According to its Chief Executive Yan Xiaolei, Freshippo, a grocery store chain owned by Alibaba, turned a profit for nine straight months during the recently completed 2024 financial year.
A Chinese Powerhouse
Over the last year, the food retail giant opened 72 new locations throughout the world’s most populated country. Yan said this growth is the most the company, known to Chinese citizens as Hema, has experienced in five years. The recent string of success has bumped the total number of supermarkets to 400, encompassing 50 cities. Moreover, roughly one-third of these outlets appear in places not considered first-tier economic strongholds.
Freshippo was founded in 2015 and reported quarterly profits from the last quarter of 2022 to the first quarter of 2023.
Not Going Public Yet
Alibaba, which also owns the South China Morning Post, delayed taking Freshippo public in 2023. Company Chairman Joe Tsai said Alibaba was in no rush to trade shares of the successful grocery store chain, which has a notable reputation for selling fresh goods.
Regardless, the corporate establishment reserves its position as a key cog in the Alibaba wheel. In December of last year, the powerful and influential e-commerce entity announced its intention to sell off its department store holding Intime Retail for what amounts to $1 billion.
Reasons for the Boom
Yan believes that Freshippo’s remarkable financial achievements are due in large part to an enhanced customer service experience. Such efforts resulted in a 50 percent increase in customers. Moreover, Yan said the food store chain undertook an aggressive expansion effort and partook in development programs.
Additionally, the company tweaked its compensation structure to better motivate its workforce. Furthermore, the establishment completed needed renovations at about a third of its locations, increasing its capacity to fill orders in a shorter period of time. It also heightened its product selection to include more specialized offerings, such as blueberries native to the country’s southeastern region and plums from its northwestern areas.
Impressive Numbers
Alibaba’s annual report revealed that Freshippo’s gross merchandise volume (GMV) leveled off at 59 billion yuan during the financial year ending March 31 of last year. This is an increase from the 55 billion yuan the company generated the previous year. These figures include online orders, which account for over 60 percent of the company’s total GMV.
That said, these noteworthy statistics only hint at what corporate officials think the market chain can sustain. Yan sees Freshippo eventually reaching a GMV of 100 million yuan and becoming China’s top retail establishment.
In 2023, the China Chain Store and Franchise Association ranked Freshippo as China’s largest supermarket chain in terms of sales. Coming in ahead of Freshippo were giants like Walmart China (ranking first) and Yonghui Superstores, which earned second prize.
Other Flourishing Supermarkets on a Global Scale
China is not the only nation where supermarket chains are flourishing. The German food chain Lidl, which offers consumers groceries at more discounted rates recently achieved a noteworthy milestone and continues to witness remarkable success.
For the first time since its 1994 introduction into Great Britain’s market, Lidl earned more than a billion pounds. This benchmark figure was attained during the four weeks preceding Christmas during which more than 2 million more customers purchased groceries inside the 970 Lidl franchises situated throughout Great Britain.
Additionally, the German corporation added eight new British stores during November and December, plans to open eight more before March, and 40 new locations by March of 2026.
Market analysts believe that Lidl’s growth signals that British shoppers appreciate the opportunity to obtain groceries at discounted rates, particularly during challenging economic times. Furthermore, industry insiders think that Lidl, which employs more than 32,000 people will soon become Great Britain’s fifth-largest supermarket chain.
