Mid Year Review on New Retail Year of 2018
Mid Year Review on New Retail Year of 2018—Four Unicorns Originate from Fresh Food Retailers of New Retail
Having experienced the set-up and elimination in 2017, new retail greets the outburst year of its expected potentials. So far, over half of 2018 has gone past. Based on the observation of the new retail enterprises’ action over the past 6 months, it is not hard to find out that all the new retail enterprises emphasize much more on the optimization and extension of their respective business modes while expedite their respective expansion in comparison with the unstable yet changeable climate of new retail market in 2017. In the duration, some new retail businesses due to their immature modes of operation were eliminated successively, and some were constantly shrinking in size to strive for stable development; nevertheless, there were 4 fresh food businesses of new retail reliant on their mature yet feasible business modes and their clear perception about the market trend to achieve top rankings in the fierce competition and grow up into the unicorn-to-be or unicorn enterprises. The 4 unicorn enterprises are MISSFRESH and Jing Dong Dao Jia established in Beijing, He Ma set up in Shanghai, as well as Shi De Xian founded in Guangzhou.
He Ma—nicknamed as Land of Visiting with Self-Contained Consumer Flow
He Ma, with exemplary model of new format based on the reorganization of online and offline business, regarded as Alibaba’s business trial in new retail, relied on the first annual sales volume of 0.25 billion CNY earned by its first store entity in Jinqiao, Shanghai to make an eye-catching achievement and create a sensational effect for its initial entry of new retail because its sales volume proportion per square meter was in-between 5 and 6 times as a normal super store. After verifying the feasibility of its mode of retail plus catering, He Ma expedited the expansion of its store entities, and reached cooperation with 13 property developers such as SZITIC Commercial Property (Group) Co., Ltd ("SCP"), Seazen Holdings Co., Ltd. (“Seazen Holdings”), Evergrande Group and Country Garden. According to the stats by now, He Ma has successively entered a dozen of cities including Shanghai, Beijing, Shenzhen, Guangzhou, Hangzhou, Chengdu and Nanjing by opening a total of 68 offline store entities. In addition, He Ma, collaborating with RT-Mart, launched a new commercial format “He Xiao Ma”, which has been deployed in the second-tier and third-tier cities.
Jing Dong Dao Jia—called as Jing Dong’s Striding Forward to the Field of High Frequency
Jing Dong Dao Jia is an O2O life service platform that Jing Dong mainly constructed in 2015, and also an important elevation of striding forward to the field of high frequency based on the traditional B2C mode. Currently, its service covers the first-tier and second-tier cities such as Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing and Chengdu; meanwhile, Jing Dong Dao Jia has reached collaboration with the traditional supermarkets such as Carrefour, Wal-Mart and Yonghui. On July 17th, 2018, Jing Dong Dao Jia announced that the Go3.0 smart vending cabinet would be put into use inside the office spaces in the cities such as Beijing and Shanghai, and planned to add newly 5000 locations for placing the smart vending cabinet by the end of 2018.
MISSFRESH—well known for its layout of Community-Based Front Storehouses across China
As a fresh food e-commerce platform set up in 2014, MISSFRESH is featured with an extremely fast delivery cold-chain logistics system in a form of “City-Based Sorting Center plus Community-Based Front Storehouse”. On September 6th, 2018, MISSFRESH closed a new round of funding valued at 0.45 billion USD. The financing was led by Goldman Sachs Investment Partners (GSIP), Tencent, Jeneration Capital and Davis Selected Advisers; Poly Capital participated in strategic investment; Glade Brook Capital and Huaxing New Economy Fund involved in joint investment; its old shareholders such as Tiger Global and Sofina continued crowd funding. In the future, Xu Zheng its co-founder denoted that MISSFRESH planned to increase the proportion of the products belonging to its own brand by 50%, and to advance its “100 Cities-10 thousand Storehouses-100 million Users” scheme.
Shi De Xian—renowned for its Redefinition the Way of Buying Vegetables
Shi De Xian is a fresh food platform of new retail, born in Guangzhou, where it currently has 6 front storehouses with its delivery covering 70% area of Guangzhou. Based on the stats in TOP 10 Chinese Fresh Food of New Retail List of 2018 issued by ebrun, Shi De Xian was only surpassed by He Ma, Jing Dong Dao Jia and MISSFRESH in MAU, ranking the 4th place. In the Chinese Unicorn-to-be List of Southern China New Economy Industry of 2018 released by iiMedia, Shi De Xian made its mark on the list. According to its founder Pan Wenwei’s introduction, next year Shi De Xian would enter its phase of national market layouts in China after its foundation was laid solid and planned to set up its footholds in a dozen of cities such as Beijing, Shenzhen, Chengdu, Xi’an, Nanning and Guiyang in pursuit of occupying fresh food market by releasing its continuous energy.
Seen from the current industry background and social environment, it is never incidental that the 4 fresh food unicorn or unicorn-to-be enterprises of new retail came into being. Speaking of the overall situation for the industry, the fresh food e-commerce businesses have developed rapidly and become the main channels for consumers to buy fresh food products; the overall industry has entered the fast lane of development. An official data show that the compound growth rate for the fresh food e-commerce market will reach 49% in the following 3 years, and the penetration rate for the online market will keep rising up; by 2020, the penetration rate for the online market will reach 21.7%; accordingly, the trend of fresh food e-commerce businesses replacing the vegetable markets provided by the traditional supermarkets cannot be reversed.
In terms of current social environment and residents’ consumption trend, everyone’s demands in daily life is efficiency-oriented as China steps into a new economy era; thus, time has become more and more fragmented. A copy of publicly released data shows that the yearly working time for the Chinese residents on average exceeds 2100 hours, ranking on top level across the world. (The extra time for working on either of 2 days for off work or any of statutory holidays is not included.) With the global economy weakening persistently and the competitiveness for industry intensifying, the average yearly working time per person increases year by year. Personal life flooded with work has become normal for most Chinese wage-earners. Naturally, the take-out market closely connected with the social phenomena, created favorable conditions for the emergence of the super unicorn enterprises such as Meituan and Elema. Over the latest years, everyone’s demands for the freshness and safety of the food materials and ingredients has become higher and higher as the healthy ideas have been popularized among the public. The increasingly higher demands are reasonable and can be sensed from the issues concerning the take-out businesses without license and food safety frequently placed on the hot search; consequently, more and more families have chose to cook food at homes. Conscious of the trend, the fresh food e-commerce enterprises integrated new modes into their business operation, and reconstructed the “Consumers-Products-Markets” relation. Their conspicuous e-commerce features combined with an offline concrete shopping experience have refreshed consumers’ views on the traditional e-commerce businesses. As a return, consumers are more and more dependent on the more efficient way of buying vegetables and any other fresh food.
What facilitates the fresh food e-commerce development of new retail is not merely the accelerating rhythm of everyone’s life but the consumption needs for fresh food, which is from the low-and-middle income population accounting for great proportion in the Chinese income structure as well as the middle class with a more and more embarrassing social status. Nowadays, as prices are soaring, the goods number that everyone can afford is gradually decreasing though the per capita disposable income is increasing. This forces everyone to downsize their expense in certain aspect to guarantee the sustenance of their daily lives, leading to the advent of consumption downgrading phenomenon. The growing concerns for the issues about children upbringing and health conditions enable consumers to have more and higher demands for food. Under the contradictory circumstances, the e-commerce businesses of new retail with the more convenient and more reasonable pricing advantages, compared with the traditional vegetable markets and supermarkets, is able to own a better market outlook and more quickly step into the daily lives of those who were born in 1980s and 1990s, because the 2 generations of people have been well educated and deeply influenced by modern e-commerce.
Aside from striving for the innovation of business formats and advancing the option of SKU via data analysis and modern technologies, the fresh food retailers based on new retail lower the time cost spent by consumers in purchase, and provide consumers with more high-quality and more friendly shopping experience. As retail industry and the new technology persistently move forward, the blue ocean of fresh food retailing market with surging undercurrents is manifesting its great charm.
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