Freshippo, Alibaba Group Holding‘s grocery chain known as Hema in its home market, was profitable for nine straight months in 2024, the unit’s chief executive Yan Xiaolei said in an internal letter on Tuesday.
The supermarket opened 72 new stores across China in the past year, averaging one every five days, the most in five years, according to Yan, who assumed the CEO role in March.
The additions brought the total number of Freshippo outlets to 400, spanning 50 cities, Yan said in the letter, which was seen by the Post and confirmed by employees. A third of the new stores were located in non-first-tier cities, according to a report from Chinese media Jiemian.
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Founded in 2015, Freshippo previously reported quarterly profits in the fourth quarter of 2022 and the first quarter of 2023.
Alibaba, owner of the South China Morning Post, postponed an initial public offering of Freshippo in 2023. Alibaba chairman Joe Tsai said in early 2024 that the company was not in a hurry to float shares of the grocery chain known for selling fresh food.
Alibaba postponed an IPO of Freshippo in 2023. Photo: AP Photo alt=Alibaba postponed an IPO of Freshippo in 2023. Photo: AP Photo>
Despite the stalled listing, Freshhippo remains an important part of Alibaba’s sprawling empire, as the e-commerce giant moves to divest its noncore businesses.
Alibaba said in December it would sell Chinese department store Intime Retail (Group) for 7.4 billion yuan (US$1 billion), booking a US$1.3 billion loss and confirming an earlier Post report.
Yan, who joined Freshippo as finance chief in 2018, attributed its strong performance this past year, including a 50 per cent increase in customers, to a better shopping experience, aggressive expansion and talent development.
To support its rapid growth, the supermarket added nearly 200 store managers in 2024 and promoted 10 per cent of procurement staff, she said. It revamped its compensation scheme to better motivate employees.
The grocery chain also renovated nearly half of its stores to enhance the customer experience, and upgraded its algorithm to enable more orders to be delivered in 30 minutes. It diversified its product offerings by adding local specialities, such as blueberries from southwest China and plums from the northwest, Yan added.
Freshippo’s gross merchandise volume (GMV) reached 59 billion yuan in the financial year that ended on March 31, up from 55 billion yuan the previous year, according to Alibaba’s annual report. Online orders made up over 63 per cent of the unit’s total GMV.
Yan said Freshippo aims to reach a GMV of 100 billion yuan and become China’s No 1 retailer.
Freshippo was the fifth-largest supermarket chain by sales in China in 2023, according to an annual ranking by China Chain Store & Franchise Association. It trailed rivals that included Walmart China, in first place, and Yonghui Superstores, in second place.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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