Part 4: Old-school mom-and-pop shops go digital.

Tech giants like Alibaba are helping many small businesses get skin in the e-commerce game.

A subtle but critical change is taking place in the urban food space: the digital transformation of small, independent, family-run businesses (aka mom-and-pop shops). New real-estate projects such as shopping malls and office towers may dominate Main Street today, but mom-and-pop shops remain a steadfast presence on the side streets of China’s cities, giving shoppers a quick and convenient way to purchase fresh produce and packaged food.

Often tucked into side streets, mom-and-pop shops are a convenient way to buy fresh food and packaged goods.

Moreover, thanks to internet tech giants in general — and competition in the e-commerce market in particular — these shops are thriving. Chinese tech rivals Alibaba and JD are recruiting these small businesses and providing them with software, supply-chain solutions and new monetization models. In return, the e-commerce giants get access to physical spaces, which they can add to their network of point-of-sale locations and food-delivery hubs.

At first glance, mom-and-pop shops all look the same on the surface. In fact, they’re being stocked by centralized Alibaba or JD hubs in response to real-time fluctuations in demand, thus minimizing cost and waste. These shops may even be equipped with low-cost sensors to track foot traffic. And hyper-local data insights from the neighborhood can be used by the shop owner to curate a high-exposure snack shelf.

Hyper-local data insights from the neighborhood can be used by the shop owner to curate a high-exposure snack shelf.

This “digitization-in-a-box” strategy is making small businesses “artificially intelligent” at a stroke, creating a potential platform for curated and personalized food retail environments, as well as a less wasteful stock and fulfillment process. For consumers, the gap between digital and physical shopping experiences is further collapsed.

Increasing numbers of people are rising out of poverty to join China’s middle-class, with many moving from the countryside to the city in search of better jobs.

This is a 12-part series on Food Megacity: how urbanization and technology are changing the way China eats. The full series can be found here.