China e-commerce giant JD.com follows Alibaba's lead into bricks-and-mortar food retail
Alibaba has made several store investments in recent years, including purchasing shopping mall group Intime, an 18% stake in Lianhua Supermarkets, and a 36% stake in Sun Art Retail, which owns 446 hypermarkets and many smaller stores.
JD said its new 7Fresh stores, the first of which will open in Beijing this week, aim to bring a premium offline food shopping experience to Chinese consumers using smart technology to aid the shopping experience.
For instance, 'magic mirrors' that sense when customers pick up an item of produce and automatically provide information on a screen about its source and nutritional information are being tested.
The stores will soon also have smart shopping carts that can follow customers as they browse the aisles, allowing them to shop hands-free.
Whether via traditional checkout or self-checkout, they accept payment by cash, card or mobile phone with the 7Fresh app. Self-checkout even offers an option that uses facial recognition connected to the 7Fresh app.
Customers from the neighbourhood can either take their purchases to go, or have them delivered to their homes in 30 minutes.
These functions and options are similar to that of competitor Alibaba's digital-enabled supermarket chain, Hema. A bricks-and-mortar store, it also accepts orders by app (including remotely), and promises delivery within 30 minutes in a 5km radius.
Premium produce and experience
Wang Xiaosong, CEO of 7Fresh and president of JD Fresh said: "With the highest efficiency and the greatest knowledge of consumer preferences, as well as access to the highest-quality products, we can invest in a premium experience far beyond anything Chinese consumers have experienced before."
He added the company plans to open 1,000 stores across the country in the next three to five years.
They will be stocked with fresh produce including fruit, imported meat from Australia and Spain, and seafood from Japan.
At an in-store bakery, pâtissiers trained by a Meilleurs Ouvriers de France (MOF) craftsman will offer fresh bread, cakes and other baked goods.
The 7Fresh stores will also feature a restaurant area, where consumers can choose from a wide range of food cooked on-site by chefs.
Alibaba's Hema stores offer similar options.
According to the latest analysis by market research firm Nielsen, among top-performing retailers with high sales across the store, 49% of sales come from the fresh department.
Since 2012, JD.com has been offering fresh food online. JD Fresh was launched in 2016 as an independent fresh food business unit.
The firm says its large nationwide cold chain logistics network enables it to offer fresh fruit, vegetable, seafood, meat and frozen products sourced from over 2,000 partners.
Furthermore, JD is working with a growing number of partners to use blockchain technology to track every step in the supply chain, from production to delivery. The company recently partnered Walmart, IBM and Tsinghua University to launch the Blockchain Food Safety Alliance, to enhance food tracing, traceability and safety in China.
According to Deutsche Welle (DW), close to 90% of all retail shopping worldwide is still done in person.
As Daniel Zhang Yong, the chief executive of Alibaba, said at a press conference last November: "Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalised services in the digital economy."
Amazon has also been making inroads into offline retail including with bricks-and-mortar Amazon Bookstores. It further surprised industry watchers with the purchase of high-end grocer Whole Foods for more than US$13 billion early last year.