Click to read the original article for details. I hope Hema can truly represent the future model of retail. On July 17, Hou Yi, president of Alibaba's Hema business group, said in an interview that new retail has reached a new stage, and the era of one-size-fits-all is over. This year, Hema will focus on refined operations tailored to local conditions. Hou Yi, president of Alibaba's Hema business group He revealed that Hema Fresh large stores will continue to expand rapidly, and in addition, Hema will explore multiple formats such as Hema Market to cater to different customer groups. To date, Hema has opened over 160 stores in 22 cities, and it is expected that by the end of September, the number of stores will increase to 200. "This year, we will move more steadily," Hou said. Hou Yi stated that the essence of retail, from the consumer's perspective, is products and services; from the enterprise's perspective, it is cost and efficiency. The core of Hema is the development of product strength. "Our base construction, private labels, unique product R&D, and supply chain systems are all advancing rapidly." During the interview, Hou Yi repeatedly mentioned Hema's ability to reflect and iterate. In his view, Hema is treading a path no one has taken before, and what many see as problems are actually opportunities. Speaking of the future, Hou Yi is very confident. He said that in 10 years, Hema will grow into a retail giant with sales of 1 trillion yuan, and given today's growth, "there is no problem."
On the current situation: "We benchmark against well-run companies item by item, including floor tiles." Q: It is said that Hema is also going to do a vegetable market. Compared with traditional vegetable markets and supermarkets, where is Hema's competitive advantage? A: Hema Market will differ from Hema Fresh in product structure, but the service advantages will continue, such as free delivery within 30 minutes, rich product variety, and surprising prices. Hema Market Many households have elderly people doing grocery shopping, who find it inconvenient to go up and down stairs, and it is dangerous in bad weather. At Hema, even buying just a pack of vegetables can be delivered free of charge. In terms of products, residents can basically buy everything they need for daily life in one stop. In terms of price, we have also launched an affordable vegetable channel in Shanghai, with a large number of vegetables priced under 5 yuan, making our prices very competitive. Q: Recently, there have been many reports of store closures in fresh new retail. What do you think of this phenomenon? A: Some time ago, Hema closed a store in Kunshan. In retail, nothing is 100% certain. Especially as the number of stores increases, good stores need to get better, and poor ones need to be adjusted in time to maintain a healthy body. At the same time, we will continue to open good stores. So far this year, we have opened over 40 stores, and by the end of September, we can reach 200. Hema Fresh Kunming store opening Hema will move more steadily this year. I hope Hema can truly represent the future model of retail. We are optimizing and adjusting our operations to win a healthier and more sustainable development for Hema. This year, we are benchmarking against companies that do well in operational control, item by item and category by category, to see which links are good and which are wasteful, including whether the floor tiles we buy are reasonable. Returning to the essence of retail, whether online or offline, customers always want to buy good products and receive fast service, and enterprises need to make a profit from these services, which is a matter of cost and efficiency.
On the past: "We have won the applause of the global retail industry." Q: From the perspectives of management and operations, how do you evaluate Hema's development over the past few years? What advantages can be maintained, and what shortcomings need improvement? A: In just over three years, Hema has explored new ways of retail and won the applause of the global retail industry. We see world-class foreign retail companies starting to come to China to look at Hema and new retail. This shows that China's retail innovation is at the forefront of the world. Because Alibaba is willing to take risks and fill pits, we are willing to invest in the future because it is the hope of the future. Alibaba will definitely share these capabilities with everyone for free, including the pits we have stepped into, and we will continue to share them so that everyone does not have to step into them again. Now, Hema has opened over 160 stores in 22 cities, and 30 million residents live in "Hema districts," which is consumer recognition of Hema. Our innovation capability, rapid iteration capability, and product and supply chain capabilities are constantly being verified by the market. For example, we recently launched Baicai Huafang, which uses supply chain capabilities to sell flowers at cabbage prices, making flowers truly a daily consumer item. This business will soon be launched across Shanghai and then promoted nationwide. Hema "Baicai Huafang" Alibaba talks about "customer first, employees second, shareholders third". We always adhere to customer first, maintain reverence for consumers, and build a company with warmth. There are many areas that need improvement, so we constantly reflect and iterate. You will see Hema continuously exploring new products and new scenarios. We always pursue perfection and strive to be better.
On the future: "Hope to be No.1 in profitability globally." Q: Now Hema has adjusted from "running desperately" to "running to survive." While "surviving," it still needs to "run," which actually places higher demands on the company. Specifically, to "survive" and run more solidly, what adjustments will be made in business? A: This year, Hema will research and explore organizational innovation and incentive innovation. Many supermarkets are managed nationally, which is very rigid. But if they are too active, it is also not good, and the group's advantages cannot be leveraged. Hema hopes to find a better model that solves flexibility and regional differences while ensuring the effectiveness and competitiveness of headquarters' unified management. In addition, new retail has reached a new stage, and the era of one-size-fits-all is over. This year, Hema will focus on refined operations. In addition to continuing to rapidly expand Hema Fresh large stores, whose model has been verified, we are exploring multiple formats such as Hema Market, Hema mini, Hema F2, and Hema Xiaozhan to serve more consumption scenarios. Of course, the core is still product development. Our base construction, private labels, unique product R&D, and supply chain systems are all advancing rapidly, and everyone in Hema districts will gradually feel the results. Q: You once said you hope Hema can enter all cities in China with a population of over one million. What is Hema's future positioning? What kind of retail enterprise do you want to build? A: From the experience of developed countries in Europe and America, a single retail enterprise can best achieve a 30-40% share of the local fresh food market. In our country, fresh food consumption is mainly in farmers' markets, which are very fragmented, with low levels of scale and standardization. In this sense, we have a long way to go, but also great potential. Hema has been developing on a large scale since 2017, and it has been two years now. What else do we need to do? First, we hope to enter all cities with a population of over one million and achieve full coverage. Second, we hope to truly give birth to a retailer with sales of 1 trillion yuan. If we look at today's sales growth, we should be able to reach this scale in 10 years without a problem. Third, we hope to achieve the highest profitability globally through product optimization and efficiency improvement.
On new retail: "Any innovation must ultimately be profitable." Q: Regarding the essence of retail, some say it is service, some say it is product. What do you think is the essence of retail? How do you understand it? A: From the consumer's perspective, it is products and services; from the enterprise's perspective, it is cost and efficiency. So Hema's core today is to do a good job in buying. Truly making products well is the most critical. We have already built nearly 500 bases, but it is still far from enough. We hope that in the future, the agricultural products Hema sells in different seasons will basically come from bases and supply the whole country. Including our global bases, in recent days, Malaysia's Musang King durian has been selling quite well, and we also have bases for Thai mangosteen and Taiwanese pineapple. Q: Recently, you responded to an online article, saying that it is a bit ridiculous to treat exploring new ways as a problem. How do you view the relationship between exploration and innovation and company profitability? You said there are still many "problems to solve in the future." What are they? A: The essence of business is to solve problems, and the process of solving problems is the process of creating value. Especially since Hema is exploring new retail, a path no one has taken before, the problems we face will certainly not be few, and many of them have never been encountered by anyone. This is normal and is precisely where opportunities lie. Therefore, we must maintain the ability to constantly reflect and rapidly iterate and innovate. Any innovation must ultimately be profitable, otherwise it cannot be sustained. The key to profitability is whether you have improved efficiency and created enough value for customers. Article compiled from: New Retail Think Tank, source: Lianshang.com and Toutiao's "Dialogue with Retailers"