Alibaba is pulling back further from physical supermarket retail as its Hema operation faces another wave of closures, highlighting the brutal reality of China’s grocery market.
A report published on 12 August 2026 says Alibaba intends to close its remaining Hema X supermarket operation, with the final Shanghai store scheduled to shut at the end of August. Several other Hema X locations have already disappeared.
But this is not simply another supermarket closure.
Hema was supposed to represent the future of grocery retail.
THE SUPERMARKET OF THE FUTURE
When Alibaba developed Hema, it created a radically different supermarket concept.
Customers could shop in-store or through an app, products were digitally connected to the online operation, and stores also functioned as fulfilment centres for rapid delivery.
The idea was simple: combine the supermarket with e-commerce, technology and ultra-fast delivery.
For years, Hema was presented as one of the clearest examples of China’s new retail revolution.
Now Alibaba is moving in another direction.
THE BIG EXPERIMENT IS BEING CUT BACK
The latest development follows a broader retreat from Hema’s more expensive physical formats.
The company’s membership-store experiment, Hema X, was designed to compete with warehouse clubs such as Costco and Sam’s Club.
That strategy has failed to develop into the nationwide business Alibaba once envisioned.
The remaining Hema X store in Shanghai is due to close on 31 August, following earlier closures in Beijing and Jiangsu.
At the same time, Hema has been closing individual traditional stores in several Chinese markets, while reshaping its remaining network.
This is becoming less about expansion and more about choosing which formats deserve investment.
ALIBABA IS NOT LEAVING FOOD
The important point is that this does not mean Alibaba is abandoning food retail altogether.
Hema Fresh and its discount-oriented Hema NB formats remain part of the strategy.
Recent Chinese retail reporting shows Hema continuing to open and adjust stores while accelerating changes to its physical network. Several older Beijing stores have recently closed as the company restructures its estate.
That makes the story more interesting.
Alibaba is not simply walking away.
It is deciding that some supermarket models are no longer worth the investment.
THE COST OF HIGH-TECH RETAIL
Hema’s original proposition was expensive.
Large stores required substantial investment in property, equipment, refrigeration, technology, logistics and staff.
The stores also had to generate enough sales to justify operating as both supermarkets and fulfilment centres.
That model can work when consumers are spending strongly and online grocery is growing rapidly.
But China’s retail market has become fiercely competitive.
Consumers have more choices, discount retailers are expanding and retailers are under enormous pressure to keep prices low.
Technology alone cannot solve that problem.
THE MESSAGE FOR GLOBAL RETAILERS
The Hema story should be watched well beyond China.
For years, retailers around the world were told that the future would be about bigger technology investments, seamless online and offline shopping and highly automated stores.
Hema was one of the pioneers.
But the latest restructuring delivers a different message:
Retail technology has to make money.
A brilliant app, rapid delivery system or digitally connected supermarket does not guarantee profitability.
The winning model may ultimately be the one that combines technology with the simplest possible economics.
ALIBABA CHANGES COURSE
Alibaba’s supermarket experiment is therefore entering a new chapter.
The company has already reduced its exposure to some physical retail assets, including selling its stake in Sun Art Retail Group to private-equity firm DCP Capital in 2025.
Now Hema is being reshaped around fewer, more focused formats.
The ambition has changed.
Instead of trying to build a supermarket empire at any cost, Alibaba appears increasingly focused on efficiency, digital capability, discount retail and rapid fulfilment.
The company may still be betting on the future of grocery.
But it is no longer betting on every supermarket format.
Hema was once a symbol of China’s supermarket future. Its latest closures show that even the most technologically advanced retailer has to answer the oldest question in retail: does the store make money?