JD.com and Meituan ramp up efforts as new retail street battles reignite

Author | Wang Xiaojun

Editor | Zhou Zhiyu

The smoke of the takeaway war is still thick, and internet giants like JD.com and Meituan have gathered heavy troops on another "high-frequency necessity" battlefield—fresh produce.

Recently, JD.com’s Qixian and Meituan’s Xiaoxiang Supermarket have accelerated their offline store openings, marking the resurgence of the once-dormant "new retail" concept. Wall Street Insight has learned that JD.com plans to achieve full coverage of Qixian in the Beijing-Tianjin-Hebei region by the end of the year.

Compared to a few years ago, the landscape of the fresh produce retail market has changed significantly: on one hand, consumers have developed the mindset of purchasing fresh produce online; on the other hand, the "30-minute delivery of everything" instant retail networks heavily invested by various companies have paved the way for efficient collaboration between online and offline.

A more critical catalyst is that the pioneer Hema has finally reported achieving annual profitability after nine years of exploration. This proves that the "integration of warehouse and store" model in fresh retail is a profitable business, injecting strong confidence into latecomers.

Therefore, the current wave of offline store openings is far richer in connotation than a few years ago. These stores serve as sales channels and are also efficiency nodes that integrate experience, warehousing, and fulfillment, playing a key role for platforms in addressing "traffic anxiety" and reconstructing e-commerce logic.

When online and offline are no longer a choice between one or the other, a truly meaningful retail transformation may just be beginning.

Big Companies in Fresh Produce, Accelerating Offline

After other categories have stabilized, a significant portion of the competition narrative among big companies in recent years has revolved around high-frequency necessities like takeaway and fresh produce.

Recently, many people have noticed that in several large shopping malls in the Beijing-Tianjin-Hebei region, barriers have been erected announcing that JD.com’s Qixian will soon be opening stores.

Additionally, market insiders have revealed that JD.com’s Qixian has successfully signed a contract with Tianjin Kerry Center and will soon add another mall store in Tianjin. At the same time, JD.com will also lay out offline Qixian stores in key business districts in Beijing, Hebei, and other areas. Current site selections already include core business districts such as Beijing Xihongmen Huiju, Beijing Wangjing CapitaMall, and Shijiazhuang Yuhua Wanda.

Insiders from JD.com have confirmed this news to Wall Street Insight.

A relevant person in charge of JD.com’s Qixian stated: "North China is a key strategic market for Qixian. This year, our goal is to achieve full coverage in the Beijing-Tianjin region by the end of the year. In the future, we will continue to increase investment and enhance service range and quality to provide consumers with a good, fast, and affordable shopping experience."

Previously, JD.com also clearly stated in its financial report that Qixian would accelerate the promotion of the "1+N" model in the North China region this year.

The so-called "1+N" model refers to "1" representing the central store, which plays a dual role of experience and hub. This store focuses on core business districts for site selection, such as Beijing Wangjing CapitaMall and Tianjin Kerry Center, with a single store area exceeding 600 square meters, accommodating over 6,000 SKUs Functionally, the central store serves as a product display, hot food preparation, self-pickup point, and regional supply chain hub; it can also become an area for users to "try before they buy," enhancing trust and providing users with tangible quality expectations for the products they purchase online.

"N" represents satellite stores, which have lower costs and are also part of efficient fulfillment nodes. In terms of layout, satellite stores are generally densely distributed within a 3-kilometer radius centered around the central store, with a single warehouse area of about 200-300 square meters, focusing on sorting and delivery. These satellite stores help create economies of scale and improve operational efficiency.

While increasing offline presence in fresh supermarkets, JD.com is also trying to connect Qixian with delivery services.

On June 18, JD.com launched its first "Qixian Food MALL" in Harbin, introducing local time-honored brands such as Qiulin Gevas and Lao Chujia, as well as first-store brands in Harbin like Liubiju and Siyue Pufferfish. According to JD.com, this is the first pure catering format equipped with a 100% back kitchen live streaming system, which can collaborate with JD's delivery service to handle millions of orders, creating a "what you see is what you get" mentality for users.

At that time, JD CEO Xu Ran stated that high-frequency businesses like delivery can feed back into low-frequency consumption and increase the frequency of instant retail.

Another major player increasing its offline presence in fresh products is Meituan. In April, market news indicated that Meituan's fresh instant retail brand, Xiaoxiang Supermarket, was also ramping up its offline efforts, initially benchmarking against Hema's community store brand "Hema NB."

With Meituan's recent optimization adjustments to its selection business, Xiaoxiang Supermarket has become a key business in Meituan's instant retail sector. Meituan has also announced that Xiaoxiang Supermarket will continue to expand its coverage area, gradually extending to all first- and second-tier cities.

A person recruiting for positions such as sorting staff for Xiaoxiang Supermarket told Wall Street Insight that cities like Hefei have already started warming up, with an official launch expected in September-October.

Wall Street Insight found that there are over 200 job postings related to Xiaoxiang Supermarket on Meituan's recruitment website, including positions for site expansion managers and engineering construction roles, covering areas such as space design and store expansion; meanwhile, positions for reserve store managers are also being recruited on job platforms.

With the ramp-up of JD's Qixian and Xiaoxiang Supermarket, the fresh supermarket market is becoming lively again.

Returning Offline, Targeting Hema

Before this wave of returning offline, Xiaoxiang Supermarket had been away from offline for five years.

The last round of offline encounters among the three companies can be traced back to when Alibaba founder Jack Ma proposed the concept of new retail. At that time, in the fresh food sector, Alibaba used Hema as a lever to practice new retail, which stirred the industry.

After a period of brewing and contemplation in 2017, the online and offline collaborative fresh business of the three companies became more heated in early 2018. That year, Meituan's "Zhangyu Fresh" was upgraded to "Xiaoxiang Fresh," opening seven stores in Beijing, Wuxi, and Changzhou. In the same year, JD.com officially opened its first offline fresh supermarket, 7FRESH.

However, the reality of the following years led to skepticism about new retail in the market. At that time, delivery had only risen for a few years, the infrastructure for "30-minute delivery of everything" had not yet formed, and users had not developed the habit of buying fresh products online; relying solely on offline store traffic made it difficult for the business to operate efficiently Just over a year after its peak, in 2019, the darkest moment for fresh food e-commerce arrived. Supermarkets like Xiao Xiang did not see the expected expansion but began closing offline stores. That year, Xiao Xiang closed five stores in Wuxi and Changzhou.

Later, with the onset of the pandemic, various companies entered the community group buying battlefield, and Meituan and JD.com did not make further investments in offline stores for fresh food. Hema, which took more significant actions, was also questioned by the market for its continued inability to achieve profitability in recent years. Some analysts bluntly stated that fresh food new retail is not a good business due to issues like standardization and supply chain.

Northeast Securities pointed out in a research report in 2023 that the fulfillment costs of the front warehouse model are three times that of traditional central warehouse e-commerce, twice that of platform-based e-commerce, and six times that of community group buying. The low gross profit and high loss rates of fresh food categories do not match the high fulfillment costs.

The story seems to have taken a turn in the past two years. During the pandemic, users developed a mindset for purchasing fresh products online, and fresh food supermarkets with offline stores became a more trusted choice for users.

Now, JD.com’s Seven Fresh and Xiao Xiang have both returned to offline, which is not unrelated to their profitability compared to their benchmark, Hema.

After nine years of practicing new retail, Hema finally reported good news this April, achieving its first annual profit, maintaining stable profitability from April 2024 to March 2025, regardless of the off-peak or peak seasons. This also means that fresh food retail has transitioned from a money-burning expansion phase to a refined operational profit-making phase.

According to the latest annual report disclosed by Alibaba on June 26, Hema's overall GMV exceeded 75 billion yuan in fiscal year 2025, and it achieved positive adjusted EBITA for the first time in a year. By the end of fiscal year 2025, Hema had over 420 operational stores, with online transaction GMV contributing over 60%.

The profitability itself and the manifestation of online and offline synergy have provided further motivation for previously cautious players to lay out their strategies.

Looking at the current situation, the three companies meeting again in fresh food retail is also an extension of their previous joint efforts in instant retail. After all, besides the high-frequency essential service of food delivery, fresh food retail can also be considered a high-frequency essential need. Now, each company is accelerating the establishment of a foundational network for "30-minute delivery of everything," and the high-frequency essential fresh food retail can further drive overall business traffic.

However, despite seeing profitable examples, past facts have proven that this is not an easy business. In addition to strong competitors, it also tests the capabilities of one's own supply chain.

Analysts at CITIC Securities believe that for fresh food instant retail, supply chain capability will be the core competitiveness of channel merchants in the long term. Upstream brand manufacturers are expected to enter the front warehouse with strong supply chain capabilities and are likely to reshape the offline retail landscape through warehouse-store synergy.

Where fresh food e-commerce will head in the future is still difficult to predict.

Giant Clash in New Retail

This migration from online to offline goes far beyond the fresh food category. As the internet traffic dividend peaks and the rising customer acquisition costs online become a consensus, almost all e-commerce platforms are re-evaluating the value of offline entities, viewing them as a key battlefield for seeking new growth and improving efficiency The layout paths of the giants have different focuses, but their goals are consistent.

JD.com is building a multi-layered and widely covered physical network through formats such as "JD MALL," "Qixian Supermarket," and "JD Pharmacy," binding offline experiences deeply with online fulfillment, covering everything from digital appliances to fresh medicine.

After divesting its retail business acquired in earlier years, Alibaba now relies more on its incubated Hema, positioning it as the vanguard of new retail.

At the same time, other platforms within its system are also boldly exploring. For example, 1688 has opened a "Henan Selection Center" at Zhengzhou Airport, intending to create a "white-label supply chain supermarket" aimed at small vendors and mothers; the second-hand platform Xianyu plans to open offline recycling stores in 100 cities within five years, while its competitor Zhuanzhuan has already opened its first multi-category recycling warehouse store in Beijing.

Meituan's core advantage lies in its strong instant delivery capability. According to Wang Puzhong, CEO of Meituan's core local business, Meituan plans to increase the number of "lightning warehouses" from the current approximately 30,000 to 100,000 by 2027. Based on this vast distributed warehousing network, the newly opened Xiaoxiang Supermarket offline stores will become key moves to fill the gaps in its offline experience and store scenarios.

In this transformation, the role of offline stores has been completely reshaped. They are no longer merely sales terminals but are now "efficiency nodes" that integrate multiple functions.

As experience venues, they allow users to genuinely perceive the quality of online products, using the trust of "seeing is believing" to improve purchase conversion rates and reduce return rates.

As fulfillment warehouses, they position products closer to consumers, supporting "minute-level" delivery for instant retail or meeting users' convenient needs for online ordering and in-store pickup. This warehouse-store collaborative model has also been applied in chain clothing brands, which deliver out-of-stock items that cannot be shipped from the central warehouse to consumers through free delivery and same-city flash purchases.

Looking back to 2016, when Jack Ma first proposed "new retail," the concept was rich, but the instant delivery system and consumer mindset supporting its implementation were far from mature, leading to significant challenges in realizing the ideal.

Now, with heavy investments and improvements in instant retail infrastructure from various companies, this concept, once seen as "too advanced," has finally found fertile ground for revival, beginning to truly reconstruct the underlying logic of the e-commerce world