Hema’s Ten-Year Journey: An Evolution and Reflection on China’s New Retail Industry

New Retail Says Goodbye to the Hype, Returning to Its Core.In August 2025, Hema’s X Membership Store officially closed its doors at the Senlan Mall in Shanghai. At the same time, Hema Fresh plans to open nearly 100 stores within the fiscal year, signaling Hema’s full exit from the membership store market, focusing instead on Hema Fresh and community discount stores. Meanwhile, JD.com announced it would open five new JD Discount Supermarkets in Suqian, Jiangsu, and Zhuozhou, Hebei. Meituan’s discount brand, “Happy Monkey,” will also unveil its first store in Hangzhou. After ten years of exploration, the three giants that once competed in the new retail space have now clearly diverged in their strategies.The Rise and Fall of New Retail Over the Past Decade: From Frenzy to Rationality.In 2015, Alibaba internally launched a new experimental project called “NB Project,” which would later evolve into Hema. This project marked the beginning of China’s ten-year new retail era. That year, Hou Yi, who had nearly 30 years of experience in the retail industry and had helped build JD’s logistics system, returned to Shanghai after resigning from his previous role.

He shared a vision with then-CEO of Alibaba, Zhang Yong: to create an integrated online and offline supermarket. In January 2016, the first Hema store opened in a quiet location in Shanghai’s Jinqiao area. There was no publicity, but the store’s lobster priced at 99 yuan each, the strict “Hema app payment only” rule, and the innovative “store-as-warehouse + instant delivery” model with a promise of 30-minute delivery within a 3km radius quickly attracted attention and turned Hema into a viral sensation.In its first year, the Jinqiao store generated about 250 million yuan in revenue, with its per-square-meter sales 3.7 times that of traditional hypermarkets. This success attracted major retailers like Carrefour and Walmart, who began studying Hema’s model.From 2016 to 2019, this period is considered the “golden age” of new retail. Six months after Hema’s first store opened, Jack Ma proposed the concept of “new retail,” declaring, “In the next ten years, there will be no e-commerce, only new retail.” Alibaba’s research institute defined it as a consumer-experience-centered model, driven by data, which would give rise to more service-based formats. Overnight, “new retail” became a dominant buzzword in Chinese business.

From entrepreneurs to capital, from department stores to supermarkets, from online platforms to logistics companies, everyone went wild for new retail. Hema, which had successfully tested the waters, became the market darling. Meituan’s “Zhangyu Fresh” (later upgraded to “Little Elephant Fresh”), JD’s “7FRESH,” RT-Mart’s “Feiniu Fresh,” Yonghui’s “Super Species,” and BBK’s “Fresh Food Performance” projects all followed suit. These new retail formats largely replicated Hema’s model: an online and offline integrated fresh supermarket, with dining areas and delivery services, attracting customers with high-quality seafood.Hema’s store numbers quickly multiplied, experimenting with various business models. However, several challenges emerged during these years. The first problem was the high costs and difficulty in turning a profit. A key feature of new retail was self-operated instant delivery, which required a significant investment in logistics infrastructure to maintain peak delivery efficiency, resulting in high fulfillment costs. Added to this were employee salaries, rent, utilities, and operational losses, all of which severely squeezed profit margins. Secondly, blind expansion consumed cash flow. Physical stores operate on a heavy asset model, with considerable investments in rent, labor, and renovations.

As companies pursued the new retail trend, they spread their resources thinly across new formats, diverting attention from their core business, while cash flow was quickly depleted. Thirdly, supply chain transformation lagged behind, resulting in a lack of product differentiation. Most innovations were focused on the consumer-facing end, while deep changes to the supply chain remained inadequate, leading to issues of product homogeneity. Consumers complained that “the products are similar, but prices are not cheap,” and repeat purchases became difficult to sustain.In 2020, the pandemic accelerated the shift to online shopping but also exposed the limitations of the online model. Meanwhile, consumers became more concerned with value for money, prompting industry-wide reflection on product strength and operational efficiency. This led to a strategic retreat by leading players: Hema stopped multiple business formats, closing all its warehouse membership stores, and focused on Hema Fresh and community discount stores; Yonghui’s new retail transformation encountered difficulties, and it shifted its focus to products and services; Meituan’s “Fresh e-commerce leader” MissFresh quietly exited the market in 2022; Suning’s “Suxian Fresh” disappeared from the scene.As the “new model” hype faded, the underlying issues emerged: What is the sustainable essence of retail?

Hema’s journey has become a critical case study in the evolution of new retail.Value Return: Building a Core Moat Around Product Strength.After years of expansion and trial-and-error, Hema chose a strategic focus. The company decided to concentrate its limited organizational capacity, brand equity, and resources on more long-term value-oriented core businesses that could generate synergistic effects. This pivot marked a return to the foundational elements of retail: products and services. Recently, Hema CEO Yan Xiaolei emphasized that “product strength” is Hema’s core competitive advantage. Hema Fresh has officially launched its new brand proposition, “Explore Freshness, Enjoy Life,” aiming to build a three-in-one product system that integrates “data-supply chain-experience.” This system transforms customer pain points into core drivers of product iteration and experience upgrades.This relentless pursuit of product strength is vividly demonstrated in Hema’s customer experiences. For example, 24-year-old baking enthusiast Zhou Lili raved about the Rose Lychee Napoleon pastry that launched in July. She admitted that she rarely bought baked goods from supermarkets before, but after trying this product from Hema, she was hooked. Thanks to her recommendation, Hema’s bakery section became a must-visit spot for her dormitory friends on weekends. This popularity is not just due to the precise capture of flavors but also Hema’s increasingly refined supply chain response time and quality control.

Another example is from 37-year-old mother Chen Xian, who chooses Hema primarily for its “freshness.” The “Daily Fresh” series of morning glory and sweet potato leaves are her family’s favorite, and she loves that the ingredients are fresh, perfectly portioned, and don’t need to be stored overnight. Her perception of Hema’s higher prices has changed due to the consistent quality and freshness of the products. Moreover, Chen’s daughter’s love for Hema’s dried fruit speaks volumes about Hema’s attention to product quality. “There are no random additives, the fruit is plump and chewy, and the colors are naturally beautiful,” she said.Hema’s precision in solving customer pain points extends even to smaller details. Peng Juan, a 28-year-old customer service representative, previously relied on bubble tea to help her manage stress. However, she found Hema’s fruit slices to be a game-changer. “Hema’s fruit slices are not only delicious but also very convenient—they come in different varieties, from watermelon to pineapple and mango, and they are easy to eat without making a mess.”This focus on consumer experience, combined with supply chain efficiency, has created a self-reinforcing cycle that enhances both customer loyalty and operational performance.New Retail Returns to the Essentials of Retail.As we move into 2025, there has been a growing sentiment that “new retail is dead.”

Alibaba’s sale of its stake in Suning, JD’s reduction of its stake in Yonghui, and speculation about Hema’s future have sparked many debates. However, Jack Ma’s recent visit to a Hema store and Alibaba’s statement that it “won’t sell Hema” have sent a strong signal of confidence. Meanwhile, Hema’s focus on large-scale Hema Fresh stores and community discount stores, along with integration into Alibaba’s core business ecosystem via platforms like Taobao Flash and 88VIP, has opened new avenues for user acquisition and streamlined its supply chain advantages, setting the stage for future growth.In retrospect, Hema’s initial concept was questioned—“Is an app and delivery service all that new retail is?” But today, apps and delivery have become standard features for almost all retail chains. “30-minute delivery” has become a baseline expectation for online shoppers. More objectively, new retail never truly disappeared; it simply shed its conceptual glow and became a normalized capability within the retail sector. The next phase of competition will focus on the core elements of retail—product strength, supply chain efficiency, and consumer experience. This is exactly where Hema’s current strategy is betting its future. From the exploration of its first store in Jinqiao, Shanghai, to the 2025 brand evolution with the slogan “Explore Freshness, Enjoy Life,” Hema’s ten years have also mirrored the new retail journey from concept to execution, and as competition zeroes in on product strength, supply chain, and customer experience, the story of new retail may be entering its most value-generating chapter yet.