That means digitized customers, logistics and supply chains, as seen in Alibaba’s 100 or so Hema stores (first seen in 2016) and in’s less numerous 7Fresh stores (which first opened in 2018).

Let’s look at the detail of what this means in practice…

1. You have to download the Hema or 7Fresh app to shop in store

At the centre of New Retail is data. By necessitating use of their respective apps during in-store shopping, Alibaba and know everything you purchase.

The app then provides customers with personalized product recommendations.

2. Payment in-store is by mobile wallet

In Hema, when you have all your groceries, you head to the self-checkout where you can pay by Alipay, part of the app experience.

You can pay with cash, but you’ll have to queue at the service desk to do this and the experience is not as convenient.

Even with the penetration of digital wallets in China (which notably include Tencent’s WePay within WeChat), the almost cashless nature of New Retail has caused some grumbles. According to a 2017 article in ejinsight, “Some customers, upset about not being able to use cash, have filed complaints,” and that “Interestingly, the authorities have decided to side with the complainants. The People’s Bank of China said rejecting cash payment in renminbi is illegal.”

Hema does in fact accept cash payments by way of special counters where staff will use the store app to purchase on the customer’s behalf. Still, the complaints may suggest a cash-free society is some way off, especially as Hema stores tend to be in Tier 1 and Tier 2 cities.

7Fresh, incidentally, also leans towards the mobile wallet (WeChat Pay) but also supports cash, credit card, and has trialled facial recognition.

3. The app-first New Retail model is intended to drive people online

Hema has released figures that for mature stores, 60% of sales are online, delivered to home. However, most customers will visit stores, too.

This is all part of the plan, with Alibaba and envisaging customers who “graze and pay”. Test the produce in store, then order a bigger quantity to your home.

This model explains why in Hema stores, the experience is geared around fresh food counters (such as seafood) and deli style eateries (where chefs will cook your purchases), with far fewer stock-keeping units (SKUs) on the shop floor than there are online (Business Insider reports 3,000 products in store compared to 50,000 online).

Prices are displayed in-store on digital displays which are synced with online prices.

Intriguingly, Zhao Heshan, a Shanghai-based farm produce supplier for several major Chinese e-commerce platforms, told Techcrunch that “The golden age of cheap internet traffic is gone. Now it’s the opposite. Customer acquisition is much cheaper offline.”

4. Accordingly, delivery is quick, stores handle fulfilment, and in-store shoppers can opt for delivery

At both Hema and 7Fresh, delivery is guaranteed within 30 minutes for those that live locally (within 3km).

That proposition means that the vision of people ordering the night’s food on the way home is a reality, as is the idea of using the supermarket as a showroom of sorts, with the delivery following you home. This is catnip for metropolitan shoppers who are time-poor commuters and don’t drive.

In the stores, pickers can be observed fulfilling these orders, with conveyor belts taking the bags to and fro.

5. Multichannel shoppers are almost twice as valuable

The South China Morning Post reports that Alibaba data shows online and offline shopping leads to an increase in average monthly spend.

“Consumers who shopped both online and offline at Hema spent an average of 575 yuan monthly, compared to under 300 yuan for purely online, or purely offline shoppers.”

6. The app is also central to the lifestyle appeal of Hema and 7Fresh

It’s important to understand supermarkets in China. Hema and 7Fresh are aiming to be a brand not unlike Whole Foods, with a focus on transparency and customer centricity.

The context for this lies in low consumer trust stemming from incidents such as the 2008 baby milk scandal, which led to a big online market for international baby formula.

Even having fresh produce wrapped (such as vegetables) in these New Retail stores provides a point of difference to other stores.

Digital technology plays a big part in this appeal, as customers can scan QR codes on products and find out lots of information about their ingredients and provenance.

In 7Fresh stores, Techcrunch reports that, “The a-ha moment comes when you get to the fruit section, which lets you scan barcodes on meticulously wrapped items. Details of the fruit then pop up on a screen above your head, showing where it comes from, how sweet it is, et cetera.”

7. Local analytics creates efficiency

Remarkably, zdnet reveals that Alibaba says house prices have soared in the delivery radius of Hema stores.

The local element to Hema stores goes beyond fulfilment and delivery – Alibaba’s big data analytics (and the fact that it has a 360 degree customer view) allows it to localize product selection and therefore decrease wastage and improve margins.

It is, however, important to note that some reports cast some doubt on the Hema model because they are in prime (expensive) locations and not at a scale where logistics costs can be spread.

Alibaba acquired startup in 2018, to beef up its local delivery capability, and the service is set to compete with Meituan-Dianping to deliver all sorts of items beyond just groceries (such as food and medicine).

8. Technology to be white labelled?

Another aspect of the New Retail business model is pointed to in the South China Morning Post, which says that some of Alibaba’s tech has been offered to other retailers seeking to transform, and has improved sales by 10% every month.

We’ve seen Microsoft recently exploring this option in America, teaming up with Kroger to produce a ‘retail-as-a-service’ solution, albeit one on a smaller scale than Hema, but including elements such as digital pricing.

9. New Retail is experiential

Though the idea might be to push customers to shop online, the big appeal of the stores may be in robot-assisted food courts and bigger fresh produce counters (still staffed).

Tom Doctoroff writes in AdAge that “culinary adventurism is tantamount to lifestyle elevation” in China. That means that recipe suggestions when customers scan products brings a new dimension to shopping. Customers may go in-store for inspiration rather than the weekly shop.

10. There are still some features that sound like hype

Smart shopping carts is one advancement touted by 7Fresh. They are reportedly supposed to follow you around the store, or take you to the aisle you need. What usage these carts see and how widespread they are is unclear.