Jack Ma hoists an enormous spider crab out of a pool of water in one of Alibaba’s growing fleet of Hema grocery stores in Shanghai. This is more than just a typical photo opportunity – the 13 Hema supermarkets represent Alibaba investment in “new retail.” The video of a tour of the store, reveals that Hema stores are taking huge leaps in data powered store experiences. Compared to Amazon’s convenience store concepts, Hema takes the connected store experience to a new scale – customers are fully connected to hundreds of thousands of grocery products, including a constantly revolving assortment of fresh produce, meats, and fish. You can shop in store and pick up your items or have them delivered locally within a nearby radius of the store - Hema employees pick, pack, and deliver your order right to your door.
What’s more is that unlike Amazon’s “get in - get out” shopping concept, Alibaba has invested in creating local experience and community in these Hema stores. Customers can pick live fish by hand, have it cooked on site, and enjoy a meal with friends and family, all in the same place – with beer and wine recommendations coming from the Hema app. All of this drives greater local engagement, repeat visits, and ultimately sales in these “new retail” grocery stores.
Stateside, Nordstrom recently announced the October opening of a “Nordstrom Local” concept store. The store will focus on driving the experience with services like tailoring, manicures, etc. alongside food and drink in a smaller (3000 sq. ft.) neighborhood concept. What the store will not have a lot of is inventory.
Instead the store will serve as the “experience” side of Nordstrom online with stylists focused on providing a highly curated experience for customers, but instead of scouring the racks for the right item, they will have access to the entire online catalog which can be shipped same day and prepared in a dressing room for an inbound shopper. The stores will also serve as a hub for online orders needing alterations and online returns.
While in completely different verticals, both Hema and Nordstrom Local provide insight into a growing trend in retail. For sustained online growth, retailers need to connect with customers locally and differentiate themselves on their in-store experience. Sure these stores have fundamentally different formats from most of brick and mortar today, but they still have the essential essence – experience that drives growth as we move forward to “new retail.” The pre-digital retail mantra of “Location, Location, Location” has shifted as we enter a digital and physical revolution where customers are demanding “Local, Local, Local.”