Hema embarks on a new era of expansion

Author | Cao Anxun

Editor | Zhou Zhiyu

Without surprise, after CEO Yan Xiaolei took office for more than three months, Hema's strategic focus has undergone a significant change.

On June 27th, Hema announced that with the opening of 5 new stores this week, the total number of Hema stores exceeded 400, joining the "400+" club of Chinese chain supermarkets, with stores spread across more than 30 cities including Shanghai, Beijing, Hangzhou, Guangzhou, Shenzhen, and others.

This rare large-scale expansion of stores by Hema since the opening of its first Hema Fresh store in Shanghai in January 2016 signifies the entry of Hema into a new era of expansion.

Mei Xiang, the national site selection manager of Hema, stated that the recently opened stores have half covering new "Hema Districts," such as opening new stores in cities like Changzhou, Changshu, and Tongxiang; while the other half is "encrypting" the store network within the original delivery range to enhance the experience of existing users.

According to Mei Xiang, the newly opened stores have further upgraded the offline displays, shifting from sales-oriented to experience-oriented. "In the past, the entrance of the store featured popular products like milk and fruits, but now it has been changed to trendy products like flowers and baked goods, allowing consumers to see colorful flowers and be attracted by the rich cream scent as soon as they enter."

Some industry insiders pointed out that as a self-operated supermarket, the breakthrough in the number of Hema stores reflects the possibility of batch replication after the model stabilizes. Moreover, after many years, a new player has joined the "400+" club of Chinese chain supermarkets, demonstrating the continued vitality of the retail industry in China.

Different from the focus on promoting discount reforms last year, Hema has been accelerating its expansion pace this year through actions such as restoring membership card issuance and renewal services, opening up franchising, and launching its own brands overseas.

In early June, Hema's own brand officially went overseas and entered the largest Chinese supermarket and e-commerce platform in the United States, Yamibuy. In the first week of Yamibuy's launch, "Hema Brand" new products had already risen to the top of the new product rankings on the East and West Coasts of the United States. This is the first large-scale overseas expansion of a domestic supermarket's own brand from China.

Next, after the successful trial of Hema brand products in benchmark channels in the U.S. market, they will enter countries such as Australia, Southeast Asia, Japan, and South Korea. In addition, Hema is also in talks with leading local e-commerce platforms and chain supermarkets in Singapore.

At the same time, Hema O'le and Hema NB are also accelerating their store opening pace, attempting to leverage high cost-performance to tap into the mass market beyond the middle class.

Under the leadership of Yan Xiaolei, Hema is also standing at a new starting point.

Alibaba's financial report shows that in the 2024 fiscal year, Hema's total transaction volume (GMV) reached 59 billion yuan, higher than the previous fiscal year's 55 billion yuan.

Among the Hema self-operated stores operating for more than a year, most have achieved positive cash flow.

It is worth mentioning that with the rise of the new retail wave, major commercial entities have deepened their ties with Hema. Leading properties such as China Resources, COFCO, Vanke, Longfor, Wuyue, Intime, CapitaLand, and others have become important partners of Hema.

In the "2023 China Top 100 Chain Stores" list released by the China Chain Operations Association, Hema ranked 8th, just behind giants such as Walmart (China), Juran Home, Suning.com, Yonghui Superstores, China Resources Wanjia, and others For Hema, after going through the price war and leadership changes with Sam's Club in the past two years, following the breakthrough in the number of stores, ensuring the match between offline services, product quality, and prices has become increasingly important.

Rooted in one of the world's largest consumer markets and growing with the trend of new retail, Hema is fortunate. However, to wear the crown, one must bear its weight. Facing the trend of consumer downgrading and competition from traditional retail giants like Sam's Club, Hema also urgently needs a resounding victory to consolidate its position as a benchmark in China's new retail industry