7-Fresh, The Concept of The Month
In Northern Beijing, China’s e-commerce giant JD.com (owned by Wal-Mart and Tencent) opened in March 2018 a 2nd 7-Fresh supermarket at the China Resources Dreamport mall. The first unit of that kind opened at Dazu Plaza Shopping Centre in the Yizhuang neighbourhood, near JD’s headquarters in late December 2017. The sales area of the 7-Fresh store covers 4,000 sq.m and sells only grocery products. Fresh products account for 75% of the total range with a wide proportion of imported products meeting demand from middle class households, like fruits from New Zealand, oysters from France, Iberico ham from Spain and beef from Australia. The store has an array of screens that display information on products which are ready for collection. The store offers a mobile app providing digital payment via WeChatPay and a delivery service in 30 minutes within a five-kilometre radius (vs. three kilometres for Hema Fresh). Amongst big innovations are the smart shopping carts, which navigate customers to the correct display aisles and can self-drive around the store, eliminating the need for customer efforts. The 7-Fresh store offers in-house cooking staff, as many Chinese people like having food cooked in store and bring it back home. “During the first 2 days of business, 7-Fresh registered more than 10,000 daily transactions” said the J.D. Group. Whereas up to 70% of Hema’s sales come from online, J.D. didn’t reveal the contribution of online sales.
Meanwhile, Wal-Mart and JD.com aims to combine their networks of warehouses and cold storage to shorten customer delivery times. In China, “consumers want to touch and pick the produce they are buying, it is a very pronounced trend here”, said Steven Kwok, Associate Partner at OC&C Strategy Consultants. According to Alibaba’s Chief Executive Daniel Zhang Yong, “Physical stores serve an indispensable role during the consumer journey and should be enhanced through data-driven technology and personalised services in the digital economy.” As omnichannel grocery retail in China is strongly anchored in stores, a fierce competition is expected between 7-Fresh and Hema.