Source | Yilan Business
New retail has left the hype cycle and returned to its essence. In August 2025, Hema X membership store in Shanghai Senlan City officially closed, and Hema Fresh plans to open nearly 100 stores within the fiscal year, marking Hema's complete exit from the membership store track and a strategic pivot to focus on two main formats: Hema Fresh and community discount stores. Concurrently, JD.com announced the opening of five JD discount supermarkets in Suqian, Jiangsu, and Zhuozhou, Hebei; Meituan's hard discount brand "Happy Monkey" will also unveil its first store in Hangzhou. The three giants that once fiercely competed in new retail have now charted divergent paths after a decade of exploration.
The Rise and Fall of New Retail: From Frenzy to Rationality In 2015, Alibaba internally incubated a new experiment called the "NB Project," which was the precursor to Hema. This experiment by Alibaba kicked off a decade of new retail in Chinese commerce. That year, Hou Yi, who had nearly 30 years of retail experience and had laid the foundation for JD.com's logistics system, resigned and returned to Shanghai, aspiring to create a supermarket integrating online and offline. His vision aligned with that of Daniel Zhang, then CEO of Alibaba Group. Image source: Internet In January 2016, Hema's first store quietly opened in Shanghai's Jinqiao area without much fanfare. However, the store's 99-yuan Boston lobsters, the mandatory "Hema APP-only payment" policy, and the pioneering "store-as-warehouse plus instant delivery" model with a 3-kilometer, 30-minute delivery promise quickly ignited the market, propelling Hema to internet celebrity status. In its first year, the Jinqiao store generated approximately 250 million yuan in total revenue, with sales per square meter reaching 3.7 times that of traditional hypermarkets, attracting visits from retail giants like Carrefour and Walmart. From 2016 to 2019, new retail enjoyed its "golden three years." Six months after Hema's first store opened, Jack Ma proposed the concept of new retail, asserting that "in the next decade, there will be no e-commerce, only new retail." Alibaba Research Institute defined it as: a consumer experience-centric, data-driven approach that spawns more service forms. Overnight, "new retail" became a super trend in Chinese commerce. From entrepreneurs to capital, from department stores to supermarkets, from online platforms to logistics companies, everyone went crazy for new retail. Image source: Internet Hema, having successfully tested the waters, became the market darling. Projects like Meituan's "Zhangyu Fresh" (later upgraded to "Xiaoxiang Fresh"), JD.com's "7FRESH", RT-Mart's "Feiniu Fresh", Yonghui's "Super Species", and Bubugao's "Fresh Food Evolution" all launched. Most of these formats imitated Hema's model: an online-offline integrated fresh supermarket with dining areas and delivery services, relying on large seafood for traffic. Hema's store count also expanded rapidly, experimenting with various formats. But problems were also sown during these years: First, high costs and difficult profitability. A key feature of new retail is self-operated instant delivery. To ensure peak delivery efficiency, sufficient delivery capacity must be maintained, leading to persistently high fulfillment costs. Combined with employee wages, rent, utilities, operational losses, etc., store profitability is extremely compressed. Second, blind expansion drains cash flow. Physical stores are typical heavy-asset operations. Rent, labor, and renovation are significant investments. Moreover, companies chasing trends continuously launch new formats, leading to severe resource dispersion. The profit model was not yet proven, but cash flow was rapidly consumed. Third, supply chain transformation lags, and product strength is lacking. Most industry "innovations" focus on front-end consumer experience, while deep supply chain transformation lags significantly, resulting in severe product homogenization. Ultimately, consumers criticized that "products are similar, but prices are not cheap," making repeat purchases difficult to sustain. In 2020, the pandemic accelerated the shift online but also exposed the limitations of online models. At the same time, consumers became more focused on value for money and quality for price, objectively prompting the industry to reflect on product strength and efficiency. Subsequently, leading players underwent strategic contraction: Hema halted multiple formats, closed all warehouse membership stores, and focused on Hema Fresh and community discount stores; Yonghui's new retail transformation hit difficulties, leading it to learn from Pangdonglai and deepen its focus on products and services; "Fresh e-commerce first stock" Miss Fresh exited the stage in 2022; Suning's Su Xiansheng had already disappeared. When the halo of "new models" faded, questions surfaced: What is the sustainable essence of retail? Hema's practice is becoming a key sample for observing the evolution of new retail's core.
Value Return: Product Strength Builds the Core Moat After expansion and trial and error, Hema chose strategic focus, concentrating its limited organizational capabilities, brand mindshare, and resources on core businesses that have long-term value and can create synergies. This shift is essentially a return to the starting point of retail capability—products and services. Recently, Hema CEO Yan Xiaolei clearly stated that "product strength" is Hema's core moat. Hema Fresh also formally proposed a new brand proposition: "Explore Freshness, Enjoy Life," aiming to build a product strength system that integrates "data-supply chain-experience," turning user pain points into core drivers of product iteration and experience upgrades. This extreme pursuit of product strength is vividly presented through specific consumer experiences. "If I don't go to Hema for a few days, I feel like I might miss something new," exclaimed Zhou Lili, a 24-year-old baking enthusiast. Her recent favorite is the rose lychee Napoleon pastry launched in July. She admitted that she rarely bought baked goods in supermarkets before. "Baked products in supermarkets are either too dry or too moist, rarely crispy, and the cream is heavy, so the taste isn't good." After stumbling upon a recommendation post on Xiaohongshu, she tried it skeptically and was immediately won over. Thanks to her recommendation, Hema's bakery section has become a must-visit spot for her dorm sisters on weekends. Such blockbuster appeal stems not only from precise taste capture but also from Hema's increasingly refined supply chain response speed and quality control capabilities. Generally, traditional supermarkets communicate with consumers in a one-way, lagging manner, making it difficult to accurately understand product flow and user feedback. In contrast, Hema can leverage sales data and user reviews to gain insights into demand, analyze pain points, and drive rapid iteration by R&D. This contrasts with the traditional model where suppliers lead product selection and replacement is based on experience, achieving a shift from "goods finding people" to "people determining goods." For 37-year-old mother Chen Xian and her family, "freshness" is the core reason for choosing Hema. The "Daily Fresh" series of water spinach and sweet potato leaves are her and her daughter's favorites, and she queues up to buy them every morning. "They are fresh and crisp, with just the right amount for one plate, enough for one meal, and basically don't last overnight," Chen Xian laughed, saying this solves the "stockpiling pressure" in her fridge. From product quality to portion size, this extreme pursuit of freshness has even changed Chen Xian's mother's stereotype that Hema is "expensive." Once, the mother and daughter bought "Daily Fresh" chicken wings together: "The meat was pinkish-white, with no off-putting smell. A quick rinse and they were ready for the air fryer, no marinating needed to taste the natural flavor. Now I'd rather spend a bit more and buy from Hema." Chen Xian's daughter's favorite Hema dried fruit also reflects Hema's dedication to product strength. Chen Xian is very assured about the ingredient list and taste: "No messy additives, plump and chewy flesh, and natural-looking color." It is reported that Hema innovatively uses juice marinating combined with low-temperature slow baking, which locks in the best taste and nutrition while effectively solving the problem of dried fruit oxidizing and turning black. Chen Xian's three-generation family experience vividly illustrates how Hema deepens "freshness" from a time concept to a taste and quality experience. Behind this is the support of a full-chain supply chain system: using algorithms to predict sales and precisely control loss; compressing the time "from field to table" to the maximum through direct sourcing, air冷链, and modified atmosphere preservation technology; and deep cooperation with suppliers in R&D to ensure product strength. In this way, Hema establishes a "trust anchor" for consumers, becoming their firm choice. Hema's precise resolution of user pain points is also reflected in detail design. Peng Juan, a 28-year-old e-commerce customer service representative, feels this deeply. Due to the need for rapid response to customers, she often relies on milk tea to "keep going" under pressure. "Desserts and large fruit pieces take too much time to eat and easily dirty hands and keyboards. But work also needs a little happiness, and in the end, only milk tea is the most convenient." But drinking milk tea every day is not a long-term solution. Hema's fruit cuts became her savior: "The fruit cut category is rich, including not only common watermelon but also pineapple, mango, and papaya, with sizes from single servings to sharing packs. The key is that they are ready to eat, clean and neat." Peng Juan has now replaced her afternoon tea with Hema's fruit cuts and often buys frozen fruit to DIY smoothies or sparkling water: "Delicious and convenient, and DIY is fun, making work more enjoyable." Peng Juan laughed. Through standardized and scenario-based design, Hema not only meets consumers' pursuit of a convenient, healthy, and joyful lifestyle but also greatly reduces decision costs and consumption barriers. By precisely solving user pain points, it effectively improves conversion and repurchase rates, which is the foundation for realizing product strength value. It can be seen that Hema is building differentiated product strength and experience advantages by deeply understanding and solving the specific pain points of different groups. Behind all this is the deep synergy of data insights, supply chain efficiency, and operational capabilities—supply chain efficiency provides the foundation for product strength; excellent product strength brings higher conversion, repurchase, and user loyalty; and enhanced user value provides momentum and resources for continuous efficiency optimization, ultimately forming a self-reinforcing virtuous cycle.
New Retail Returns to Retail Essence In 2025, the retail industry is not short of talk about the "death of new retail." Alibaba's sale of Gaoxin Retail and Intime, and JD.com's reduction of its stake in Yonghui, have also sparked speculation about Hema's fate. However, Jack Ma's revisit to a Hema store and Alibaba's clear statement that it will not sell Hema have sent a strong signal of confidence. At the same time, Hema is focusing on two core formats—Hema Fresh large stores and community discount stores—and deeply integrating into Alibaba's main business ecosystem by connecting with Taobao Flash Purchase and the 88VIP system. This not only opens up a larger user pool and efficient traffic entry for Hema but also significantly amplifies its advantages in product strength and supply chain efficiency, showcasing its future growth path. Back when Hema's first store was questioned, "Is having an APP and delivering takeout enough to be new retail?" But now, APP and delivery have become standard for most chain retailers, and "30-minute delivery to home" has become the basic user expectation for online retail. Perhaps a more objective statement is that new retail has never died; it has just shed the halo of the concept and integrated into the retail industry as a normalized capability foundation. The next stage of competition will focus on the essence of retail—a comprehensive contest of product strength, supply chain efficiency, and consumer experience. This is the core battlefield that Hema's current strategy is fully committed to. From the exploration of the first store in Shanghai Jinqiao in 2016 to the upgrade of the proposition to "Explore Freshness, Enjoy Life" in 2025, Hema's decade is also the decade of new retail from concept to implementation. When the core of competition truly focuses on product strength, supply chain, and experience, the story of new retail may truly enter its most value-creative chapter.