The "618 war" is imminent, Taobao, Jingdong, Pinduoduo and other e-commerce giants have been exhausted, and Suning Tesco, the former king of offline home appliance retail, has also made frequent moves recently.
Suning Tesco's official WeChat disclosed that on the evening of May 7, Zhang Jindong, chairman of Suning Group, met with Kevin Wheeler, CEO of A.O. Smith Group in the United States. This meeting made people see Suning.com's intention to cooperate deeply with international home appliance brands.
It is worth noting that during the past May Day period, Suning Tesco landed 17 large stores in 13 cities such as Fuzhou, Nanjing, and Beijing, which attracted the attention of the industry.
All kinds of signs also indicate Suning's active expansion in the market, and Suning Tesco, led by Zhang Jindong, is trying to return to the center of the stage.
Four battles, rise and fall, success or failure
Suning, the former overlord of China's home appliance retail, has been mired in the quagmire in recent years and cannot extricate itself. Looking back on Suning's development history of more than 30 years, it has mainly fought four important business wars, and Suning's rise and fall success or failure is also vividly reflected in these four business wars.
The first battle, "anti-encirclement and suppression". In 1990, Zhang Jindong and Zhang Guiping opened a small shop on Ninghai Road in Nanjing to sell electrical appliances and provide one-stop services for sales and installation, which were deeply liked by the people.
However, because it broke the unspoken rules of the industry, it moved someone else's cake. In 1993, Suning was jointly encircled and suppressed by 8 state-owned shopping malls such as the Central Shopping Mall and Nanjing Commercial Building, and Zhang Jindong faced it head-on, going the opposite way and going to buy goods in winter, so that Suning won 70% of the Nanjing air-conditioning market within a month. At the same time, Zhang Jindong's purchase method has solved the financial pressure for the manufacturer and won the trust of the manufacturer. Therefore, Zhang Jindong agreed with the manufacturer to invest in the manufacturer in the off-season to support production, and in the peak sales season, the manufacturer will give back to Suning with preferential prices and stable supply. In the end, Suning successfully broke through, with sales exceeding 300 million yuan. This has also become a big battle for Suning's debut, and it has established its position as a leading dealer of household appliances in the country in one fell swoop.
At the end of the 90s, wholesalers began to open their own stores, and the former partners became competitors, although it did not affect Suning's business, but Zhang Jindong felt that the road of wholesalers would only get narrower and narrower in the future, so he tried his best to override public opinion and shifted Suning's positioning from home appliance wholesalers to home appliance chains.
The second war, the "Great War between the United States and the Soviet Union". When the two brothers of the Zhang family were in full swing in Nanjing, two brothers also appeared in Beijing, and they also started an electrical appliance business, these two brothers were Huang Junqin and Huang Guangyu of Gome Electric.
In 2004, Suning and Gome went public one after another, and 35-year-old Huang Guangyu ushered in the highlight moment of his life and sat on the throne of China's richest man. In 2005, the two sides clashed in their respective expansions, and the high-spirited Huang Guangyu decided to open a store in Nanjing, not to make money, but to kill Suning within three years, so far, the "US-Soviet War" officially began.
Who would have thought that the world is unpredictable, life is impermanent, in 2008, the big victory was not scored, Huang Guangyu was "glorious" imprisoned, Guomei seemed to be on a jumping machine, falling from a high place to a low place, and since then there has been no ability to fight between men and women. Suning has officially become the overlord of the national home appliance chain.
The third war, the "Shuangdong War". In 2009, Jingdong's sales reached 208.3 billion yuan, three times that of Suning, which made Zhang Jindong feel the pressure of the Internet, and half a year later, Suning Tesco was born.
In August 2012, Liu Qiangdong shouted the slogan of "how fast and good to save", and the "Shuangdong War" officially began. Zhang Jindong issued an order to all employees of Suning: "Jingdong wants to play, Suning accompanies him, explains to investors, and stabilizes the stock price." ”
The battle lasted for three years, and finally under the mediation of the National Development and Reform Commission, the two sides made a truce. Jingdong became a god in this war, and it can be regarded as the top spot in the sales of Internet electrical appliances. As a result, Suning suffered its first loss in 10 years since its listing, and its performance continued to decline. In the hearts of netizens, Suning lost miserably in this battle.
The fourth war, the "battle of mutual aid". In 2014, Alibaba went public, and another Internet giant was born. There are no permanent enemies, only eternal interests. In August 2015, Suning reached a strategic cooperation with Alibaba, one of its Internet competitors, in the form of mutual participation. Suning and Ali subscribed for 1.09% and 19.99% of each other's shares at a consideration of 14 billion yuan and 28.34 billion yuan respectively. Ali supports Suning online, and Suning supports Ali offline. As soon as the news came out, JD.com's stock price plummeted by 6% on the same day, and Suning's stock price once rose to the limit.
In 2016, Suning walked out of the huge loss situation, entered a stage of rapid development, and began its own diversified expansion road, with industrial layout in eight major sectors, including real estate, sports, finance, science and technology, logistics, e-buy, cultural and creative and investment.
Tens of billions of dollars are burned, and the heyday will not come back
Eight major plates, 70 billion yuan burned in 5 years. However, it backfired, not only with little effect, but even because of Evergrande, resulting in a direct loss of 20 billion yuan. As a result, Suning Tesco has slumped, losing money year after year, and the debt stock continues to expand.
Suning.com's 2020 financial report shows that its annual revenue and net profit have declined, and there was a small loss for the first time. In 2021, the financial report will have a huge loss of more than 42.3 billion yuan. Such a big loss made Suning fall into a dead end. In desperation, Suning could only introduce state-owned assets and joint industrial capital in Jiangsu Province and Nanjing City to carry out mixed reform, Zhang Jindong surrendered control, resigned as chairman of Suning Tesco, retired to the position of honorary chairman of Suning, and almost disappeared from public view.
In 2022, Suning Tesco will have a net profit loss of 16.8 billion yuan, and although the loss has been greatly reduced, it still failed to meet its profit target.
At the end of 2023, on the occasion of Suning's 33rd anniversary, Zhang Jindong released an all-staff letter within Suning, saying that "Suning people who have experienced the darkest moment are fearless".
At the beginning of 2024, at the annual work deployment meeting, Zhang Jindong announced that Suning Tesco has completely returned to the "track of Suning people-led development", and will focus on the improvement of management and operation capabilities in the future. At the same time, he also proposed to build three capability middle platforms and two operating platforms to deeply reform the organizational management and operation mechanism to meet the "era of alchemy". This may be the key strategy for Zhang Jindong to lead Suning to recovery.
From the release of the all-staff letter to the convening of the 2024 annual work deployment meeting, the return of Suning's soul has become more clear.
On March 29 this year, Suning Tesco released its 2023 annual report, with annual revenue of 62.627 billion yuan, a year-on-year decrease of 12.25%; The net profit loss was 4.089 billion yuan, a significant decrease of 74.79% year-on-year. The net cash flow from operating activities turned from negative to positive, reaching 2.91 billion yuan, a year-on-year increase of 561.37%.
Although it is still mired in losses, with the full return of Zhang Jindong, Suning Tesco has shown a strong recovery momentum and is accelerating the "return to blood", and the situation is gradually improving.
During the May Day holiday, Suning Tesco vigorously promoted the "big store strategy" and opened 17 large stores in one fell swoop, with an additional business area of more than 250,000 square meters. These large stores located in the core business districts are not only large in size, comprehensive in branding, and high-end in specifications, but also provide a better shopping experience. Compared with traditional electrical appliance stores, these large stores have upgraded their image stores with well-known brands, adding experience areas and model rooms, and truly recreating the family scene.
For the "big store strategy", Xu Zhong, president of Suning Tesco's environmental commodities division, said that in 2024, Suning Tesco will focus on omni-channel construction, supply chain development, and service capacity improvement, and accelerate the upgrading of retail service providers. Among them, for the offline market, Suning Tesco will solidly promote the "100 stores and 10 billion" plan, and launch a new and upgraded large store format - Suning E-home Super Experience Store (Max) and Suning Tesco Super Flagship Store (Pro).
Fujian's first Suning Yijia Max was grandly opened during the May Day period, located in Fuzhou, covering an area of more than 30,000 square meters, and quickly became a new landmark of "home consumption".
Strengthening offline and upgrading store experience and service advantages is becoming one of Suning's important strategies to improve its performance.
On the one hand, the "big store strategy" in the primary and secondary markets has achieved initial results. In 2023, 210 new 3C home life professional stores of home appliances will be opened, and 101 stores will be upgraded to effectively enhance the scene experience of users and improve sales conversion, and the sales revenue of comparable stores will increase by 4.94% year-on-year during the reporting period.
On the other hand, the "county and town sinking market" is becoming the direction of Suning's heavy bet, and the specific implementation is realized by the "retail cloud" of the franchise system. At present, the "retail cloud" still maintains a fast speed of store expansion, and actively expands the track of home furnishing. In 2023, the "retail cloud" will accelerate the expansion of super stores in key cities, and deepen the layout of flagship stores and standard stores at the county level; In terms of category extension, the home appliance category is the main track to accelerate the layout of the new home furnishing track. 2,686 new stores were opened in the "retail cloud" throughout the year. Relevant statistics show that by the end of 2023, the total number of "retail cloud" stores has reached 10,729, and the total sales scale of "retail cloud" channels has increased by more than 20% year-on-year. At the same time, the online business is also continuing to deepen open cooperation, relying on the home appliance supply chain and service capabilities, deep linking and taking root in major traffic platforms, and promoting the rapid development of e-commerce business.
The result will not deceive people, this series of self-rescue measures has made Suning, who was originally unable to extricate itself, get out of the predicament, adjust the hull of the ship, and continue to sail in the right direction.
Breakeven, dead wood in spring
According to the latest financial report for the first quarter of 2024, Suning.com's net profit has decreased by 62.26% year-on-year, basically breaking even. At the same time, the net cash flow generated by operating activities also reached 1.407 billion yuan, and the efficiency of capital operation was significantly improved.
With the breakeven of profit and loss, Zhang Jindong also put the profit target on the agenda. The financial report mentioned that in 2024, Suning Tesco will achieve full profitability at the operational level, accelerate EBITDA to contribute cash flow, further reduce debt on a large scale, and ensure that the company fully returns to normal business order.
In fact, since 2022, with the support of Jiangsu Province, Nanjing Municipal Government and industrial investors, Suning Tesco has been actively promoting the work of increasing income, improving efficiency and reducing costs.
In terms of increasing revenue, Suning Tesco will continue to promote the "big store strategy", take the opening of Suning E-home Max and Suning Tesco Pro as an opportunity to create a "big store benchmark" in key cities and core business districts, comprehensively improve the scene experience, optimize product institutions, improve service quality, and accelerate the transformation and upgrading of the brand image of "buying appliances to Suning" to "customized home scenes to Suning".
In terms of efficiency improvement, we will deepen and promote the exclusive supply system, improve product competitiveness and gross profit margin, increase the level of logistics cost control, and improve input-output efficiency.
In terms of cost reduction, Suning Tesco will continue to promote the adjustment of the closure of loss-making stores, transform the operation mode of low-quality stores, strengthen the investment and operation capabilities of commercial properties, and further promote the rent reduction and sublease of stores to improve the efficiency of stores.
Pleasantly surprised, no pole Tailai
After talking about Zhang Jindong and Suning Tesco, let's talk about Zhang Kangyang, the "prince" of Suning Group. Many people compare him with the "national husband" Wang Sicong, but his label is really more dazzling, studying abroad at the age of 15, becoming a business elite at the age of 26, politely rejecting the "milk tea" marriage proposal, and taking charge of Inter Milan...... Every single thing is taken out and beaten by a group of second generations.
At the beginning of 2016, Zhang Kangyang returned from his studies and served as the vice president of Suning, responsible for Suning's international business development. On June 28 of the same year, Zhang Kangyang was appointed as a director of Inter Milan Football Club, when he was only 25 years old and was questioned by hundreds of minority shareholders.
In the 38th round of the 2017-18 Serie A season, Inter reversed Lazio 3-2, ranked 4th in Serie A, and entered the Champions League next season, finally realizing the Champions League dream.
On October 26, 2018, Inter Milan Football Club officially announced that Zhang Kangyang became the new chairman. At just 27 years old, he became the youngest president in the club's history. In 2017 and 2018, Zhang Kangyang was shortlisted for two consecutive years in China's 40 business elite list under the age of 40 released by Fortune Chinese Network.
As we all know, three years ago, Zhang Kangyang used Inter shares as collateral to borrow 275 million euros from the Oak Fund, and now he needs to repay 375 million euros with interest, which is a huge test for Inter's finances.
Therefore, funds are crucial to Inter Milan, and the deadline for repayment is urgent, which is a huge crisis for Zhang Kangyang, and the failure to repay will cause him to say goodbye to Inter, and Suning will also lose Inter completely.
In the early morning of April 23, 2024, it was destined to be a night written in the history of Inter Milan clubs, defeating AC Milan in the same city derby, and embroidering the second star on the jersey representing the 20 Serie A championships as desired, winning the championship 5 rounds in advance, and also tying the record of the earliest championship in the history of Serie A.
Inter Milan have a sizable prize money in the Champions League, while Serie A revenue is expected to exceed 200 million euros.
With the team winning the Serie A championship ahead of schedule, the momentum is flourishing, and the future revival and development is also attracting attention, which also gives Zhang Kangyang the confidence to negotiate and finance.
After unremitting efforts, Zhang Kangyang finally reached a 3-year investment agreement with PIMCO (American Pacific Investment Management Co., Ltd.), will receive 430 million euros of new financing, the two sides signed a contract on Wednesday, and it is expected to be officially announced this Friday, which is only 3 days away from the established repayment deadline.
Completely solving the previous debt problem is of great significance to Inter's financial situation and reinforcements this summer, and it also declares that Suning's "rule" over Inter will continue until at least 2027. It is gratifying that PIMCO is willing to take over this financing, which seems to indicate that Inter's prospects are optimistic in the next three years.
Suning's current breakeven, profit plan for 2024, Inter's "second star", and 430 million euros in financing all seem to indicate Suning's rejection.
Let's wait and see how Suning will develop in the future.
Source: Suning Tesco official WeChat, Suning Tesco financial report, Suning 33rd anniversary internal letter, Inter Milan Football Club official account, etc