Innovative Retailer: Freshippo
Name: As of very recently Freshippo, having renamed itself from the former Hema. Either way, it’s owned by Alibaba.
The Place: China. It’s totally a Chinese thing right now and there are around 100 of them in 16 big Chinese cities as we speak. But they do things on an epic scale over there so the plan is for 2,000 of them within five years.
And then world domination? If Amazon hasn’t got there first. The ‘New Retail’ concept where you shop physically but organise delivery and pay online does have competition, you know.
The Story: What’s your idea of a perfect food shopping trip?
One where someone else pays: No. I think you’ll find it is one where you can just wander around lazily trying lots of the fruit, veg and other products and then have anything you like delivered via an online order to your house within 30 minutes. Isn’t that right?
Errm: Of course it is. Followed by a meal which is served to you by robots and ordered on an app.
Ummm: And at the end of it you pay by facial recognition and have your freshly selected seafood dispatched in front of you.
When you say dispatched…I mean shuffled off this mortal coil.
OK, let’s hold it right there for a moment: And this is what Alibaba’s Freshippo is trying to serve up the new Chinese customer.
I’m beginning to wonder if the Asian customer might be a bit different to the Western one: Cultural practices vary but this is the background you need to get: Chinese supermarkets are not usually the pristine, fully packaged up centres of uniform quality, known provenance and consistency that they are here.
How so? There just isn’t a tradition of supermarkets. Only actual markets full of stalls, which are a lot more haphazard and a lot less clean. Chinese people are unused to pre-packed food generally and are pretty much addicted to choosing their own live seafood to guarantee freshness. (This is why the likes of Tesco got burnt by western consumers when it started selling live turtles in China).
Hideous. So these shops are like a hybrid market/supermarket with a helluva lot of tech: In essence. Every product line has a scannable code, and via the company’s app the customer scans to get product history, country of origin, recipe ideas, similar products, heck – even the day it was delivered to the store. Very useful for the Chinese consumer who is being introduced to a lot of new tastes from around the world.
Have they been introduced to the Brussels Sprout yet? I literally have no idea. But this obviously allows for real-time price changing without loads of staff hours spent altering fiddly bits of plastic on shelves.
Right, so what are the staff doing all this time? Did I mention that the stores double up as distribution centres. If you live within 3km of a store they offer 30 minute delivery.
But wouldn’t that mean…. Yes, your shopping can beat you home and be waiting for you at the doorstep.
Crikey: Employees are given scanners and shopping bags with a unique bar code, which refers to an individual order. They then have around 10 minutes of the 30 to get the order in the bag. Bag is then dropped off onto a ceiling conveyor belt and taken to be sorted (10 mins) and then delivered (final 10 mins).
Flipping ‘eck. They must be the Usain Bolt’s of the dairy aisle: Reviews from non-Chinese customers often refer to the slightly chaotic nature of a Freshippo as employees hurtle from place to place with these bags trying to get the order done in time. It’s not what we’re used to. Plus not everyone likes the feeling of moving bags constantly above their heads.
And when you’ve finished the shop? Still no human interaction unless you want it. Get your phone out again and pay via Alipay (of course) and in some stores facial recognition. There is a reason why Alibaba has invested an awful lot of money in SenseTime who specialise in exactly this, and in fact have already done a trial involving Alipay and KFC. And for those who, ahem, want to pay in cash…
So last century: Indeed. But for those few hardy souls there is a special service centre where you can pay with, like, real money.
OK, I think it’s time to bite the bullet and talk about the live food in-store: Ah. Right. There are big tanks with live crabs, fish, squid etc in them and people just choose the one they want to take. If they want they will also be cooked fresh for them too.
What is this obsession with freshness? There have been various food scandals in China in recent years (one reason why Freshippo is proving so popular with its packaging and product information) and the people have always been pretty obsessed with choosing their own freshest seafood – this is just the logical conclusion.
Yes, well, that’s enough about that. Tell me about the restaurant. That sounds better: Well, this is in the Shanghai store. The only humans in sight serve the soup and that’s only until the robot has better hand to eye co-ordination.
Seriously: Customers check in via an app (god help you if you don’t have a phone in this new retail future) and are assigned a table automatically, order via online menu or by scanning table barcode and pay via Alipay while you wait for the cute little white robot to trundle up with the food.
I quite like the sound of this bit. But enough about robots and soup. Give me hard business facts on how this is working immediately: Alibaba’s management are absolutely adamant that this dual approach of seamless online and offline is increasing average spend.
Facts! 575 Yuan for those using both, 300 for either/or customers.
More facts: Um…demographics of users. 35% are in their early 40s with their own houses and interested in new imported products. Another 25% are more senior and for them it is a convenience and value for money thing.
One more fact: A supermarket open for two years generates daily sales of 120,000 Yuan and 60% of that is ordered online.
Impressive: Using all the data they store about their customers’ previous spending habits, cycles of demand and so on, each store can tailor its offering which should minimise food wastage.
That’s enough facts: 85% of sales in China are still offline.
I’m going: The on-demand food delivery market is estimated to be worth 872 billion Yuan by 2020.
PCMS is a global provider of IT software and services for the retail industry. PCMS offers a full-range of integrated commerce solutions across selling touch points and also provides turnkey managed services and cloud hosting. Its client list includes John Lewis, Marks & Spencer, Waitrose, Whole Foods, as well as Walgreens in the US and fashion brands including Prada and Ferragamo across Europe