Tour Blog: Innovative Retail in China 2019

As part of a corporate tour from April 14 to April 17, X5 Retail Group discovered the technological world of the Middle Kingdom.

As part of a corporate tour, X5 Retail Group discovered a whole new world of technology in the Middle Kingdom on April 14–17. 

Our group 

Here are some interesting facts about the tour participants: 

  • X5 Retail Group is the 50th largest retailer in the world and No.1 in Russia.
  • The company is looking for interesting innovative startups, hoping to use them to solve certain problems in the future. For example, the company is interested in drones that could fly in distribution centers and scan barcodes on pallets.
  • X5 Retail Group has 15,000 stores. 
  • The company employs lean manufacturing principles. 
  • For added cost-effectiveness, the company introduces cheap but effective innovative methods. 
Day 1
7Fresh

7Fresh is a high-tech supermarket by JD.com. The new 4,000-square-meter store in Beijing has a wide range of fresh and cooked products. 7Fresh delivers orders within 5 km in 30 minutes. 

Офис 7 Fresh

The tour participants were met by the store’s manager who showed them how the store worked and what kind of innovations were being used there (for example, when products were scanned, information about the manufacturer was displayed on a screen, including the country of origin, production site and product contents. This applied to fresh produce). 

What drew the participants’ attention immediately was how perfectly clean the store was (the fridges looked brand new and the shelves were spotless), which was not really surprising, given that cleanliness is the norm in China. For example, the iron fences in the streets that separate the pedestrian area from the road are washed by municipal workers with brushes and soap solution. 

The store has two types of cafés:

  • the one specializing in seafood, where customers can buy seafood and have it cooked for them while they are finishing their shopping; 
  • and another specializing in different kinds of food such as salads, snacks, ice-cream, tea, coffee, etc. 

Plug and Play

The famous international accelerator is an irreplaceable link connecting top corporations, startups, universities in major cities, and cross-border projects. After its successful launch in 2015, the Chinese office of Plug and Play invested in more than 200 startups and accelerated more than 500 startups in 8 large Chinese cities including Beijing, Shanghai, and Shenzhen. 

As for the company’s position toward European countries, it has a branch in each one, for example: 

  • Fintech in France
  • Brand & Retail in the Netherlands
  • in Germany, there is Supply Chain and Energy & Sustainability in Berlin and Insurtech and Health in Munich
  • in China, the company has 10 verticals that operate in a number of areas including retail. 

Plug and Play can monitor businesses and startups and offer the list to the final customer, at which point the startups that will be partnered with are chosen. 

The company closely cooperates with the state. 

TusHoldings

TusHolding is a group of S&T investment holdings based in Tsinghua University that specializes in science and technology services. Tsinghua University is fully responsible for the development, construction, operation, and management of TusPark, being one of China’s first demonstration enterprises in the field of modern service. 

The tour participants visited the demonstration hall where they saw how companies are formed and developed, how many kinds of such companies there are and what they produce.

The holding owns several buildings in the centre of Beijing and it is greatly dependent on the state policy. 

https://www.facebook.com/FastForwardTours/videos/1496807380450167/ 

TealDANCE

TealDANCE is Russia’s first business accelerator in China with 100% Russian capital, operating with the support of TealTech Capital Fund.

The fund was founded by VkusVill, Khimrar, and Agama, three prominent industry leaders in Russia. DANCE is an acronym that stands for Data Networks Cloud Algorithms Equipment. In a short time, the accelerator’s international team and experts will teach you how to use all the opportunities offered by the Chinese market to create and promote your product. Here, teal means modern entrepreneurial principles that the company supports: 

  • The company has a clear goal that would help to make life better. The whole team shares this goal. 
  • The organisation is based on mutual trust; there are no budgets, no schedules and no bosses, as teams decide for themselves how to achieve their objectives, and hierarchy has been replaced with networking. 
  • ‘Conveyor corporations’ have been replaced with collaboration and communication platforms, allowing people at the ends of the supply–demand line to communicate without intermediaries.
  • To perform multitask operations, the organization’s core is replaced by groups. 

BingoBox

The startup’s most interesting features in mainland China are: 

BingoBox has already installed 200 of its automated shops. Now, the company plans to expand its business by entering the markets of Hong Kong, East Asia, and eventually the world. In the near future, the company plans to increase the number of automated stores to 5,000.

https://www.facebook.com/FastForwardTours/videos/404051290178003/

  • The expansion will help the company collect more data on the preferences of residents in different areas and offer specialized product ranges at affordable prices.
  • The very existence of BingoBox reflects the customers’ tendency to forgo traditional supermarkets with cashiers and security guards. To enter one of the shops, the customers use a QR mobile phone scanner. Having chosen the goods, they place them on a special counter, which displays the quantity and writes a check. Payments are made with mobile wallets.
  • Surveillance cameras and RFID tags are used to provide security at the stores. Thanks to the RFID tags on each product, the security system is able to detect any failure to pay for a purchase. Additionally, the shops have surveillance cameras have face recognition technology. The average area of the stores is 13 to 15 square meters and they offer 500 to 800 items of goods.
Day 2
In Auchan 1 minute

It has been one of the trends in Chinese retail to try and introduce something new into the domestic business by copying or observing the development of other large international companies. Initially, companies introduce international innovations into Chinese business and then become leaders in the field themselves.

Let’s now discuss the store that works 27/7 and fits into a small container where most of the everyday necessities can be found. Such shops are very popular and have a high footfall (since most of them are located in neighborhoods with a lot of offices).

Visiting Auchan 1 Minute

Auchan 1 Minute

After a trial period in 2017, Auchan Retail China moved on to the second stage of implementing its city convenience concept. On October 25, the company entered a partnership with Hisense, a global leader in digital retail and intelligent appliances. 

In our increasingly urbanized world, where four million people are projected to live in cities by 2025, Auchan Retail, the 11th largest grocery retailer in the world, launched an Auchan Minute store in Shanghai’s Yangpu District. 

This fully automated outlet allows citizens to use automated stores next to their homes. There are no sales assistants at the stores. Customers use the WeChat app to scan the code and enter. Scanned products are added to a virtual cart. The customers pay for their purchases via AliPay or WeChat Pay.    

Visit to an Auchan supermarket 

Three values – trust, openness, and excellence – support the company’s vision reflected in its slogan “Auchan changes lives”.

В магазине Auchan
  • Auchan Retail was founded in 1961 in Lille, in the north of France. Currently, Auchan Retail Development covers 17 countries and regions on three continents.
  • Auchan Retail China was launched in 1999 when it opened its first hypermarket in Yangpu District, Shanghai. Since 2008, the company has expanded is presence to cover the entire country. 
  • By the end of 2018, the chain comprised 75 hypermarkets and the supermarket Hi-Auchan.
  • Apart from its offline segment, the chain is very active in developing its online business.
  • Auchan Retail China’s subsidiary SunArt Group joined forces with the e-commerce giant Alibaba in November 2017 when they signed a new strategic deal on retail. Currently, their online platform includes Taoxianda that cooperates with Taobao, Auchan Wine that offers top-tier imported red wine, and the internet and mobile platform Auchan Daojia.
  • Moreover, Auchan Minute, first launched in June 2017, is the first innovative convenience store in China. Shopping and customer service have been optimized to become quicker, more convenient and more effective. 
Day 3
Citysuper

Citysuper is a small premium-class store selling luxury items imported to China from all over the world. The store is the epitome of a boutique approach as it sells targeted products for middle-class consumers who like to combine shopping and eating out. The main focus is on fresh produce of the middle and/or premium segment. 

Citysuper represents the actively growing format of “high-end supermarket + fresh food restaurant + O2O”. 

In the first quarter of 2017, the operating income of Yonghui Superstores reached RMB 15.3 billion (USD 2.3 billion), which is 13.8% more that it was in the same period of 2016. 

Its conventional retail chain includes about 500 stores and plans are being made to open 200 more.

The company employs 70,000 people. The prices are 2 or 3 times higher than those in other supermarkets. The shops in this chain are located in neighborhoods where they are popular. The chain offers a rather limited range of products including fresh produce, refrigerated meat and seafood. The chain focuses mainly on Western sweets and snacks – customers come here to do a quick bit of shopping and take hope just a couple of items. 

Walmart (Wal-Mart) China

The retail giant entered the Chinese market in 1996. It includes two retail formats, Wal-Mart supercenters and Sam’s Club stores. After acquiring Yihaodian.com, Wal-Mart launched a mobile app so its customers could have purchases delivered to their homes. 

In June 2016, Wal-Mart and Chinese e-commerce company JD.com announced their strategic alliance aimed at improving customer service throughout the country through synergy of traditional and online retail. 

In Wall Mart

Hema

Hema is Alibaba’s first brick-and-mortar store. Hema leverages data and intelligent logistics technology to seamlessly integrate autonomous online systems designed to deliver fresh produce in 30 minutes. 

  • The stores are divided into three areas, the shopping area, the restaurant and the pick & pack zone. IN addition, there is a replenishment and distribution area (of about the same size as the shopping area). 
  • Hema stores sell about 3,000 items of goods, around 30% of which are fresh and refrigerated products. The first shop started generating profits in about 20 months after launch. Customers can purchase fresh produce and have it cooked for them right then and there. 
  • The restaurant area is a considerable source of income, since, in addition to rent, a 20% commission is charged on sales. 
  • Customers who live within 3 to 5 kilometers of a Hema store can have their purchase delivered to them in 30 minutes.
  • Currently, online orders placed via the Hema app make up 50% of all orders. 
  • Each item has its own RFID that allows customers to check product information including price, origin, manufacture date, maintenance tips, etc. 

Li&Fung

Li&Fung is the holding all the most famous brands use to enter the Chinese market. Its portfolio includes luxury and casual segments. The company supports the full cycle of introducing a brand into the market and promoting it. 

The tour participants walked through the company’s demonstration halls where they saw for themselves that Li&Fung offers its clients a “turnkey solution”, from design to fully equipped warehouses.

In Fung Group office

TechNode

TechNode is China’s leading technology-themed blog aiming to unite the Chinese technology sector and the English-speaking world. 

Written in English and Chinese, TechNode posts discuss startups and technology-related events in China and Asia in general.

TechNode also hosts TechNode Touch (TNT), a monthly meeting for start-ups, and the ChinaBang Awards, an annual event that awards the best Chinese startups.

Management tour participants discovered the secrets behind China’s top companies first hand!

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Participants about the tours
These people have visited our tours and ready to share their experience and impressions.
Anton Nesiforov
Anton NesiforovProcess Manager for fruit and vegetable preservation, beverages, and alcohol

On our tour of Germany, we visited the most famous food exhibition, the Green Week, as well as numerous retail chains and enterprises operating in various interesting industries. We have a lot to learn. We must take the best and use it. Thank you, FastForward, for your careful approach to creating this tour.

Alena Nesiforova
Alena NesiforovaUnified Concept Manager for Izbenka and VkusVill

We visited several retail stores in Germany, as well as manufacturing facilities. What we liked the most about the stores we visited was the high quality standards of German retail. Retailers know how to sell high-quality goods at affordable prices, and this is probably the main secret of Germany's retail success. As for production, we were inspired by some of the small family businesses we saw.

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