Opportunity to transform from retail from physical to digital

Alibaba has pumped billions into investments including its own grocery chain, a shopping mall group, an electronics retailer, and now the Walmart-like Sun Art. (Indeed, Walmart (WMT, +0.93%) and Sun Art compete in China.)

Alibaba has proved itself a canny innovator, prompting speculation about its intentions. It’s not simply a hunt for new revenues. “We don’t view this as purely physical retail, but rather as an opportunity to transform from physical to digital,” says Alibaba CEO Daniel Zhang in an interview with Fortune. “We still need physical stores, but we want to redefine the experience.”

The purest manifestation of Alibaba’s online/off-line ambitions is Hema, a digital-first supermarket chain it incubated in Shanghai. Consumers shop using a mobile app, either in person or remotely. Shopping options include buying food to take home, purchasing in store and getting help cooking a meal, and buying online with 30-minute delivery. Zhang calls Hema a “new animal” that caters to the “lifestyle of our customers.” Alibaba has opened 20 stores and plans a rapid expansion, including franchises.

Source: Fortune