Alibaba and JD.com set record for store opening

Date : 19 January 2021

Jiong-Jiong Yu

Senior Retail Analyst

In a store opening race post-COVID, Alibaba opened 21 new Freshippo stores and JD.com 14 SEVEN FRESH outlets in just one month. 

Alibaba opens 21 new stores in 13 cities in December

The 21 new stores include 19 Freshippo supermarkets and two Freshippo Mini. “The store opening in December is the fastest in our company’s history,” said a Freshippo official.

Every crisis brings opportunities. Freshippo’s great performance since the outbreak of the pandemic has been acknowledged by the government and its customers.

A national survey conducted recently reveals that “Freshippo” is perceived by shoppers as one of the grocery shopping channels rather than just a store banner. It is similar to the situation where vacuum cleaners are known as “hoover” in the UK because of the exdeeingly strong brand awareness.

Source: IGD Research

 

Source: IGD Research

 

JD.com’s SEVEN FRESH closely following suit

The 14 stores that JD.com opened in the same month include SEVEN FRESH supermarket and SEVEN FRESH LIFE. The latter is the retailer’s community store format.

According to JD.com’s official post, the new openings are in Beijing, Tianjin, Tangshan, Langfang, Guangzhou and Huizhou. It marks the first time that SEVEN FRESH LIFE enters Guangdong-Hong Kong-Macao Greater Bay Area.

At the same time, the retailer has enriched product offering and expanded the range by 300% for residents in Beijing and Hebei, covering categories such as noodles, ready-to-cook food, vegetables, milk and eggs.

Source: IGD Research

 

Source: IGD Research

 

Both facing similar challenges

The store opening race is also the race of establishing a strong foothold in lower-tier cities.

The main challenge facing both Alibaba and JD.com is how to adapt the operating model that works so well in tier-1 and tier-2 cities, such as Beijing and Shanghai, in less developed areas.

This challenge is manifested into many sub-areas, from shopper attitude, shopping habits, visit frequency, spend level, local preferences to supplier network, blockchain and logistics.  

Both companies have the capability of solving these puzzles by utilising their abundance of data and sophisticated algorithms.

Simple copy-and-paste will not work. It would need back-end data adjustments and human experience,” a retail expert commented.

There will be failures and store closures along the way for sure. The only way to progress is to keep trying, which is often the case in China.