The topic of new retail has been around for three years. During these three years, there have been endless innovative models and massive capital support (of course, the mainstream is still the participation of giants). Amid continuous praise and skepticism, some companies have carved out their own models and taken the lead in the track, while some players have exited due to "lack of stamina." We believe that the progress of this track, so far, is consistent with the original vision. The focus is on efficiency upgrades and the accelerated integration of online and offline! We previously shared the topic of the future of 30-minute new retail at the Innovation New Retail Summit. Today, through some actual cases, we see that it has advanced further. First, let's talk about the rise of new consumption. As of June 2019, China's overall FMCG market showed steady growth, with an average growth rate of 5.4% over the past 12 months, slightly higher than the 5.2% growth in 2018. Consumption upgrade remains the main theme of the market. Based on various trend indices, we have summarized the following three major signals: 1. Instant consumption. Instant delivery users are experiencing explosive growth. In 2019, users are expected to exceed 400 million. The entire instant consumption market is over 100 billion yuan. We have found that previous consumption patterns were mostly fixed, such as when something is missing at home, it is fixed consumption. Now there is much more instant consumption. Instant consumption directly requires instant delivery, which has also driven rapid industry growth. Let's look at the data on instant consumption, mainly dominated by food delivery. In July this year, Meituan Waimai announced it had exceeded 30 million orders per day. The whole of China has reached 400 million food delivery users. According to a set of data previously provided by Meituan Waimai, the main users are aged 24 and below, accounting for 52.6%; in addition, the 25-30 age group accounts for 25.77%, meaning that people under 30 are the main group for instant food delivery consumption. 2. Nationwide "lazy" consumption. This is a major consumption development direction proposed in the "2018 Life Consumption Trend Report," which is nationwide "lazy" consumption. What does "lazy" consumption mean? Let's look at it. First, when you want to buy something, you don't want to go far, and now you don't even want to go downstairs. Why? Because if you open Miss Fresh or Meituan on your phone, it can be delivered in 30 minutes, so everyone is unwilling to go downstairs. This is a big experience of lazy consumption. Second, not cooking. People are starting not to cook. This is very interesting data. Now the order volumes of Meituan and Ele.me are increasing year by year, and everyone is starting to order food delivery and accepting this method. 3. Social consumption. In the circle economy, the more you share, the more impulsive and fun it is. Everyone knows the development of Pinduoduo, which is a great miracle in e-commerce history, going public in just three years. Pinduoduo captured people's psychology, which is the trend of social consumption. In the current circle economy, when people see food, travel, and product recommendations shared on social media, their trust and interest are higher. Let's think about the three new consumption trends just mentioned. In terms of new consumption, we say that the future development of retail must be driven by new consumption. Because consumption drives the entire retail transformation and development. Of course, at the technical level of retail, it will also drive industry changes and bring about changes in consumer habits. For example, convenience that was previously impossible is now realized. We have an understanding that in the future, buying fruits, food delivery, cola, and refrigerators will all be delivered within half an hour. You can imagine the whole picture. We believe that some things can be achieved now, such as food delivery, fruits, and cola, which can be delivered within half an hour through Meituan, Ele.me, and Miss Fresh. Now even clothes can be delivered within 1 hour, and in the future, refrigerators will also be included. Refrigerators are considered large appliances. If you buy a refrigerator online, it takes at least 2 days to deliver. But in the future, half-hour delivery can be expected. These things seem simple, but they are supported by a complete system. This cannot be accomplished by any logistics alone; it must be a whole system, from central warehouses, front warehouses, or front-end outlets to the consumer. Next, let's look at landmark events. The first is Hema, which is a disruptive and significant event for traditional retail in the entire new retail format. Previously, Hema disclosed operating data: Hema's average sales per square meter reached 50,000 yuan per square meter per year, which is 4 to 5 times that of traditional supermarkets. Now Hema is rapidly expanding and replicating. In the first five months of this year, Hema added 41 new stores, averaging one new store every 3 days. Now Hema MINI and wet market tests are also going well. In some Hema stores, online traffic has accounted for 70% of total traffic. This is something traditional retail would not dare to imagine, because traditional retail can only rely on fixed traffic. But with this 70%, we can think about it: there are many incremental sources, not just fixed traffic, because everyone is actively on their phones, including Alibaba's traffic entrance, which provides many incremental traffic sources. This is a completely different model from traditional consumption. Here we also need to mention Hema MINI stores. Since June this year, the first Hema MINI store opened nationwide. The results have been surprising. Hou Yi said, "Hema Mini's sales per square meter in the first three months of operation exceeded that of Hema's large stores." Compared to Hema's large stores, Hema Mini has several advantages, such as lower logistics and delivery costs, online orders exceeding 50%, and investment costs only one-tenth of large stores. This will be easier to expand in lower-tier markets. The second example is Luckin Coffee. In May this year, Luckin went public. Just now I looked at the market value: $4.475 billion. There are many traditional coffee sellers, so why did Luckin Coffee stand out? Its core is that it captured the right audience. Because now the post-80s and post-90s generations are more accustomed to using phones. Second, offline stores ensure fast delivery to office buildings and commercial centers. Self-pickup is their main model. So why do they need offline stores? In new retail, this is understood as an outlet for front-end points. Having a point for delivery allows for fast delivery; their delivery takes only 18 minutes. Their new consumption model fits current people's needs well. Including the newly launched Xiaolu Tea, it is still based on consumer groups and scenarios for category extension. The third example is the cooperation between Ele.me and Tmall Xiaodian, both under Alibaba. Here, daily sales and daily order volume have tripled. Ele.me is now doing a "brand conversion" model, renovating old stores. You will find that the original mom-and-pop stores had no online traffic and could only rely on natural traffic. To deliver food, they need logistics and delivery teams. Once coverage is wide, delivery can be made within 15 minutes. This leads to multiplied growth, so daily traffic is three times the original, basically all online. For example, if we want to drink cola, we no longer need to go to the store downstairs. Why? Because it can be delivered in ten minutes. This is a very good thing. Perhaps seeing Luckin's profits in the delivery field, Starbucks has also accelerated its delivery service. However, unlike Luckin's model of front-end stores and self-pickup, Starbucks still radiates from its offline stores, which requires a strong delivery team. By September this year, relying on Alibaba's Ele.me mature delivery system, Starbucks' official online ordering service—Xingxing Delivery—covered 3,000 Starbucks stores in 100 cities in China. The Q3 financial report showed that Starbucks' delivery business sales accounted for about 6% of total sales, and Starbucks' active members in China increased by 10% compared to the previous quarter. The battle for the wet market is now very hot. Let's take Dingdong Maicai as an example. "Dingdong Maicai" is a model of "mobile ordering—front warehouse distribution + instant delivery to home," featuring "zero starting price, 29-minute delivery." No delivery fee is its platform advantage. In short, it is a vegetable market on your phone, delivering live fish and shrimp, ensuring freshness. Dingdong Maicai currently has about 200 front warehouses in Shanghai, each about 300 square meters, accommodating 1,500 SKUs. It currently serves nearly 3,000 communities in Shanghai, deeply penetrating core residential areas. In December 2018, Dingdong Maicai's daily order volume reached 150,000 orders. Of course, the online battle for the wet market has not yet formed an oligopoly. It still depends on whether the model is fully proven. At present, it is the general trend, and the disruption of the wet market is only a matter of time. What signals do these five events bring? There are purely innovative models and models that build on existing foundations. Of course, some may be fast on the surface, and some are fast at the core, such as digital operating systems and various applications. Where exactly is the speed of retail? The core of this picture is that consumers order online, and finally, the goods are delivered to the consumer (more referring to home delivery). What tasks need to be allocated in this time period? And what systems support it? First is online ordering. Online ordering: because online traffic is huge, it must be physical traffic for offline single stores. So if you order from Tmall or JD.com, after ordering, they need to do big data matching and arrange the nearest store or supermarket. If it's cola, they will arrange Dada delivery to your door. If you want to buy a refrigerator, it must go through a hypermarket. What will drive the future development of retail? As enterprises, what mainly drives this transformation? Here we talk about five driving forces, which may bring some thoughts. The first is traffic-driven. Previously, Xiaomi mainly relied on community and online traffic to start. After a period of setbacks, it had a difficult time. Why did it later rebound against the trend? The core comes from Xiaomi Home. Xiaomi Home's sales per square meter can now reach 270,000 yuan per year. In comparison, Apple is 400,000 yuan per year, so the frequency efficiency is very high. This is Lei Jun's understanding of new retail: using internet methods to do retail. This is his direct understanding of new retail. It gives us food for thought: as traditional retailers, where will our future online traffic come from? Platform cooperation can still strive for online traffic within our own territory. This is also an opportunity point. For example, we now see many companies doing well with private domain traffic. The second is technology-driven. Technology-driven requires iteration. What is the root of our technology iteration? Consumer speed must be fast. For example, entering an unmanned convenience store is still relatively cumbersome, and the interaction processes have room to save time. So the future direction must be something like face recognition for quick checkout, but this requires time for iteration. The third is logistics-driven. Ma Yun mentioned that new logistics = zero inventory. Why is this the future direction? If through their logistics network, all goods can be delivered within one day, then your logistics and warehousing can truly achieve this. Of course, it is not zero inventory in the true sense, but basically no need to stock up. We think controlling the supply chain is very difficult. How to improve supply chain efficiency is also a big test for enterprises. Currently, there are many digital solutions that can be applied. The fifth is big data-driven. For example, some platforms provide data support, giving user profiles and achieving "thousand stores, thousand faces." Why? Because people in your community eat more dumplings with chives, while people in another community may prefer cabbage dumplings. They will recommend related products based on the situation. This matches products in advance to optimize efficiency. The above is our thinking on half-hour retail, but the road on this track is still very long. Especially for categories such as home furnishings and home appliances, achieving half-hour delivery is very difficult, but it is also a future opportunity point. Source: Retail Business Review (ID: lssync) If a tip is adopted, a reward of 400-2000 yuan will be paid. China FMCG + Internet Professional New Media Committed to FMCG manufacturer and distributor transformation and channel digital solutions