Sep. 19, 2017 08:44 BST

REYKJAVIK, Iceland — Chinese retail giant Alibaba Group is planning to open far more of its “new retail” concept supermarkets, which blend the online and offline spheres and feature live seafood.

This was according to Gfresh vice president Anthony Wan, who is privy to Alibaba’s plans as his firm has taken investment from it, he said.

While he would not put a figure on these plans, he described it as a “staggering” amount of stores in the pipeline.

Currently there are 13 stores in Shanghai, Beijing and Ningbo, and they serve customers located within a 3 kilometer radius to ensure shorter delivery times, according to Alibaba.

“We believe the future of ‘new retail’ will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place,” said Daniel Zhang, CEO of Alibaba, when it launched three new stores in July 2017.

Wan noted live seafood was a key feature of these stores, where customers can scan barcodes to find out all the information on products, and buy them.

“A good number of people only go into the store once — when they want to buy again they just do it online,” he observed. With curious customers, producers are able to buy a few precious minutes in which to put across the much-feted “story” of where the seafood has come from, and in doing so go a long way towards brand-building.

Elsewhere in “new retail”, Wan noted China has old-fashioned convenience stores practically on every street corner, which are being given facelifts — and new, online payment systems — thanks to the country’s growing e-commerce firms.

According to China Daily, Alibaba plans to encourage merchants to link into its “LST app” and thereby “unlock the consumption potential of shoppers from second-tier cities to even lower-tier townships and villages, by enhancing the merchants’ capabilities in marketing, delivery and inventory management”.

“[Alibaba-owned] Tmall has begun the process, and is planning to launch some 1,000 of these stores in 2017,” said Wan. “Not to be outdone, JD [.com] is planning one million,” he added.

Bricks and mortar meets e-commerce

Alibaba’s leadership recently told Yahoo Finance that building out infrastructure is central to its future plans, “which appear to focus on the spread and development of physical assets as well as its e-commerce infrastructure, including its marketplaces, logistics, and payments system”.

Alibaba is looking to bring the technology and utility of its Hema stores to shopping malls; these stores use machine learning to customize fresh food offerings in each location, making each store unique and tailored to consumer preferences, the news site wrote.

“Bringing this technology to malls could boost brick-and-mortar retail sales, as the improvements to the shopping experience and product offerings would likely entice customers.”

Alibaba can integrate this technology into malls either by building and acquiring stores and malls — which it has already embarked upon — or it could look to partner up.

“[vice chairman, Joseph] Tsai suggested that acquiring many real estate assets is a bad use of capital, and working with third-party stores might be a better way to go. That could hasten the spread of Alibaba’s innovations, and provide it with a new revenue stream as a retail technology provider. However, it might find difficulty getting stores to take full advantage of its tech.”

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