Source | Old Zhang Talks Retail Tea Bai Recently, Hema CEO Yan Xiaolei sent an internal letter on the first day of the new year. The letter contained few flowery words, only a few solid numbers: revenue growth exceeding 40%, and cumulative consumers served surpassing 100 million. Hema's sales this year have basically crossed the 100 billion yuan mark. This is a pretty impressive report card, but what people are curious about is not "how it succeeded," but "how it suddenly succeeded." After all, just a year or two ago, Hema was widely questioned for its constant trial and error and complex business formats. From attacking on all fronts to focusing on profitability, this turnaround seems simple, but it was actually a difficult self-revolution.
Before Yan Xiaolei sent this letter, Alibaba's financial report had already laid the groundwork. In fiscal year 2025 (2024), Hema's overall GMV exceeded 75 billion yuan. The significance of this number is not only that it finally ended losses, but also that it quietly climbed to one of the top players in domestic fresh food retail. After all, turning losses into profits is one thing; reaching the top in fierce market competition is another.
Reading that internal letter carefully, you can find three clear signals. The first signal: pace. In 2025, Hema Fresh entered 40 new cities, and opened more than 200 "Super Hema NB" stores. The speed is not slow, but it feels different from the previous grand expansion. The old Hema seemed to want to occupy every street corner; now it seems to be playing Go, with each move more deliberate in placement and timing. The second signal: confidence. Based on the hard indicator of 40% revenue growth, some media speculate that, following this trend, by the end of the fiscal year in March 2026, Hema's GMV will likely exceed 100 billion yuan. The third signal: focus. The letter mentioned that in the past year, as much as 80% of new product development was closely centered on users' core needs, showing the importance placed on user needs. This proportion indicates that Hema, which once chased every trend, has finally pulled its gaze back and focused on what can most impress customers at the moment.
Behind all these changes, "profitability" is the most realistic baton at work. In 2025, Hema's strategy shifted significantly. On one hand, it leveraged the low-cost, lightweight NB stores to quickly conduct market tests; on the other hand, it adjusted the company's overall operational tone to be pragmatic, aiming for steady progress. Notably, this fiscal year happens to be the first full year after Yan Xiaolei took over as CEO. A new leader typically brings "three fires." Yan Xiaolei's fires may not seem intense, but they burn accurately: returning to user value, focusing on core business, and strengthening organizational capabilities. The strategy sounds plain, but the accompanying actions are quite decisive.
For customers, it has become more "refined." A batch of old stores completed upgrades, and new products launched also revolve around the simplest demands of "health" and "convenience." More importantly, by optimizing backend systems, the proportion of orders delivered within 30 minutes has significantly increased. For business, it has become more "picky." The X Membership Store, which once carried high expectations, saw its offline expansion plans abruptly halted, going from a peak of 10 stores to zero now. This decision sends a clear signal: businesses without a clear path to profitability should be put on hold. Internally, management has become increasingly "meticulous," with every aspect of operations precisely controlled. From adjustments in certain positions to stricter financial approvals, a series of measures reiterate a principle: every yuan invested must first calculate the return. New business? It can be discussed, but please first prove your business logic is sound.
So, today's Hema has its core business clearly anchored in two formats: Hema Fresh large stores, focusing on quality life, and Hema NB small stores, focusing on high-frequency, essential needs, especially NB stores. If you walk into an NB store, you'll find bottled cola for 2.2 yuan and liter-pack fresh milk for 9.9 yuan, with prices directly benchmarking traditional hard discount stores. Moreover, about 30% of products are private label, making "extreme value for money" a visible, tangible reality on the shelves. This series of adjustments is less about foresight and more about a sober recognition of reality.
Looking back at Hema's years of exploration, it's like a vivid "history of retail format evolution." Convenience stores, community supermarkets, front warehouses, membership stores, fresh food markets, discount stores—it tried almost every popular model. At that time, Hema seemed constrained by the "new" in "new retail," believing that not creating a new format meant not innovating. The result? It crossed every river it had to cross and stepped in every pit it had to step in. Effort was scattered, superficially lively, but internally weak. This is a bit like practicing martial arts: beginners want to master all schools, switching weapons every day. True experts know that rather than showing off various fancy moves, it's better to focus on perfecting a basic set of punches, because only then can you achieve more practical results.
In retail, especially fresh food, it's essentially a hard, thankless job. It competes on efficient supply chain operations, relying on excellent efficiency and quality to win customer trust and support, and thus establish a market position. This requires a supply chain system that is as stable and flexible as a spine. If the front-end store formats keep changing, customers' perception of you becomes blurred—and trust takes time to build but can collapse in an instant. Hema X Membership Store's exploration journey is a case in point. The original intention was good: use a supply chain that better understands the Chinese market to create a down-to-earth membership store. But in actual operation, customers seemed to feel that its unique value proposition still lagged behind international brands like Sam's Club and Costco. In past years, Hema seemed to aspire to cover the needs of all customer groups with its business map. However, trying to achieve "have it all" often trapped it in a triple dilemma of cost, scale, and price. Why go through such unnecessary trouble? Was there no smoother path, requiring such great effort?
Initially, Hema, like many merchants, equated "novelty of form" with "innovation in essence." It thought the essence of "new retail" lay only in unique models, efficient delivery, and flashy stores. However, the truly enduring "new" in retail may not be so eye-catching at all. It hides in daily life, shaping the industry's future in a subtle, moistening way. In the past, many traditional supermarkets selected products like "moving goods," stocking whatever was popular in the market, disconnected from consumers' real lives. Products on shelves might remain unchanged for years. Hema has indeed invested more in product innovation, but this requires time to settle and deep binding with industrial sources; being eager for quick success is hard to achieve.
The rapid trial and error in previous years once put Hema in a dangerous position within the group's strategic layout. It wasn't until it clearly proposed "returning to the essence of retail" that it truly began strategic adjustment. Last year, an internal management meeting clarified the development direction: Hema Fresh and Hema NB become dual-core driving forces, advancing side by side, while strengthening organizational system construction to lay a solid foundation for future development. Hema Fresh's task is to focus: how to become the most trusted daily shopping choice for middle-class families. Not seeking to amaze, but to be reliable and convenient. Hema NB's mission is to penetrate: like a reliable neighbor in the community, meeting the affordable and convenient needs of three meals a day in the most efficient way. For the team, it's necessary to stimulate the vitality of the front line, enabling employees to receive reasonable returns for their efforts, thereby driving efficient team operations.
From its inception, Hema carried the high expectation of "consumption upgrade." The image of Jack Ma holding a king crab and the concept of "Hema district housing" became portraits of that era. But the market ultimately gave an answer not of uniform "upgrade," but of increasingly evident consumption stratification. Groups pursuing quality and experience chose different channels; consumers obsessed with extreme value for money flocked to different platforms. They each have their own needs and choose their own paths. The imagined vast and unified market did not fully materialize. Timely strategic focus and contraction, instead, allowed it to stand firm, and its position within the group became clearer. Group executives later explicitly stated they would not sell Hema, with pragmatic reasons: healthy business growth and self-sustaining造血能力. However, the real challenge may just be emerging; everything is merely a prologue, and greater tests are quietly approaching.
For Hema at present, more thorny issues are already on the table: how to strictly control costs without damaging the established consumer experience? Can the profit model it has figured out be successfully replicated in lower-tier markets where consumer behavior is more cautious and price sensitivity is higher? Without the group's special resource support, can it achieve independent survival and development under fully market-oriented conditions? The answers to these questions will determine Hema's ultimate direction. Whether it will become a solid "ballast stone" for the group's stability, or merely a "test field" for a phase, fading away in exploration, remains to be tested by time.
[Moving Toward Consumers] The 11th China FMCG Conference Time: March 16-18, 2026 Location: Chengdu, China