Xing: Innovation in the China Retail Market

It’s a habit you probably don’t even think about. You go to the convenience store, pick out a drink, take it to the cashier, pay your money (or more likely these days, scan your WeChat or Alipay), and you’re on your way. But since summer last year, there’s been one company in the China retail market that is trying to disrupt the entrenched model of the convenience store market: Xing.

china retail market

[ABOVE: Xing founder, Si Jianghua]

Founded in June 2017 by Si Jianghua, a former high-level executive at review site Dazhong Dianping and tech giant Alibaba, the Shanghai company has dispensed with the cashier in favor of self-pay technology. Common in the West perhaps, but not yet in China, what Si is doing with Xing counts as revolutionary in the country’s staid convenience store sector.

china retail market

[ABOVE: Xing’s product mix includes more premium offerings such as Patron Tequila]

Add to that an upgraded product mix that includes thing like Patron Tequila, unique snacks like dried mulberries, and pre-packaged meals that include healthy salads, and the nearly 20-store chain has a real point of difference with its competitors. In one sense, though, they are following a model laid down by Si’s former employer, Alibaba, and their Hema supermarket. In lieu of a cashier, customers download the Xing app, register an account, scan their item, pay via WeChat or Alipay directly, and then scan a code on the way out to show that they have indeed paid for the item. While there are no cashiers, there are still employees, who stock the shelves and act as “shopping guides”, as the Chinese media have dubbed them.

china retail market

The convenience store is just part of the equation though. At a forum about the future of retail held in late December, Si said that the company is positioning itself as a high-tech retailer that will redefine the experience of “instant consumption”, a strong demand by millions of office workers, who don’t want to travel more than 15-minutes or 500 meters from their office or home to go shopping.

Apart from the convenience stores, the company was also inspired by the massive network of vending machines in Japan. To that end, Xing’s vending machine business vastly outnumbers its cashier-less convenience stores, with more than 30,000 machines in 50 cities across China. As Si sees it, the winner in the market will be the first to 300,000 locations and he expects a result by Spring Festival 2018. The former CEOs of both Dazhong Dianping and Meituan are among the investors who believe in his vision.

china retail market

Si himself is not tied to the current product mix, however, and notably predicts that the real sales will come from wholesome foods, a trend we at TSI have been witnessing for the last two to three years, at least. Si’s stores also tie into the trend of novelty and fun, with a number of customers observed on a recent visit to a store just off West Nanjing Road in Shanghai, all curious about this new breed of store and willing to give it a try. His dream of eliminating the cashier in favor of investing more in the remaining employees may or may not come true, but for us, Si’s Xing Convenience Stores stand out as the latest in a long line of innovations in China’s food & beverage industry.

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