allows shoppers to browse a store using a mobile app. Shoppers are also able to handle payments using Alipay, a mobile-payments platform operated by Ant Financial, a subsidiary of Alibaba. Recommendations on the mobile app are personalized based on data that has been collected from shoppers in previous transactions. The geographic data of shoppers also assists in planning the delivery routes that are most efficient.
Alibaba’s strategy to overhaul the online retail market in China is expected to shrink the margins of brick-and-mortar retailers even further in the world’s most populous country. Margins for physical retailers in China have been shrinking in the recent past due to rising land and labor costs as well as the growing popularity of online retail. Already the online retail market in China is the world’s largest and is expected to grow enormously to reach a figure fo $1.7 trillion in the next two years.
The announcement by Alibaba to open new Hema stores in Beijing comes less than a week since Ant Financial’s plan to acquire MoneyGram was rejected by the U.S. government over concerns of national security.