The market has a forgetting curve. After all, new news and new things appear every day. But Hou Yi couldn't forget Hema, even though Alibaba had announced his "retirement."
Recently, Hou Yi, who has been silent for a long time, posted a long post on his WeChat Moments, looking back with emotion on his career in Alibaba. He said at the beginning: "In the Fengqing Yang (Feng Qingyang? Editor's Note) class, the four words that Teacher Ma admires the most, "Quietness and Audience are wonderful," come from Lingyin Temple in Hangzhou. I read it after I retired and I have quite a lot of experience." He said Emphasize that 60 years old is a new starting point.
Generally speaking, when executives of large companies retire, a better choice is to invest and monetize their experience and connections in another way. But Hou Yi is well-known to the world for Hema, and Hema has become the most prominent label in his career. For this reason, according to Lianshang.com, Hou Yizheng teamed up with Zhang Yong, the former chairman and CEO of Alibaba, who was kind to him, to bid for Hema Xiansheng with an offer of US$2 billion. As of press time, Hou Yi himself had not responded to this news.
"But the two parties can't agree on the price." A person familiar with the matter revealed. The initial offer was frustrated. Whether Hou Yi will join forces with Zhang Yong to make another offer remains to be seen. But there is no doubt that Hou Yi is not willing to "retire".
"From the perspective of professional experience, Hou Yi jumped from a senior executive in the logistics industry to a leader in new retail. He can be said to be a master of business cycles." An industry executive who has dealt with Hou Yi said tube said.
Can 60-year-old Hou Yi still usher in his second cycle?
The starting point of new retail
Although he has been invisible for a while, Hou Yi cannot turn a blind eye to some hot topics in the retail market. Hot topics in the current retail market include but are not limited to:
Hunan retail company Bubugao has undergone a comprehensive transformation led by the founder of Fat Donglai, Yu Donglai. Its renovated stores say: "The product structure has reached 90% of Fat Donglai's"; In addition, because Hou Yi launched the membership store format in his last year at the helm of Hema and highly praised the Sam’s Club model, some media came to this conclusion. New retail is like a dream, and the winner is Sam. Although, Sam’s membership system comes with its own threshold and is not suitable for mass consumers. All kinds of public opinions are actually forming a psychological hint at the social level: although new retail companies have made a lot of model innovations with the help of Internet technology, they have ignored the fundamentals of commodities.
This conclusion is neither right nor wrong. First of all, Hou Yi himself has said in 2023 that digitalization can only solve 50% of the problems in the retail industry, and the other 50% of the problems involve commodities and supply chains, which cannot be solved purely by so-called technical problems. Hou Yi's understanding at that time was also the realization that he had spent a lot of money on over the years. Why can't
solve it? Combined with the many controversial views on Hou Yi himself, it is because people who look at new retail from today’s perspective may not understand the starting point and history of new retail. Therefore, it is impossible to explain the fundamental reasons for the setbacks of new retail, let alone to point out the direction for the future of China's retail industry. Perhaps because of this, Hou Yi also wanted to have a chance to prove himself again.
Hou Yi’s core focus in Hema Fresh Food is “fresh food”. What the Internet values is the traffic value of fresh food. Practitioners in the retail industry hope to use Internet technology to transform hypermarkets and solve the problem of young people not going to supermarkets to buy things and being unwilling to cook for themselves. There is room for transformation from both the supply and demand ends.
From the supply side, the fresh food business of traditional supermarkets does not make money. Therefore, the industry hopes to find a way out to allow the fresh food business to make money independently.
From the demand side, due to China's accelerated urbanization process, traditional farmers' markets have shrunk, and the supply of street stores is very unstable. Retail distribution channels are becoming the main channel for the supply of fresh food ingredients. However, young people are not used to it, and the middle class does not have time to visit offline supermarkets. The number of visitors to many supermarkets has been declining year after year. The decline in the number of visitors has directly made it impossible to discuss all business models of traditional supermarkets. Because of this, there are supermarkets that can be reached within 30 minutes, and there are many attempts at retail + catering.Although most current attempts at supermarket retail + catering have failed, this path is not necessarily wrong.
The e-commerce of fresh food is the starting point of the entire new retail. Hema has many eye-catching features since its birth. For example, the store’s online orders account for more than 50%. However, one fundamental aspect of Hema has been ignored by many people, that is, since the day of its birth, Hema’s store product structure has broken the traditional supermarkets’ three-quarter situation of “fresh food, fast-moving consumer goods, and department stores”. Basically everyone is out. Of course this kind of innovation is a double-edged sword. The elimination of the department store category means that cross-subsidization of gross profits of different categories, one of the traditional profit methods of supermarkets, cannot be realized. So can the fresh food category both attract traffic and make money? To solve the profit pressure caused by the reduction of large category structure? It can only be said that with the blessing of self-operated home delivery, Hema has given itself a super difficult business arithmetic problem.
Hema Fresh’s original benchmarking template came from Shangyin Aquatic Products in Taiwan, which has nothing to do with Sam’s or even Wal-Mart. If we don’t face up to the starting point of fresh food e-commerce, all prescriptions for China’s retail industry will be folk remedies. If you look at the gains and losses of new retail from an incomplete perspective, then all these years of tuition will be in vain.
Who will Hema belong to?
Of course, for today’s Hema, the former founder’s backlash may also cause Hema to face a crossroads of destiny again.
In previous rumors, it was rumored in the industry that the main bidder for Hema came from state-owned enterprises. It should be said that state-owned enterprises mainly focus on Hema’s existing channel value and brand value. After all, in many places, being able to introduce Hema can be regarded as an achievement in attracting investment. In 8 years, Hema itself still has a certain degree of popularity as a retail brand. However, the foundation of the retail industry lies in commodities and supply chains, as both the popular Fat Donglai and Sam have proved. If state-owned enterprises take over, in terms of supply chain, it may be more based on the existing supply chain plus resource injection from state-owned enterprises. It is conceivable that Hema’s many overly torturous moves in recent years will no longer happen again. Under the discourse system of state-owned enterprises, strategic stability must be guaranteed.
Titanium Media app believes that if a state-owned enterprise takes over, what is particularly worthy of attention is whether Hema’s door-to-door delivery by self-operated riders, which has made it famous, will continue and whether there will be adjustments.
For Hou Yi and his old friend Zhang Yong, if they return to Hema, they may continue some of Hou Yi’s unfinished initiatives, including adjustments to retail and supply relationships, development of own products, etc. But one thing we should be aware of is that even though Hou Yi is 60 years old, his once expressive and tossing character may have been restrained, but it will not completely disappear. It may also be of value to retail, a large industry that is mired in cyclical declines.
As a retail industry colleague said, Hou Yi has used the technology of the Internet industry to do a lot of trial and error for the traditional retail industry. This is something that only Hema can do. What is said here can be done, it is not as simple as having money or not having money. But from the perspective of the business structure of the entire enterprise, Hema is, after all, a new enterprise that is only eight years old, and there is still room for improvement in many things. This is also the difference between "raising high buildings from low ground" and "renovating old cities" as Ali said.
In any case, Hema’s story continues, and Hou Yi seems not to be really ready to retire yet. (This article was first published on Titanium Media app, author | Fang Yu, editor | Hu Runfeng)
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