Shopping Centers Today

DEC 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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38 S C T / D E C E M B E R 2 0 1 8 S T O R E F R O N T S by the end of that year. Now Hema operates 52 stores across 13 of China's biggest cities. Looking to the imme- diate future, the chain has ambitious plans to open some 2,000 outlets across the country within the next •ve years. Hou says the company does not see existing, old-school supermarkets as competitors. Indeed, Alibaba uses Hema to showcase an o‚-the-shelf system for stores of any size. Already, several small businesses in China have adopted what Alibaba calls its "inte- engineers. …e chain's success is rooted in data, data and more data. Traditional supermarkets gather payment informa- tion only at the checkout counter. But Hema knows a good deal about a cus- tomer even before that customer sets foot inside one of the stores, including phone numbers, products perused on the Hema app, any recent Alipay transfers, the content shared on certain social-media platforms, and even home addresses. All of this helps shape the catalog of goods Hema stocks. …e chain is •rst and foremost a model of what Alibaba refers to as "new retail": a concept that blends the brick-and-mortar shopping experience with that of on-demand e-commerce. …ough Alibaba dominates China's online retail scene, the company also recognizes that physical stores cannot be replaced. AŠer all, only some 20 percent of the country's retail sales take place over the Internet. As of 2017 Alibaba has invested some $8 billion in brick-and-mortar retail infrastructure, and this includes funds for building the 22 Hema stores that were operating H ema may be a supermarket chain in China, but it o‚ers a glimpse of the future of retail everywhere. At any given moment, 'eet-footed sta‚ members are zipping through the aisles of Hema's supermarkets, reading orders o‚ computer printouts and grabbing bottles of olive oil from southern Italy; fresh produce from all over China; cosmetics from Japan or South Korea; or live crustaceans from water tanks. …ese team members, all wearing light- blue polo shirts, are racing against the clock: When a customer places an order through the Hema smartphone app, sales associates have 30 minutes to complete ful•llment and delivery — as the company guarantees to anyone residing within three kilometers (nearly two miles). Hema, a subsidiary of Chinese e-commerce giant Alibaba, was estab- lished in 2015 by logistics expert Hou Yi with the idea of merging online and o›ine retail. Shopping at the chain's stores begins with downloading the app, which links up with the user's Alipay account (an electronic payment service that has been widely adopted in China's increasingly cashless retail landscape). Not only does Hema provide an easy, convenient shopping experience, but its prices are hard to beat. Local produce, for example, is oŠen 10 percent cheaper at Hema than at open-air markets. …e chain can o‚er these savings because it uses Alibaba's existing logistics chain to reach farms directly, thus circum- venting middlemen. …e services go even further: For a fee, Hema cooks will prepare meals of fresh ingredients selected from the store's aisles. It is perhaps no surprise that of the 900-plus employees at Hema's head- quarters, roughly half are soŠware The new retail How China's Hema supermarket chain is cracking home delivery By Brady Ng When a customer places an order through the Hema smartphone app, sales associates have 30 minutes to complete fulfillment and deliv- ery to anyone residing within three kilometers

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