FreshHema: No Price War for New Retail Business
The so-called "New Retail" business advocates a healthier way of consuming by providing better products and services.
"The so-called ‘New Retail’ business advocates a healthier way of consuming by providing better products and services, and what distinguishes it from the traditional retailing business is that it will never launch nor participate in any price war," said Freshhema’s CEO HOU Yi (候毅) in China Entrepreneurs Forum's 19th annual conference hold in Beijing.
By mentioning price war, Hou Yi refers to the e-commerce giant Alibaba’s Singles Day and JD.com’s 618 massive promoting campaigns similar to the Black Friday. The Singles Day (11 November of every year) has become the largest offline and online shopping day in the world, with Alibaba shoppers exceeding USD 30.8 billion in spending during the 2017 celebration.
Alibaba announced in July 2017 its “new retail” strategy by opening three Freshhema supermarkets in Beijing and Shanghai, which provide online and offline shopping experience for people who need fresh products from first-tier suppliers.
Freshhema now owns over 130 stores covering the major cities in China, while most of them are located in tier-1 cities such as Beijing and Shanghai. Customers can shop, dine and order from their mobile phones and use Alipay to make payments. The Alibaba-backed company says every item barcodes that can be scanned to reveal price and product information.
Since most of Freshhema's customers use mobile apps to place orders and Alipay to make payments, the company in-fact has the ability to track and record everyday’s demand data of fresh products. The data, which is collected from Freshhema's stores and mobile apps, will be used to back-feed the whole chain supermarkets system’s supply chain. Thus, the supermarket group has estimated the problem of destocking, which is a serious issue for the traditional retail business such as Alibaba and JD.com’s online marketplaces. From which it’s obvious to see that Alibaba and JD.com need huge promotions days such as the Single Day and the 618 Promotion Day.
But the new retail businesses such as Freshhema don’t have such a problem so they don’t need price war, just as what was brought up by HOU Yi in his speech, "the technology world has energized the retail industry by providing big data and artificial intelligence solutions, and improved the efficiency of supply chains in a great way."