FOR ALIBABA’S HEMA (FRESHIPPO), X DOES NOT MARK THE SPOT

Throughout the years, I spent many days scouting new formats of Alibaba Hema for my ChinaTechTrip study tours. Under the leadership of the now-'retired' Hou Yi (who just started a ‘Hema for Pets’-like concept), Hema would launch more than 12 different concepts.

One of those concepts was a warehouse membership store, Hema X, launched in 2020, clearly modelled after Costco and Walmart’s Sam’s Club that had seen growing success in China. Hema wanted to 'Copy, operate, and surpass'.

I took some groups to see the Hema X on Jianguo Road in Beijing, as part of an afternoon of Hema concept exploration. To be honest, we often were the only ones there. Maybe it was the time of day. After all, these stores were aimed at upper-middle-class families, and they were probably hard at work. Or maybe the offering just wasn’t compelling. Judging from negative reviews, Hema X did not seem to offer the premium products and customer service people were expecting.

Not so long ago, news reached me that this specific Hema X store and another one in Shanghai (the one of the infamous ‘Sam’s Club to Hema X’ busline campaign) were closing. A few days ago, Hema announced that it would close 3 out of 5 Hema X stores in Shanghai.

In his well-known boldness, Hou Yi had claimed that there would be 50 Hema X stores in two years. It never got further than 10 in 3 years. And now there will be only 5 left.

As industry experts have said, the problem with Hema was that it spread its attention and investment over too many different concepts. Under the new leadership, the focus is clearly on Hema Xiansheng (the original format) and the Hema Outlet/NB discount format.

Yonghui, Carrefour and others have tried the membership model but failed. The jury is still out on RT Mart’s M Stores. Lianshang wrote: “(..) in China, the warehouse membership store model has great market potential, but if companies want to do well, they need to further optimize and innovate in products, services and supply chains. The warehouse membership system is easy to learn, but it is difficult to implement its values ​​and systems that truly operate with "membership as the core". It takes time to cultivate brands and strengthen corporate capabilities.”

Foreign companies like Costco and Sam’s Club do membership stores best. They are more rigorous regarding site selection, store structure, and product configuration and have higher standards. Domestic alternatives have not yet fully mastered or understood the operational core of this type of industry and are still in the initial "imitation" stage.

The Hema website still shows 8 Hema X. I wouldn’t be surprised if they are all gone by this time next year. Meanwhile, Hema plans to open 100 Hema Xiansheng stores in the dozens of new cities this year.

For Hema, X does not mark the spot, but it will focus on finding the real treasure.

Source: Lianshang

Picture: Hema X Senlan Store (SH, still open)

- Ed