3 6 Ke·2025-07-24 05:14Core Insights - Hema, as a pioneer of Alibaba's new retail strategy, initially showed strong momentum in business innovation but struggled to achieve profitability before the departure of its founder, Hou Yi [1][2] - After the leadership change to Yan Xiaolei, Hema shifted its focus to profitability by closing most stores and concentrating on Hema Fresh, leading to a significant turnaround with adjusted EBITA turning positive for the first time in FY2025 [2][5] - Hema's sales reached 75 billion yuan, surpassing Yonghui's 73.2 billion yuan, positioning it as the third-largest supermarket in China [2][5] Business Strategy - Hema's initial strategy involved a multi-format approach with up to 12 different business models, including Hema Fresh and Hema X membership stores, but this led to high costs and unclear business models [4][5] - The high-end positioning of Hema X membership stores conflicted with the company's low-price rapid expansion strategy, resulting in a limited number of openings and eventual discounting measures [3][4] - The company has now adopted a dual strategy focusing on high-end market penetration and down-market expansion through Hema Fresh and Hema NB community stores [5][8] Market Position and Competition - Hema's growth comes amid a decline in traditional supermarkets, with a reported 28.6% drop in average foot traffic for large supermarkets since 2019, while community supermarkets and convenience stores have seen growth [5][8] - Hema plans to open 100 new Hema Fresh stores by 2025, targeting first and second-tier cities, and aims to expand its Hema NB stores to over 1,000 locations [8][9] - The company is leveraging its supply chain advantages, with over 60% of Hema NB's products being private label, although this has resulted in lower profit margins compared to Hema Fresh [9][10] Future Outlook - Hema's future hinges on its ability to integrate into Alibaba's instant retail ecosystem, as the company has not yet fully aligned with Alibaba's strategic focus on instant retail [6][7] - The competitive landscape is intensifying, with major players like Alibaba, JD, and Meituan focusing on instant retail, which poses challenges for Hema's growth strategy [5][6] - Hema's current business model aims to balance profitability in the high-end market while aggressively expanding in the lower-end market, creating a complete commercial loop [9][10]