MEITUAN OPENS ‘LITTLE ELEPHANT’ SUPERMARKET (AGAIN)

Meituan operates Xiaoxiang (Little Elephant) front-end warehouses in over 30 Chinese cities. Last Friday, it opened its first offline 4,500 m2 Xiaoxiang Supermarket (XXS) in northern Beijing.

As is normal in China when a highly anticipated store opens, there were large crowds on the first day(s). Communities within a 5-km radius were approached with typical offline promotions, and many retirees gathered to collect their free/discounted eggs on opening day. Meituan had also promoted the store through 27 group-buying deals in the Meituan and Dianping apps. In the store, staff members held up signs saying, "For group-buying coupon issues, please ask me."

XXS offers freshly baked goods, provides meat- and fruit-processing services and displays signs showing how to select and consume products. At "Freshly Craft Beer" taps (whatever freshly might mean here), customers can have a taste and fill beer bags.

Suppliers run some of these operations while wearing XXS uniforms. These also show the text "Because it's fast, it's fresh." Name tags have descriptions like "fragrant magicians" (flower sales) and "wave-riding magicians" (seafood section). There is a Xiaoxiang Membership (98 RMB/year) with benefits such as member pricing, exclusive coupons, free ice cream, and free parking.

While Meituan’s Happy Monkey community stores copy Alibaba’s Chaohesuan NB (formerly Hema NB), XXS positions itself like Alibaba’s Hema (Freshippo), offering similar products and in-store catering. Unlike Hema, XXS does not offer delivery from its offline store (yet). Since the offline store has products not available in Xiaoxiang’s front-end warehouses, those would need to be picked orders in the XXS store; an inefficient fulfilment method. Happy Monkey doesn’t offer home delivery either, but is reportedly working on implementing it.

As in Happy Monkey stores, information on pesticide residue testing is displayed on screens. While Happy Monkey uses simple paper price tags, Xiaoxiang uses electronic price tags. There’s a large share of private labels in both formats. Beyond margin advantages, these also make it harder for consumers to compare prices across stores.

Xiaoxiang is already preparing a second store outside Beijing and is selecting additional locations. In fact, this isn’t the first attempt. In a 2019 ChinaTechTrip study tour, we visited the first attempt, shortly before it shut down. Let’s see if this second iteration will fare better.

Lianshang: “Online traffic growth has peaked, and customer acquisition costs continue to rise. Offline stores can reduce customer acquisition costs (..). Offline scenarios can also fill the experiential gaps of purely online models. In the future, whoever can achieve seamless integration of online and offline channels will be able to accurately match consumer demand across all scenarios and dominate the trillion-dollar instant retail market.”

Sources: 36Kr, Lianshang.

-Ed