---
title: "New Retail in 2018: Leading, Integrating, Bubbles, and Catfish Stirring"
description: "As 2018 draws to a close, the new retail industry has experienced significant developments, from the continued rise of fresh food supermarkets to the integration of technology in offline retail, the bubble burst of unmanned shelves, and the surge of social e-commerce. Looking ahead to 2019, the industry is expected to focus on supply chain efficiency and tapping into lower-tier city demand."
author: "New Distribution"
publisher: "New Distribution"
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published: "2018-12-24"
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# New Retail in 2018: Leading, Integrating, Bubbles, and Catfish Stirring

> As 2018 draws to a close, the new retail industry has experienced significant developments, from the continued rise of fresh food supermarkets to the integration of technology in offline retail, the bubble burst of unmanned shelves, and the surge of social e-commerce. Looking ahead to 2019, the industry is expected to focus on supply chain efficiency and tapping into lower-tier city demand.

As 2018 draws to a close, what has the new retail industry experienced? What will 2019 bring?
At the end of each year, it's time to look back and look forward.
In 2018, new retail bid farewell to the naivety of its early days (2017) and moved forward with a more mature face, bringing a variety of exciting developments. So, what has the new retail industry experienced in 2018? What will 2019 bring?
**Leading: Fresh Food Supermarkets Continue to Thrive**
When it comes to new retail, many people immediately think of fresh food supermarkets. Indeed, it is the emergence of this new retail format that made people truly feel that Ma Yun's "new retail" is not just talk.
Take Hema Fresh as an example. With its pioneering retail model combining "fresh food supermarket + dining experience + online business warehousing and delivery," consumers have gained a refreshing shopping experience: upon entering the shopping area, a dazzling array of seafood is on display, with a cooking area nearby where, for a modest processing fee, customers can have delicious meals prepared from their fresh purchases.
In addition to the "eat and shop" experience in physical stores, Hema Fresh's online experience is equally impressive. Through new technologies like electronic price tags, it ensures the same products and prices online and offline; and with automated logistics equipment in stores, it ensures efficient in-store picking, allowing customers to order via the app and have delivery within 30 minutes if they are within 5 kilometers of the store.
This business model perfectly embodies Ma Yun's original vision of new retail as "online + offline + logistics." Not only did it become an "internet-famous store" upon its debut, but it also provided a reference for traditional supermarkets to transform and upgrade.
The trend is unstoppable. Entering 2018, various merchants rushed into the fresh food supermarket track, and competition became increasingly fierce. For example, Suning's Su Xian Sheng opened simultaneously in Beijing, Nanjing, and Chengdu on the eve of New Year's Day, and then expanded to Xi'an, Guangzhou, and other cities; Meituan's Xiaoxiang Fresh made its debut in Beijing's Fangzhuang in May, followed by expansion to Wuxi and Changzhou; and traditional retail giants like Wumart and Wangfujing Department Store launched their own fresh food brands... Quietly, fresh food supermarkets became a battleground in the new retail arena.
At the same time, fresh food supermarkets themselves continue to evolve. For example, "slimmed-down" small and medium-sized fresh food supermarkets like Hema Mini and Suning Xiaodian, with their lighter asset models, can reach thousands of households at lower costs and faster speeds.
From another perspective, the continuous expansion of fresh food supermarkets highlights the prosperity of physical stores.
**Integration: Technology Empowers Offline Retail**
In the past two years, the decline of online traffic dividends and persistently high costs have put increasing pressure on e-commerce companies. Meanwhile, the advent of the "consumer sovereignty" era has driven the reconstruction of the value chain across the retail industry, with consumer demand becoming the origin of all business value; and consumers' pursuit of experiential consumption continues to amplify the shortcomings of online shopping. People have finally realized the value of physical stores—they not only provide tangible consumption experiences but also serve as new traffic entry points.
Thus, we saw that in the "first year of new retail" in 2017, online giants' thirst for physical stores was evident, from BAT to Meituan and Xiaomi, all joining the battle for physical resources. For instance, Alibaba invested in New Huadu and Gaoxin Retail, Tencent continued to consolidate its alliance with Yonghui Superstores, and various convenience store owners "overnight" became "employees" of internet giants.
After the frenzied land grabbing, time came to 2018, and the industry landscape was basically set. At this point, how to focus on fine management of stores and integration of online and offline resources became two new issues.
Fine management of stores essentially involves improving consumer shopping experience through the transformation and upgrading of traditional physical stores. In summary, in 2018, merchants mainly adopted two approaches:
First, promoting cross-border integration of retail scenarios with other scenarios, allowing consumers in stores to enjoy more diverse sensory stimulation. This is why more and more bookstores are selling coffee, indoor gardens appear in large shopping malls, and retail spaces are filled with leisure and entertainment elements. The fresh food supermarkets mentioned earlier are also a cross-border integration of retail and dining.
Second, embedding technological elements to enhance stores. Take Suning's "Unmanned Store Biu" unveiled in Beijing in 2018 as an example. Its biggest highlight—the face-scanning payment black technology—is stunning: simply by registering facial information in the mobile app in advance, customers can pay by scanning their face throughout the shopping process, even if they make funny faces, wear hats, or cover half their face, they can still be recognized.
As for integrating online and offline resources, the key lies in data fusion. As new traffic entry points, physical stores must rely on technology to obtain consumers' near-field data. Still using face-scanning payment as an example, beyond the consumption experience, the underlying facial recognition technology can also conduct precise analysis of store visitors, including traffic, gender, age, expression, preferences, and other characteristics, making user profiles clearer and more defined, thereby optimizing product configuration, improving conversion rates, and feeding back online by providing data to manufacturers through online channels, helping them better understand consumer needs and thus precisely develop products and plan marketing strategies.
Because of this, 2018 saw a new wave of investment in retail technology. According to a research report by Pintu Think Tank, the investment amount and number of investments in the basic technology layer of retail technology (including artificial intelligence, cloud computing, IoT, robotics, etc.) both showed a significant upward trend.
However, also having experienced frenzied grabbing, some things withered before they could bloom.
**Bubble: Unmanned Shelves Rise and Fall**
Under the new retail heat, not only fresh food supermarkets took off, but also unmanned shelves; and the latter's rise and fall is quite lamentable.
The rise of unmanned shelves can be traced back to Amazon. At the end of 2016, Amazon revolutionarily proposed the physical store concept Amazon Go, pushing the "unmanned retail" concept into the spotlight. With features like direct placement in offices, easy access for consumers, time-saving convenience, and low cost, the unmanned shelf industry attracted a frenzy of capital.
According to the "2017 Unmanned Shelf Industry White Paper," by the end of 2017, dozens of unmanned shelf startups had raised over 3 billion yuan in cumulative financing, with Miss Fresh Convenience leading the industry with over 1 billion yuan in financing, while Guoxiaomei, Xingbianli, Xiaoe Weidian, and others also secured hundreds of millions in financing. In addition to new entrepreneurs, giants like Suning, SF Express, Ele.me, Cheetah Mobile, and Bianlifeng also entered the fray. For a time, the industry was thriving, with snacks and beverages flooding into shopping malls and office buildings. Comparable to the "Hundred Regiments War" in food delivery and the "Rainbow War" in bike-sharing, the battle over placement points could well be called the "Hundred Shelves War."
In the eyes of leading players, the unmanned shelf industry in 2018 was a sea of stars. For example, Guoxiaomei aimed to have 1 million shelves in 2018, Bianlifeng planned to open 10,000 stores nationwide, and Miss Fresh Convenience planned to deploy 300,000 points in 2018... But as 2018 drew to a close, most players were "singing the sad Pacific."
Starting from January 2018 when Bianlifeng was reported to be withdrawing from third- and fourth-tier cities, Xingbianli, Guoxiaomei, Bianligou, Qizhikaola, and others successively reported layoffs and point removals, and some simply closed down or were acquired. After the false fire came a mess, and the unmanned shelf industry collapsed like a row of dominoes. The trend came too fast and went too fast. Today, only a few unmanned shelves under giants like Suning and Ele.me remain in the market, while most former players have quietly exited.
Looking back, the original intention of reducing costs through "unmanned" operations, the novelty of the format, and the sinking of product supply channels once sparked unlimited expectations for new retail. However, frequent problems such as immature technology, poor product maintenance, difficulty in preventing theft, and inefficient and costly supply chains punctured the bubble of unmanned shelves, and many platforms faded away before even being heard of. People began to realize that mere novelty in form is not enough to constitute new retail; how to reduce costs, improve efficiency, and enhance experience remains an eternal topic for the retail industry.
As the old saying goes: "When God closes a door, he opens a window." Although the novelty of form did not bring glory to unmanned shelves, it catalyzed the prosperity of other things.
**Catfish Stirring: Social E-commerce Prevails**
In July 2018, a major piece of news flooded countless people's moments: Pinduoduo, founded only three years ago, successfully listed on Nasdaq. With its unconventional model of "low-price bestsellers + group buying," Pinduoduo's user base quickly surpassed 300 million, becoming a force to be reckoned with in the e-commerce industry.
Despite controversy over product quality after listing, Pinduoduo's rise brought the "social e-commerce" model into the public eye. In today's nearly settled mainstream e-commerce landscape, social e-commerce is like a catfish stirring up the entire market.
As a derivative of e-commerce, social e-commerce is based on interpersonal networks, leveraging social media (Weibo, WeChat, Douyin, etc.) for dissemination, using social interaction and user-generated content to assist in product purchases, and applying social elements such as attention, sharing, and interaction to the transaction process. It is a trust-centric social transaction model.
Compared with mainstream e-commerce, social e-commerce completely subverts the previous "top-down spread" development approach. Its paradigm determines that they are born traffic magnets, using social media for viral dissemination under the guidance of low prices and various promotional activities, acquiring massive users at very low cost. At the same time, based on trust and sharing among acquaintances, social e-commerce also achieves instant promotion of shopping information, greatly improving product conversion rates.
Thus, when the mobile internet dividend period gradually fades, customer acquisition costs for mainstream e-commerce rise significantly, and overall traffic conversion rates decline, social e-commerce becomes a new trend. Following Pinduoduo, Mogujie also achieved a US stock listing recently, and platforms like Youzan, Yunji, Liwushuo, and Beidian are also shining. Tencent's investment in Meiriyitao and Suning's launch of a group-buying platform further demonstrate giants' favor for social e-commerce.
**Outlook: Supply Efficiency, Demand Sinking**
In addition to the above, there are many other developments in new retail in 2018 that cannot be fully enumerated. For example, in new retail formats, Yonghui gave birth to Super Research Club, and ODM platforms like NetEase Yanxuan and Suning Jiwu lead the new trend of "de-branding"; in terms of fields, the flames of new retail have spread to the home and automotive industries, with giants making efforts and newcomers entering...
So, what will the industry do in the upcoming 2019?
In my view, "supply efficiency" and "demand sinking" will be two important directions.
First, the former. After two years of development, internet giants have largely completed alliances and territorial expansion, and the market landscape is stabilizing. From the demand side, new retail species and formats are emerging endlessly, benefiting C-end consumers. With the disappearance of mobile internet dividends, the entire retail industry is shifting from an incremental market to a stock market, and retail philosophy is also shifting from managing "traffic" to managing "people." To achieve better management of "people," changes on the supply side are essential. Therefore, building a more efficient supply chain system, promoting collaborative integration among upstream B-end enterprises, and thereby providing consumers with higher cost-performance products and better services will become key focus points for all players on the track.
Second, the latter. Although the mobile internet dividend period has passed, it does not mean the C-end has become a red ocean. Objectively speaking, new retail still belongs to residents of first- and second-tier cities, while cities below the third tier seem not yet covered. In fact, the spread of the internet and rising incomes are gradually releasing the consumption potential of residents in lower-tier cities, and new business opportunities lie precisely here. Who will be the first to open up new territory in this vast market of 1 billion long-tail users? In 2019, let us wait and see.
Source: Weitou
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