Looking at the Comprehensive Feasibility of New Retail from the Perspective of Box Malaysia

By orchioo Dec26,2021

Not long ago, the news that an old brand supermarket in Beijing with an excellent location was closed caused many people to sigh. This supermarket is located in Wanda Plaza on the east side of Chang’an Street in Beijing. It used to be the main store of Wanda Plaza, serving the surrounding residents for ten years.
However, surrounding residents quickly learned that supermarkets, as a basic livelihood service, will not be far away from them. The one who continues to take over this position is Hema X membership store under Hema. Industry insiders have noticed that this phenomenon is not unique. When traditional supermarkets such as hypermarkets begin to shrink their front lines, Hema is accelerating its opening in many places.
Compared to the previous hypermarket formats, the area of Hemamen stores often shrinks. However, where there is a Hema, there will be delivery to home service. This is also the service label that Hema has clearly labeled since its inception.
Today, the home delivery service for daily necessities has evolved from a value-added service to a nearly standard service, and the categories that can be delivered to your doorstep are becoming increasingly comprehensive. The difference lies more in the differences in timeliness and platform. Looking back at what is happening, Hou Yi, the founder of Hema, believes that whether it is near field retail, instant retail, or opening online stores in supermarkets, this precisely demonstrates the profound impact that the new retail has had on the retail industry since its inception. Although there have been fewer people proposing new retail in recent years, the connotation of new retail has become more of an action for most enterprises. This is also a success.
When it comes to new retail, Hema has been a benchmark enterprise for new retail since its inception, and the external world even judges the success or failure of new retail based on Hema’s fresh development and changes. Recently, Hema announced its quarterly profit. Hou Yi believes that Hema has proven through its own practice that new retail can not only run smoothly, but also make profits, not just burn money.
I believe that Hema’s performance today not only proves the feasibility and plasticity of the new retail model itself, but more importantly, Hema is in the highly challenging field of fresh food retail (e-commerce), with fresh food as its main category and profitability, proving the comprehensive feasibility of new retail.https://www.slw-ele.com/
1、 Zhansheng Fresh
Fresh retail has always been considered a trillion dollar market and the most difficult market for internet companies to conquer. The way to manage fresh food is fine and there are many pitfalls. For example, it is easy to fall into diseconomies of scale when doing offline community fresh food stores. When the number of stores is small, a single store can make money, but when there are more stores, it may lead to overall business losses due to the difficulty in converting product size into an improvement in supply chain efficiency.
If it is based on the fresh e-commerce model, it will encounter the problem of volume diversion and high delivery performance costs, which will make it difficult for the entire business model to pass the break even point. It can be said that neither up nor down.
Hema Fresh, hence its name Siyi, cannot be separated from the fresh category. On the surface, Hema adopts an omnichannel model, which can simultaneously leverage the strengths and avoid weaknesses of both models. However, Hema’s exploration was not smooth sailing, and there were also ups and downs and even detours.
In mid-2020, during a small-scale communication with the media, Hou Yi also took the initiative to discuss whether the store should sell bulk vegetables. Because fresh food is sold separately, it is closer to the experience of the vegetable market and will bring familiarity and familiarity to some elderly customers. But to this day, Hema no longer struggles with such issues. Entering today’s Hemamen store, even leafy vegetables are pre packaged before being placed on the counter, and today’s consumers have already accepted all of this.
The changes reflected in this detail are actually some underlying logical differences in the new retail.
A core point is that in the future, the retail industry will not differentiate between online and offline products. It will choose products online and offline based on different consumer scenarios and needs.
There is no distinction between online and offline, which refers to both consumer needs and the form of the product itself. From the beginning of establishing the store, the products of Hema store need to be able to meet the two situations of store sales and delivery to home, so standardization of product form is the only way. The standardized operation actually brings an increase in packaging costs, but it also brings convenience to consumers. After pre packaging vegetables, the weight is visible and there is no need for secondary weighing, saving consumers time. It has been proven that after a period of market education, consumers can ignore small packaging costs for convenience.
From a product perspective, Hema Fresh must make consumers feel that the products they provide can truly meet the consumption scenarios and needs. Traditionally, traditional stores have been more focused on creating a “fireworks atmosphere”, which is not wrong. The core of “fireworks atmosphere” is to create a family like atmosphere, stimulating consumers’ purchasing and stocking desires. In the past, many of the main user groups in traditional stores were elderly people with rich product knowledge and life experience, who would plan three meals a day for their families. However, in today’s Hema store, the consumer group is mainly middle-class and young white-collar workers, who need more efficient and accurate food solutions.
So, if today’s Hema Fresh has to some extent solved the problem of difficult profits for fresh food, it is also more than just focusing on “fresh food”. On the one hand, Hema will use standardized methods to reduce the loss of fresh food; On the other hand, Hema will also provide differentiated supply based on the needs of a typical middle-class family life scenario, including baked goods, frozen foods, dairy products, beverages, etc. In these food related categories, Hema has developed a large number of its own brands, forming a differentiated supply with economies of scale. For example, in the niche field where there are relatively strong brands such as dumplings, Hema has also launched its own unique products and adheres to the “fresh” short term warranty feature, achieving a good reputation and performance. These goods are essentially repurchased based on quality.
Customized supply tailored to consumer demand actually means that the supply chain must change accordingly. Hou Yi said to himself that Hema has been struggling these years, but finally managed to make it through. When it comes to the supply chain, Hou Yi stated that Hema strongly opposes the highly dependent supply model of KA and insists on differentiated product innovation and supply.
Of course, Hema Fresh, which relied on the Alibaba platform in its early years, cannot achieve the aforementioned changes without the support of internet technology and digital solutions. When it comes to digitalization, many companies have gone through the process of going to the middle stage and abandoning the middle stage. But Hou Yi is very firm in this, and he wants to form a systematic ability through the middle platform to improve the organization and efficiency of the entire company and ecology. At present, Hema has three major platforms: the first is the product research and development procurement platform, the second is the production and research technology platform, and the third is the logistics supply chain platform. Through this system, Hema has realized the structure of the entire process management, and then moved towards digitalization, and finally realized intellectualization.
So looking back, there is no distinction between online and offline in new retail, which seems to be the most superficial effort of new retail, even if it involves delivering goods at home. But it is also the key to triggering a series of deep-seated changes in the future, pulling together and mobilizing the whole body. It is precisely because the core category of fresh food requires omnichannel operation, which requires standardization, precise understanding of user needs, and differentiated supply. The backend must rely on digital means for operation.
2、 Eat dry and squeeze out
In the past development of Hema, one perplexing aspect for the outside world was its multi industry development. However, in Hou Yi’s view, the establishment of these formats has both internal connections and external market demands.
Hou Yi said, “We classify Hema’s current business models as Hema Fresh and Hema X member stores, including Hema Mini, mainly serving the consumption level of Hema’s middle class; Hema NB and Hema Ole stores mainly serve the consumption of ordinary people.” In addition to these two business models, we also lack several business models. The first one is a top boutique supermarket, so we will launch a temporary “freshshippo best” in the second half of this year. At the same time, we have established a new FOD (Food Operation Delivery) business model that truly integrates wholesale and retail, targeting B-end customers at competitive prices
Please note that when discussing how fresh retail should be done earlier, Hema mainly looks at the issue from the perspective of category and supply chain. But when it comes to business formats, Hema looks more from the perspective of segmented customer groups and what other business formats consumers need. The product strength and consumer segmentation together constitute the dimension of Hema Incubation’s segmented business format.
Hema initially started as a fresh food retailer, why not focus solely on the fresh food store?
Firstly, Hema’s fresh product category capabilities are still common across multiple formats, with differences only targeting different customer groups and specific product positioning. Even to a certain extent, the coexistence of multiple formats can help Hema better consume upstream supply chain resources. For example, many fresh products have different levels, and Hema has both Hema Fresh and Fresh Olay, which can form a multi-level supply. We need to squeeze out all the fresh food and achieve the development of all channels and formats, “Hou Yi said.
More importantly, Hema Fresh has developed a strong “brand mentality” over the years, which is not easy for an enterprise that has been established for eight years.
From the perspective of physical retail, many formats of Hema are also channels, and the creation of channel brands is sometimes more difficult compared to product brands because it is not easy to form distinct memory points. But Hema gradually formed its own brand memory starting from all channels.
Someone asked Hou Yi how to evaluate the role of the store when more and more orders are being shipped from the store to home today. Hou Yi believes that although Hema has strong internet genes, stores can cultivate seed users instead of relying on online platforms. The first step of Hema’s store is to establish a brand image. As soon as your store opens, people come in, and the Ole store opens, they queue up. The second step is to strengthen their understanding of your products. What exactly is Hema? So these two are the core elements that Hema can stabilize middle-class consumption today. As long as your store is there, seeing this thing will give you recognition. In addition, the store is a place to experience
From Hou Yi’s words, it can also be seen that both online and offline play a crucial role in shaping brand mentality.
When many of Hema’s stores formed a strong brand mentality, it was originally considered an inherent weakness of offline stores, and traffic issues were no longer a problem.
With commodity power, brand intelligence, and traffic, today’s Hema is able to truly explore more possibilities based on the genes of internet enterprises – platform based development.
Hou Yi pointed out that today’s Hema has the ability to do some platform based development based on existing business formats. Our dream is to establish a new integrated retail e-commerce model. Hou Yi said that the specific plan includes, first of all, establishing a cloud supermarket business. In addition to fresh food, it has expanded a large number of products such as beauty and toiletries, personal cleaning, small household appliances, health care, infants and children, toys, etc., to expand into the entire category of supermarkets; The second is to expand cross-border business. The core of cross-border business is beauty, health care, mother and child care, and there are also OTC and imported organic foods, achieving a true full range of operations for Hema. At the same time, Hema will also establish a platform based business on the APP, allowing suppliers to open flagship stores. In addition, it is based on the platform of local life, vigorously carrying out catering home services on the basis of laundry, cleaning, repair, cleaning, and cleaning.
If all of Hou Yi’s ideas can be realized, you will indeed find that Hema is becoming a complex and massive life service system. However, the origin of all this still comes from the simple proposition many years ago: “Can fresh retail do all channels and achieve profitability? Hema has been persistently solving for eight years, and now the answer is gradually becoming clear.

By orchioo

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