In pictures: How China's ecommerce giants Alibaba and JD.com have reinvented stores

UK retailers have long looked to the US, and giants such as Amazon and Apple, to seek direction on the future of retail – not only for all things digital, but for stores too.

Much noise was made about Amazon’s cashierless store at its Seattle head office when it opened earlier this year.  The online Goliath is planning to open Amazon Go stores in Chicago and San Francisco at some point in the next 12 months.

However, cashierless kiosks are already popping up across China, with access provided by smartphones that double up as walking wallets.

In contrast to Amazon Go, Chinese shoppers may have to use their smartphones to scan a QR code – which are used widely in the country – on each item they wish to buy, but the principle of stores without tills is the same.

The real revolution, however, is happening less at the checkouts and rather more in the aisles, and is being led by China’s online retail duopoly of Alibaba and JD.com.

In Alibaba’s 40-plus Hema supermarkets and JD.com’s 7Fresh shop in Beijing, digital is all around and forms an integral part of the store design. Yet they are traditional in their approach both to shoppers and the manner in which products are displayed. The phone-centric element is just a means to engage the shopper.

Some of the details in a number of stores, such as digital balls that allegedly give you a health assessment, or mirrors that provide information about products, are designed to entertain as much as make the shopping journey ‘frictionless’ and faster.

The aim would appear to be to increase dwell time, a trait more common in fashion stores than supermarkets. It’s about giving shoppers reasons to come back.

Alibaba’s grocery store

If you want to get up close and personal with Jack Ma’s (founder and eminence grise of Alibaba) Chinese fiefdom, a trip to the Alibaba ‘campus’ in Hangzhou is required.

This will go some way towards understanding the scale of the company’s ambition and the way in which an internet behemoth is treating the business of retailing from physical premises.

Just beyond the campus, one of two large offices that Alibaba has in Hangzhou, is a five-storey shopping mall named Alimall. Opened on April 28, it is owned by Alibaba and has a mix of foreign brands such as Tissot and Starbucks and Chinese brands, and is anchored by a 6,000 sq m Hema supermarket in the basement.

Hema is a hybrid store, fulfilment centre and place of entertainment, where customers can choose their food, have it cooked in situ and then eat it in contemporary surroundings, or just do some old-fashioned shopping.

On the fulfilment side, grey-shirted employees can be spotted filling small green (fresh fruit or veg) or purple (meat) bags with online orders.

These are picked from the shelves and then attached to an overhead conveyor that serves the dual function of getting the bags to where they need to be while creating a great deal of theatre by making the shopper feel that they are inside a complex machine.

The store is good-looking and has many pause points designed to make the shopper stop and stare.

Prime among these must be the seafood area. In the majority of western supermarkets, seafood means dead fish and live shellfish on ice. The Hema experience at Alimall is more akin to visiting an upscale Chinese restaurant where there are large tanks filled with fish, with each waiting to be chosen, cooked and consumed.

In Alimall’s Hema fish tanks are a core attraction, and on the day of Retail Week’s visit, crowds were staring at the happily ignorant creatures; there were even British crabs that had made the journey to the other side of the world.

Those wishing to make a purchase for home delivery or to eat in-store could do so via the Alibaba app, with payment being made by the wallet in a phone, Alipay.

Mobile is how the Chinese consumer chooses to pay. Mobile payments totalled $32tn in 2017, according to The People’s Bank of China, and Alipay, the online payment platform founded by Alibaba, accounts for more than half of the market. It has overtaken PayPal as the largest mobile payments platform in the world.

If home delivery is chosen, fulfilment takes place within a 3km radius of the store in 30 minutes.

But judging by the reaction of shoppers in this store, the part that really chimes is the opportunity to make a dining occasion of a visit to the supermarket.

Beyond the fish tanks it is the details that matter. Head for the packaged fresh veg in the chillers and each item comes in a bag with a number on it, one for Monday, two for Tuesday and so forth, with the produce on display being changed daily.

Nothing about this is much different from what is done in a UK supermarket, other than the fact that this is a retailer wearing its fresh credentials on its sleeve.

There is, of course, plenty of whizzy tech around the store, with facial recognition and an absence of the normal banks of checkouts the most obvious manifestation. And there are the vending machines, such as the automated pizza-maker, but in all of this, it’s the store that’s the star. 

What is on view is what Alibaba has dubbed ‘New Retail’, which turns out to be a mix of old and new. Alibaba itself has said New Retail means that the choice for shoppers is not a binary one and that its bricks-and-mortar presence is where online and offline work together “seamlessly”.

Fast food made faster

After visiting campus, it was off to Wu Fang Zhai, a fast-food establishment which has partnered with Alibaba to give diners a range of digital enhancements.

Diners can order offsite using an app, gain entry to the store via the same app, play an augmented reality game with their smartphones while their food is readied, and then eat and go.

There were originally 13 staff in this restaurant, but since it was digitised using Alibaba’s big data and the app, this number has been whittled down to just six: one for front of house and the other five behind the scenes in the kitchen.

David Lloyd, Alibaba’s managing director for the UK and the Nordics, sums things up when he says: “We talk a lot here about the leapfrogging phenomenon that is taking place in China.

“Retail is far more digitised in China than we see here in the UK. I think it will come here over time. It’s not that easy to open a large number of large stores in the UK, so for us I think it will take a little bit longer than it has done in China.”

7Fresh, the JD.com supermarket

Alibaba may have opened 46 supermarkets since its launch in 2015, but online rival JD.com has responded this year with 7Fresh.

Brooklyn-based Josh Gartner, VP international corporate affairs for JD.com, says: “The bricks-and-mortar offer has always been quite weak [in China], which is why online has had such good penetration in China. What we wanted to do [at the 7Fresh stores in Beijing] was to create a shopping experience that would be higher-end.”

Opened in January, this 4,000 sq m store in the Southeast of the city has an upscale feel and several in-store eating areas.

Like Hema, this store has technology to improve the in-store experience, and if shoppers want to be entertained, as well as dining there are kiosks, each of which contains a digital globe.

Sit down in front of one of these, touch it and it informs the user about their health, although how this is possible from a simple laying on of hands is somewhat unclear.

Equally entertaining is the follow-you-around shopping kart being trialled in this store, which when it has identified the shopper via a smartphone, dutifully completes the shopping journey with the customer, without having to be pushed. This is probably nice to have, rather than fulfilling any kind of need and it seems likely that it will not be adopted, according to a spokesman.

There is a heavy emphasis on fresh food for now in this store, whether it is cooked and consumed in the store or delivered within the 3km radius. The company says average delivery time within this radius is 28 minutes.

Practically, this means a store with ‘magic’ mirrors above the fresh fruit and veg that display information about the produce that a shopper selects so they can make informed purchases. 

Like the Hema store, 7Fresh is all about the app, and rather than paying with Alipay, shoppers in this store use Wechat, the mobile phone wallet that has been developed by Tencent, which also functions as one of China’s alternatives to WhatsApp.

Around 50% of the sales in this store come from dining, which is totally at odds with supermarket norms, and it is claimed that 70% of the offer is fresh.

Welcome to the new world of supermarket shopping, as much about being entertained as it is concerned with the simple acquisition of provisions to be consumed at home.