---
title: "What Should Distributors Do in the New Retail Environment?"
description: "In the new retail environment, both brand manufacturers and distributors must pay close attention to the transformation of new retail. If we analyze the Hema Fresh model, Yonghui's Super Species model, and the cooperation between Alibaba and Shanghai Bailian as important directions for new retail innovation, the new retail environment indeed poses many new challenges to the current distributor model."
author: "鲍跃忠"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-03-13"
language: "en"
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# What Should Distributors Do in the New Retail Environment?

> In the new retail environment, both brand manufacturers and distributors must pay close attention to the transformation of new retail. If we analyze the Hema Fresh model, Yonghui's Super Species model, and the cooperation between Alibaba and Shanghai Bailian as important directions for new retail innovation, the new retail environment indeed poses many new challenges to the current distributor model.

**Click the image for details**
Whether it is a brand manufacturer or a distributor as a channel player, it is necessary to pay close attention to the transformation of new retail. If we discuss the transformation of FMCG and its channels without accurately grasping the changes brought by new retail, we will make serious deviations.
If we analyze the Hema Fresh model, Yonghui's Super Species model, and the cooperation between Alibaba and Shanghai Bailian as important directions for new retail innovation, the new retail environment indeed poses many new topics and challenges to the current distributor model.
**1. New Retail Transformation Brought by Hema Fresh and Yonghui Super Species Models:**
Recently, at the 2017 China Retail Digital Innovation Conference, Hou Yi, founder of the Hema model, systematically interpreted the Hema model. Listening carefully, there are indeed many valuable aspects worth attention.
Analyzing the business logic of the Hema model and Yonghui's Super Species model, and comparing with the current status of terminal supermarkets, hypermarkets, and convenience stores, the core of their innovative new retail is more precise positioning: **More precise target consumer positioning, precise target consumer specific consumption scenario positioning, based on target consumer group needs, integrating internet technology and internet business model innovation, transforming traditional retail models, ultimately creating more valuable convenience and quality life for consumers.**
**To interpret the Hema model, pay attention to three key points:**
**\----The soul of the Hema model: More precise target consumer positioning and more precise target consumer demand scenario positioning:**
Founder Hou Yi said: First, who are our consumers? For Hema Fresh, 80% of our consumers are post-80s and post-90s. They are the original residents of the internet, a generation of consumers who have grown up in a wealthy China after reform and opening up. They pay more attention to quality, care more about the pursuit of quality, and are not highly sensitive to price.
Hema Fresh is positioned based on scenarios, building product categories around the "eating" scenario. Our composition of food categories far exceeds other supermarkets and hypermarkets, so in the "eating" aspect, Hema Fresh can definitely provide consumers with satisfactory service. Hema Fresh has made a large number of semi-finished and finished products, as well as many products that can be eaten after heating, hoping to make the structure of the "eating" category more complete and rich.
**From the perspective of retail business logic, more precise segmentation of target customers is the key issue that new retail transformation must first solve.**
Facing the fiercely competitive market situation and changed consumer demands and behaviors, retail stores transforming to new retail must adjust from "one store serves all, vague customer base, low stickiness" to "segment customers, precise positioning, enhance perception, form dependence."
The realm of running a store in the new environment: Let target customers immediately feel upon entering the store: this store is opened for them, has the goods and services they need, and is the shopping feeling and experience they want. They can generate a relatively strong perception in a short time, and then through a period of shopping experience, develop dependence on the store.
This kind of segmentation and precise positioning will inevitably impact the previous FMCG model and channel model.
**\----The core of the Hema model: Reconstruct new consumption values based on the new consumption environment:**
Transforming new retail is to reconstruct consumption values based on the new consumption environment. New consumption values will stimulate new consumer demands and potential.
Based on the characteristics of current consumer demand, Hema Fresh has redesigned a set of consumption values.
**First, "Fresh Every Moment."** The new lifestyle is that the goods you buy are fresh, and the food you eat every day is fresh. Hema Fresh packages all products in small packages, buy today and eat today, and a meal is just enough. In the future, refrigerators will no longer be needed. You can buy whatever you need, and Hema Fresh will deliver it to your home quickly. It also does not pursue the original so-called large quantities and large packages. All products at Hema Fresh are only used once, always letting you eat fresh, fresh every moment, ensuring everyone's quality of life.
**Second, "What You Think Is What You Get."** When you are at work, or when you suddenly have something to do and have no time to buy groceries, you can place an order at Hema Fresh. On the way home from work, you can place an order, and the goods will arrive home at the same time as you. The high integration of online and offline provides consumers with convenient shopping anytime, anywhere, and all-weather convenient consumption.
**Third, one-stop shopping model.** Hema Fresh is not only store-to-consumer and consumer-to-store, but also uses internet technology to expand Hema Fresh's categories. There is a B2C channel. Hema Fresh has stores with limited space, hoping to expand online. At the same time, it has expanded a green channel to meet the consumption needs of rare goods. You can buy a wild yellow croaker worth 5,000 yuan at Hema Fresh. These high-end ingredients were originally unavailable in supermarkets, but today you can buy them at Hema Fresh.
Launch various pre-sale products to meet the various needs of consumers. So Hema Fresh is positioned around eating, will meet all your eating problems, provide all eating products, so one-stop service has huge product competitiveness.
**Fourth, make eating happy and make cooking an entertainment.** Hema Fresh continuously launches various activities for consumers to participate in, allowing post-80s and post-90s consumers to reflect their value when cooking every meal at home. So Hema Fresh sets up a large number of sharing, DIY, communication, etc. throughout the store. Making "eating" an entertainment and happiness will generate strong consumer stickiness. Hema Fresh is based on consumer experience to recreate a new lifestyle, making life better and happier. This is the original intention that Hema Fresh has been pursuing since its establishment.
**New retail is based on an accurate grasp of the current changed new consumption, and on this basis, reconstruct new consumption values.**
In the new consumption environment, it is indeed necessary to build new consumption values. Hema has built its own consumption values. Every enterprise needs to combine its own reality to build its own new consumption values, making this an important principle guiding enterprise transformation.
**\----The key to the Hema model: The new retail model changes the traditional retail model:**
**First, the positioning of the store. Traditional hypermarkets, community supermarkets, and convenience stores are positioned by store size and population segmentation.** But Hema Fresh is positioned based on scenarios, building product categories around the "eating" scenario. The composition of food categories far exceeds supermarkets and hypermarkets, so in the "eating" aspect, Hema Fresh can definitely provide consumers with satisfactory service.
**Second, in terms of product structure, the Hema model changes the category combination principles of traditional supermarkets and hypermarkets, making the overall category combination shallower and more flat.** Because Hema pursues not providing customers with simple goods, but a lifestyle business philosophy, it expects more things that were previously done at home to be done in the store, providing customers with ready-to-eat finished and semi-finished products. This changes the product structure of traditional supermarkets.
**Hema Fresh packages all products in small packages, buy today and eat today, and a meal is just enough. It abandons the theory of customer unit price:** The author privately communicated with Mr. Hou, and he particularly emphasized abandoning the customer unit price theory. The traditional retail concept is: sales = number of customers * customer unit price. Abandoning the customer unit price theory means that the performance of retail stores mainly relies on increasing the number of customers. In-depth analysis of abandoning the customer unit price theory shows that it reflects a shift from a self-centered business philosophy to a consumer-centered business philosophy. It is a major business philosophy change.
**Third, the integration of catering and supermarkets makes Hema Fresh subvert the traditional catering and retail industries.** Catering is not only an experience center, but also a traffic center, bringing consumer stickiness. Catering is the processing center in Hema Fresh. It can provide more semi-finished and finished products for sale on the internet, enriching the online sales structure. Processing capacity has caused a subversive change in the entire structure. Currently, Hema Fresh is cooperating with quite a few catering companies. The processing center formed by the integration of catering and supermarkets provides Hema Fresh with the semi-finished and finished products it needs.
**Fourth, supermarket functions + catering functions + logistics functions + operational functions for enterprise-fan interaction subvert the traditional simple buying and selling retail model.** Looking at the Hema model, it is no longer a simple supermarket model, but has formed a powerful composite functional body. Especially its operational functions, logistics functions, and catering functions based on customer management and fan interaction have subverted the traditional retail model.
Hema Fresh has three sales channels: the first is offline, the second is online, and the third is interactive marketing based on fans. If the fans within three kilometers are well operated, consumer loyalty to the store will greatly increase.
**Fifth, powerful logistics function: Hema Fresh features fast delivery, with the fastest 30-minute delivery within a 5-kilometer radius of the store.**
The Hema model has transformed the simple buying and selling retail model of traditional supermarkets, hypermarkets, and convenience stores, and more reflects an ecological model of composite functions in the internet environment.
From the positioning and product structure of Hema, it has completely changed the traditional retail business model centered on goods, moving towards a scenario-centered product organization model. Hema has broken the traditional retail category concept and implements scenario-centered product organization. Because it pursues providing consumers with convenient, quality lifestyles, it will cause many supermarket categories to be reconstructed and the category management model to change.
Powerful composite functions, especially prominent catering functions, logistics functions, and fan operation functions, will inevitably impact the current single buying and selling function of retail. It truly reflects the direction of ecological reconstruction of retail business models in the internet environment.
From a certain perspective, the Hema model's transformation is "terrifying" and very worth learning from.
**What impact will the Hema model have on the entire FMCG channel?**
**\----It will inevitably seriously impact the traditional, simple, and single retail model of current supermarkets, hypermarkets, and convenience stores.** Whether it is its precise positioning and accurate segmentation of the main consumer group, its reconstruction of influential consumption values, or its new retail model subverting the traditional retail model, it will seriously hit the business models of existing retail stores and bring fatal impacts.
**\----It will bring major changes to the product structure of supermarkets and hypermarkets:** The heavy catering model has subverted the traditional retail product operation structure dominated by pre-packaged goods, and the share of packaged goods has greatly decreased; the concept of fresh every moment changes more product concepts, with health and quality becoming dominant; these changes will inevitably bring new changes to the FMCG market.
**\----It will bring changes to traditional retail technology:** Whether it is small packaging of products, abandoning the customer unit price theory, or the home-delivery-oriented retail model, all are subverting traditional retail technology. This changes traditional terminal promotion techniques such as discounts, five-packs, and buy-one-get-one-free.
Analyzing the Hema model and Super Species model, while affecting new retail transformation, will inevitably bring major impacts to the entire FMCG field, both affecting the overall market product structure and the way FMCG is played at the terminal. More importantly, it will have a substantial impact on consumers' health and quality consumption concepts.
**2. What new impacts will the new retail cooperation between Alibaba and Bailian bring?**
If the Hema model brings the impact of a single-store retail form, then the cooperation between Alibaba and Bailian may bring systemic impacts.
Alibaba attaches great importance to its cooperation with Bailian. Although this cooperation did not involve capital, Mr. Ma personally attended. Ma Yun said: "2017 is the first year of Alibaba's new retail. We chose Shanghai as the first stop of new retail, and we chose Shanghai Bailian Group as the first strategic partner of new retail. If there is a city that can represent the height of reform, innovation, and development, I think it is only Shanghai. Shanghai is the bridgehead, Hangzhou is the back garden. Alibaba has been focusing on speed and innovation for the past 18 years, but in the future, we hope to focus on height. At the height of innovation, we hope to explore the future together with Shanghai."
Alibaba Group CEO Daniel Zhang said that new retail is the process of using the internet and big data to reconstruct traditional business elements such as "people, goods, and places," including reconstructing production processes, the relationship between merchants and consumers, and consumer experience. Every enterprise will become a data company, achieving consumer identification, reachability, insight, and service. Alibaba's entire ecosystem will help merchants complete reconstruction through big data and new technologies. Shanghai is the national commercial center, and Bailian Group is a master of all retail formats. **The joint exploration of new retail by all parties means that in the future, there will be no distinction between online and offline, nor virtual and physical, which is of milestone significance in Chinese commercial history.**
It is reported that in this cooperation, Alibaba and Bailian will carry out all-round cooperation based on all formats and all channels, mainly covering six areas.
**All-format integration innovation:** With consumer demand as the core, jointly design and build new retail stores with efficient physical store operation efficiency, all-channel order processing capabilities, and the ability to sense and meet consumer needs in real time, expand intelligent and networked all-channel layouts, and provide consumers with innovative experience services.
**New retail technology R&D:** Around new retail stores, Alibaba will open up applied new retail technologies including artificial intelligence, smart payment, the Internet of Things, logistics technology, and big data applications, and promote successful experiences to society for replication.
**Efficient supply chain integration:** Use consumer demand and behavior data collected and sensed through online platforms and offline networks, sort out and integrate their respective product resources, and promote the introduction of high-quality merchant resources and new products.
**Membership system interconnection:** Connect the membership systems of both parties, use indoor and outdoor crowd positioning, consumer portrait analysis, big data-supported marketing and membership management, etc., to improve store customer service capabilities.
**Payment and finance interconnection:** Bailian offline stores support Alipay, and Bailian's Anfu Bao/Union OK Card access Alipay, becoming the preferred third-party payment channel for consumers. On the basis of data sharing and analysis, provide consumers and suppliers with fast, convenient, and diverse payment and financial services.
**Logistics system collaboration:** Bailian Logistics, as a logistics service provider for Cainiao Network, cooperates with Alibaba Group, and the two parties jointly carry out logistics planning to provide services for consumers and merchants.
In fact, Alibaba's layout of offline retail has already begun. After completing the layout of Suning Cloud Commerce and Intime in the early stage, it completed the layout of Ningbo Sanjiang at the end of 16, and now reached cooperation with Bailian. This has formed Alibaba's offline multi-format layout pattern: multi-format group (Bailian), department store (Intime), supermarket (Sanjiang), hypermarket (Hema Fresh, Hema Market), specialty store (Suning Cloud Commerce), convenience store (Taobao Convenience Store, Hema Convenience Store).
**Is Alibaba going to acquire all offline physical retail enterprises? At present, gathering multiple opinions and viewpoints, the answer is no, and this cooperation with Bailian basically reflects Alibaba's intention: Alibaba needs to use Alibaba resources to explore a new retail innovation model of integrated development with offline retail enterprises.** This model can not only help offline retail enterprises solve current operational pain points, but also enable Alibaba to obtain greater and more valuable resources. These resources are larger and more comprehensive consumer big data, as well as the joint and integration of payment, supply chain, and logistics. Through cooperation with different enterprises in multiple formats, find their respective effective value models and quickly promote them to more physical retail enterprises.
Therefore, the cooperation between Alibaba and Bailian is systematic cooperation, starting with all-format integration and new retail technology innovation, and paying more attention to the integrated integration of supply chain, membership system, payment system, and logistics system. Alibaba aims to obtain more complete online and offline consumer big data and master more complete transaction data resources.
At present, analyzing the cooperation between Alibaba and Bailian, it will bring changes in new retail technology, improvement in retail efficiency, and more importantly, the reintegration of the FMCG supply chain and the reintegration of the logistics system.
**From this, it can be judged that new retail innovation represented by Alibaba will change the entire FMCG industry chain. It will not only change the terminal retail form, but also change the entire supply chain system and logistics system. It must be highly watched.**
Senior Economist
Expert of the Ministry of Commerce's "Ten Thousand Villages and Thousand Towns Market Project"
Part-time Professor of Shandong Institute of Economics and Trade
Senior Consultant of Lianshang.com New Retail Advisory Group
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