Following the retirement of Hema founder Hou Yi, Alibaba (09988. HK) New Retail's other chess piece, Sun Art Retail (06808.HK), also has a new approach.
Red Star Capital Bureau noted that Sun Art Retail issued an announcement on March 27 stating that the company appointed Shen Hui as the executive director and CEO of Sun Art Retail, and Lin Xiaohai resigned as CEO of Sun Art Retail and was transferred back to Alibaba Group for another appointment.
Screenshot from Sun Art Retail announcement
It is worth noting that Shen Hui is an "old Gaoxin person", who joined Sun Art Retail Atomic Company Auchan in 1999 and later served as the general manager of Auchan brand operation. Lin Xiaohai is a "veteran Ali", who joined Alibaba in 2016 and served as vice president of Alibaba Group and general manager of Alibaba's retail business unit.
Shen Hui took over from Lin Xiaohai and released two messages: one is that Ali once again delegated power to the subsidiaries under the new retail sector, and the other is that the problems faced by Sun Art Retail were finally handed over to the retailers to solve.
Lin Xiaohai was transferred back to Ali
"Old Gao Xin people" took over the CEO
On December 22, 2020, Lin Xiaohai was appointed as an Executive Director of Sun Art Retail, and in May 2021, he also served as Chief Executive Officer. Prior to that, Lin served as President of Marketing for Procter & Gamble Greater China, Vice President of Alibaba Group, and General Manager of Retail Business Unit.
In less than three years as CEO, Lin Xiaohai has led Sun Art Retail to make many attempts: adhering to the omni-channel and multi-format development strategy, completing the supply chain capacity building of fresh food self-operation through digitalization and organizational innovation, and opening M member stores.
Up to now, Sun Art Retail has three main brands: RT-Mart, RT-Mart Super and M Membership Stores, with more than 500 stores across the country.
In the fiscal year of Lin Xiaohai's tenure (March 31, 2021 to March 31, 2022), Sun Art Retail posted its first loss in nearly a decade, with a net loss attributable to the parent of 739 million yuan. In the next fiscal year, Sun Art's net profit attributable to the parent company turned positive at 109 million yuan, which is not high compared with the net profit attributable to the parent company of 2 billion yuan in 2020 and before.
Screenshot from Oriental Fortune Network
Regarding Lin Xiaohai's resignation, Sun Art Retail said that the board of directors recognized Lin Xiaohai's valuable contributions to the company during his tenure.
According to Sun Art Retail, Shen Hui, who took over as CEO, has extensive management experience in the retail industry. In 1999, he joined Sun Art Retail Atomics, a company at Auchan, and was involved in the preparation and construction of the Auchan brand in China. From 2010 to 2013, he worked at Auchan in France as the general manager of the store, and from February 2016 to May 2017, he served as the general manager of Auchan brand operations.
Red Star Capital Bureau asked Sun Art Retail on March 27 whether there will be a new strategy for the CEO change, and whether Shen Hui will strengthen retail and weaken e-commerce after taking office, but as of press time, the other party has not responded.
The founder of Hema retired, and Sun Art changed his leadership
Ali retreated half a step back to new retail
Before Sun Art Retail's change of leadership, Hou Yi, the founder of Freshippo, also stepped down as CEO and retired, and Yan Xiaolei, CFO of Freshippo, also served as CEO.
It is worth noting that Sun Art Retail and Hema were both rumored to be sold by Alibaba in early March, but the two have since refuted the rumors.
Sun Art Retail and Hema are both important chess pieces of Alibaba in new retail.
In January 2016, Alibaba opened the first store of Hema as a new retail sample, and in 2017, it took a stake in Sun Art Retail, and the concept of "new retail" appeared for the first time in its annual report.
However, in recent years, Hema has been downgraded from an independent segment to a sub-business segment of the business group, and later upgraded to an independent business group, but finally became an independent company.
Sun Art Retail, on the other hand, experienced a slow decline in revenue and then a rare loss.
In February 2024, Tsai Chongxin, chairman of Alibaba Group, said that traditional brick-and-mortar retail business is not Alibaba's core business, and "it is reasonable to exit this type of business, but it will take time and be realized slowly according to market conditions." ”
Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, told Red Star Capital on March 27 that Alibaba's acquisition of physical retailers such as Yintai and RT-Mart was of great value in promoting the brand's entry into Tmall, the digitalization of the retail industry and the implementation of the innovative model of instant retail in physical retail. However, at present, in addition to Yintai's apparel brand in the early stage of Tmall's rapid development, the greater value is obviously not reflected, and related companies have also experienced varying degrees of performance decline and losses.
"Alibaba's misunderstanding of the retail industry," Lai Yang, chief expert of the Beijing International Trade Center Research Base, told Red Star Capital, "They think that the difference between the retail industry and e-commerce lies in the digital gap, so they use a lot of digital technology to transform RT-Mart, thinking that this will have a good development of performance, but in fact it has not succeeded." Because the fundamental problem of hypermarkets is that the value to consumers is too low, although digitalization will help to a certain extent, it will not solve the fundamental problem. ”
Lai Yang said that the large scale of hypermarket stores, high rental costs, and the high cost of commodity purchase, sales, storage, water and electricity are very high, and consumer demand has declined (because commodity prices have no advantage over the Internet), forming a vicious circle. Even if it is a traditional Hema store, it also has a huge distribution area, catering area, unless the ping efficiency is extremely high, otherwise it occupies space, it is difficult to achieve profitability, coupled with the construction of the entire distribution and logistics system, the initial investment is very large, and the payback period is also very long. "You can't survive without a cost-efficient business model. ”
However, Lai Yang also affirmed the impact of Alibaba and e-commerce on traditional retail: digital transformation has promoted the optimization and upgrading of enterprise operations, supply chain systems, and consumer demand analysis in the entire retail industry. Zhuang Shuai also said that the current situation of RT-Mart and Hema cannot completely deny the role of e-commerce platforms in promoting physical retail.
Red Star Capital Bureau noted that in fact, Hema and Sun Art Retail are not alone, and the retail industry as a whole is facing development difficulties, with Carrefour, the representative of hypermarkets, withdrawing from many cities, and Yonghui Supermarket (601933.SH), the "first stock of fresh food in supermarkets", has also lost money in the past two years......
What does the future of retail look like?
Lai Yang believes that optimization should be carried out from the retail itself. "The future store must be small-scale, only focusing on fresh ingredients, including fast food, fast food and other things, consumers will come to buy, and other things can be eliminated. The smaller the area, the better, which greatly reduces the rental cost. ”
Zhuang Shuai said that physical retail still relies on e-commerce platforms to achieve new growth. "The integration of e-commerce and brick-and-mortar retail is already the trend of the times and will not be separated again. If RT-Mart and Hema were not in the Alibaba department, they could have entered the platform like Yonghui Supermarket, Wal-Mart, and Sam's to develop. In the future, instant retail and digitalization will be the solution of e-commerce to the dilemma of physical retail.
Red Star News reporter Zhang Luxi Yu Yao
Edited by Xiao Ziqi
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