New Retail in China: what Europe can learn from a 6,000 m² supermarket

A Chinese supermarket where live fish are delivered to your home within half an hour, prices per piece are more important than prices per kilo, electronic shelf labels drive daily sales, and cameras help manage the sales floor: anyone who wants to understand where retail might be headed should look to China.

Not a store, but a system

Not because everything can simply be copied, but because this model holds up a confrontational mirror to the European supermarket sector. At first glance, it looks like a supermarket. In reality, it’s much more than that: a store, restaurant, dark kitchen, fulfillment center, data platform, and brand experience all in one.

The concept has become known as Hema or Fresh Hippo, Alibaba’s “new retail” formula. Customers can shop in person, have fresh products prepared, eat on-site, or order via the app. Home delivery is available within a 3-kilometer radius of the store, often within 30 minutes. This means 12 minutes of “picking time” in the store and a maximum of 18 minutes for delivery. Today, more than 60% of Hema purchases are made online.

That figure is significant. The store is no longer just a point of sale. It’s also an activation point: a place where customers get to know the brand, the products, and the service, and then increasingly order online.

The store as a fulfillment machine

One of the most striking images is literally right above your head: the conveyor system suspended from the ceiling. Order pickers walk through the store with handheld devices, gather items for an online order, and then hang the bags on a conveyor belt. This conveyor transports them from different zones of the store to the warehouse in the back.

This is where the logic of the model becomes clear. Fast-moving SKUs are stored in the warehouse, close to the couriers and the outbound flow. The long tail is picked right in the store itself. In this way, Hema combines two worlds that are often still organized separately in Europe: the supermarket as a sales space and the fulfillment center as a logistics machine.

A single customer’s order is consolidated at the back and then transferred to the couriers waiting at the rear of the store. The store is therefore not just a place where customers do their grocery shopping. It is simultaneously a warehouse, a picking hub, and a last-mile platform.

Here, too, the strength lies not in a single spectacular technology, but in integration. Alibaba built a store that was intended from the start to also serve as a fulfillment warehouse for online orders. That “store plus warehouse” model has since become a benchmark for other supermarket chains active in instant retail.

The Hema app is the glue that holds everything together. It drives the in-store experience, ordering, payment, and personalization. The integration with Alipay and Taobao makes the ecosystem even stronger: payment, ordering, reordering, and receiving recommendations all share the same data layer.

Anyone who scans a barcode in the store immediately receives detailed information about the product’s origin. The store offers free Wi-Fi, making that digital layer a natural part of the purchasing process. Transparency is meant to build trust: in the quality, safety, and origin of what the customer buys.

On top of that, the app uses the data Alibaba has collected about the customer to make personalized recommendations. So the store doesn’t just look at what’s on the shelf, but also at who’s standing in front of that shelf. And that’s exactly where “new retail” goes beyond omnichannel: it becomes a data-driven ecosystem in which the store, logistics, payment, and customer insights are all interconnected.

Live fish, cleaned and delivered within 30 minutes

The most striking example is the live fish section. The customer selects a fish, which is then killed and cleaned on the spot. That takes about 10 minutes.

Afterward, that same fish—along with other items from the same order—can be delivered to the customer’s home within half an hour. Even if a customer forgets something, there’s still some leeway: up to 5 minutes after the last order is placed, the customer can add extra items without compromising the promise of delivery within 30 minutes.

That’s no small detail. It shows just how closely operations, technology, and the service promise are aligned. In Europe, something like this would quickly sound impossible. In China, it’s part of the business model.

Everything must be sold today

Behind that freshness lies strict discipline. Fresh products—especially fish—are, in principle, sold the same day. As the day progresses and quality visibly declines, the price drops.

This “one-day selling” principle minimizes waste and maintains a high perception of freshness. But it can only work if prices are adjusted quickly and flexibly. That’s why electronic shelf labels here aren’t just a gimmick—they’re infrastructure.

An employee scans an item, the price changes, and the label updates accordingly. This allows the store to apply discounts throughout the day to products that need to be sold today.

Price per item, not per kilo

One of the most striking choices is the pricing strategy. Many fresh products are not sold by weight, but by the piece. A fish is an SKU with a single price. Whether it’s heavier or lighter matters less.

For European retailers, this feels strange. We’re used to pricing per kilogram, comparability, and precise weighing. But that’s precisely where the strength of the Chinese model lies: it eliminates complexity.

Customers don’t have to do the math. Staff don’t have to weigh items. Price perception becomes simpler. Operations become faster.

There are exceptions: some categories are still sold by weight. But the general trend is clear: wherever possible, simplicity trumps precision.

The store as a kitchen

New retail isn’t just about speed. It’s also about guidance.

Screens in the store show how products are prepared. The app provides recipes and suggests additional ingredients. Customers buying fish receive suggestions for sauces or side dishes. When someone places an order, they’re asked if they’ve forgotten anything.

The customer has three options: buy and prepare it themselves, have it prepared and take it home, or have it delivered. On top of that, they can eat there on the spot. Tasting, choosing, preparing, ordering, and consuming all happen side by side.

In this way, the supermarket becomes not just a warehouse with shelves, but a food platform.

Dark kitchen and distribution center under one roof

The concept of a “dark kitchen” also takes on a different meaning here. In Europe, we often think of dark kitchens as separate production locations for meal delivery. In this model, the kitchen is located in or next to the store and is simultaneously connected to distribution.

Prepared food can be eaten on-site, picked up, or delivered to your home. The sales floor, kitchen, and fulfillment operations form a single entity.

That is the essence of new retail: not adding an online channel to an existing store, but designing a single integrated ecosystem.

Traceability via QR code

Transparency is another cornerstone. Using QR codes, customers can access information about origin, production, and processing. For products such as oil or fresh food, it becomes clear where they come from and how they were produced.

The comparison to blockchain is obvious: everything is documented; everything is visible.

In Europe, retailers have been talking about transparency and trust for years. In China, that information is directly linked to the product, the in-store experience, and the customer’s smartphone.

Paying with your face

The checkout area is also heavily supported by technology. Payments can be made via facial recognition. Cameras monitor the sales floor and help prevent loss or tampering. Higher-priced products are located in secure zones.

The contrast with Europe is stark. There, shrinkage in supermarkets often amounts to about 2% of sales. In China, under this model, shoplifting is much more rigorously controlled through technology, and a 0% shrinkage rate is not an exception.

That difference directly affects the profit margin—and thus the feasibility of service, staffing, and pricing.

6,000 m², 120 employees

The figures are what make this model truly striking.

The total area is approximately 6,000 m². Of that, 3,000 to 4,000 m² is actual retail space with 6,000–8,000 SKUs. About 120 people work on the sales floor, not including delivery drivers.

For comparison, a Dutch example was cited during our visit: 250 employees for 1,500 m². Even if the comparison isn’t a perfect one-to-one match, the message remains clear: the Chinese operation runs on a different logic of efficiency.

Inventory turnover is also rapid. For fresh food, it’s around 1 day. For the store as a whole, it’s about 7 days. What comes in must go out quickly. Inventory is not a buffer, but a flow.

Data drives the store floor

That efficiency doesn’t happen on its own. The store is designed to be data-driven.

When a new location opens, the system analyzes the neighborhood: demographics, living environment, presence of schools, local purchasing power, and historical purchase data. Based on this, the shelf layout is adjusted. This is not a static environment, but a living model.

A store next to a school therefore follows a different logic than a store in a residential neighborhood. The best-selling products vary by city, by neighborhood, and by customer profile.

Supplier agreements are also monitored digitally. Major brands such as P&G and Unilever pay for visibility and want to be prominently displayed. The store manager verifies compliance by taking a photo and uploading it. The system compares the actual layout with the planogram and automatically generates tasks if products are misplaced.

Cameras as operational assistants

The cameras aren’t just for security. They also help manage operations.

Visual AI detects when products are running low, when shelves need to be restocked, or when something is on the floor. The system alerts the staff to these issues.

This means the store manager doesn’t have to walk around as much to look for problems. The sales floor reports on itself.

This makes the supermarket more than just a physical space. It becomes a digitally controlled warehouse with customers inside.

Picking with location codes

Behind the scenes, a precise picking system is in operation. Each product has a location code, such as AC 0101. That code refers to the category and shelf position. AC stands for meat and poultry, AP for standard products, while fruits and vegetables have their own coding.

Order pickers follow these codes, scan the product, and submit the order. If an SKU isn’t in its designated location, the system can indicate that it’s at the back of the warehouse or has been temporarily reserved.

For new employees, the interface displays photos and details, allowing them to recognize products more quickly among countless variants. In this way, training is partially replaced by system support.

The lesson for Europe

It would be a mistake to reduce this model to just technology. It’s not about electronic labels, facial recognition, QR codes, or AI cameras in and of themselves.

The power lies in the cohesion.

A 6,000 m² store operates with 120 employees. Fresh food has a 1-day turnover. Total inventory turns over every 7 days. Online sales account for about 60% of purchases. Delivery takes place within 30 minutes within a 3-kilometer radius. Customers can add products to their order up to 5 minutes after placing it. Waste is addressed through technology, while Europe sees a revenue loss of around 2%.

These aren’t just isolated figures. Together, they describe a different retail model.

For Europe, the question is therefore not whether we can simply copy Fresh Hippo. That’s not possible. Labor costs, regulations, consumer behavior, privacy, and urban density are different.

The right question is which elements can actually be adapted.

Dynamic pricing for fresh produce? Definitely. Electronic shelf labels as an operational driver? Makes sense. Better traceability via QR codes? Feasible. A stronger link between the store, kitchen, and delivery? Necessary. Data-driven planograms? Inevitable. Visual AI for shelf availability? Just a matter of time.

China isn’t presenting a future that Europe can copy tomorrow. It does, however, show just how far retail can go when the store, logistics, data, and service are designed as a single system from day one. And that’s exactly where the real wake-up call lies.