After a series of business synergies and industrial integration, Gome Retail seems to be drifting away from the old "retail" industry.
The source | ai per business network
Author | Yang Eryi
On October 11, Gome Retail (00493.hk) announced a series of big moves. At the media exchange meeting on the implementation path of the second phase of Gome's "Home Life" strategy held in the afternoon of the same day, Gome Retail announced that it had reached a entrusted management agreement with the controlling shareholder 5 companies and enjoyed 30% of the pre-emptive acquisition rights and other rights.
The five companies are Gome, Dress up, Gome Cellar, Shared Co-construction Platform and AXN Logistics, for which Gome Retail will provide 3-year management services.
Fang Wei, chief financial manager of Gome Retail, said that the conclusion of relevant cooperation will be conducive to the formation of a complete closed-loop ecology of Gome Retail's "home and life" strategy, and Gome Retail will be officially upgraded from a company led by the supply chain to a platform-led company with supply chain capabilities. "Under the all-scenario, multi-channel strategy, it is expected that Gome can get more traffic, get more consumer recognition, and increase in cost and scale." He said.
Daily Business Report noted that many home appliance industry insiders believe that this means that Gome's third-party capabilities will be further strengthened, if the future successfully spin off the home appliance supply chain, it is likely to achieve packaging and listing, bringing higher valuations to the company.
But at the same time, risks remain. After a series of business synergies and industrial integration, Gome Retail seems to be drifting away from the old "retail" industry. In this regard, Huang Guangyu publicly stated that the six plates are such logic. From a large point of view, what we do is retail home service, home life, home content, the future should be these 3, forming a scene with Internet attributes and retail attributes.
Seek business independence
In fact, this is not the first unexpected heavy blow of Gome since the second half of the year.
On September 17, Gome Retail announced that the company would lease three properties of Gome Shangdu, Pengrun Building and Xiangjiang Jiu for a long-term lease of 17.865 billion yuan for a period of up to 20 years. Subsequently, on September 27, Gome again issued an announcement that Gome completed the issuance of the consideration shares of the relevant agreement on September 27, 2021 to pay part of the rent payable under the agreement.
In the eyes of the outside world, this means that Gome will strongly enter the offline business and compete with the offline shopping malls that are blooming everywhere. Turning to the battlefield when many e-commerce platforms are betting on online channels, and extending the battle line to 20 years, this is undoubtedly a big gamble.
This gamble continues to this day. Lease contracts worth 17.8 billion yuan, together with the five platforms involved in the integration, together constitute the six important directions of Gome's retail business. According to Huang Guangyu's words, "Gome will use the platform as a tool, carry out in-depth layout and integration, and further optimize the cost."
In the eyes of industry insiders, behind the deep integration, it is the possibility of Gome paving the way for independent business and even spin-off listing: since this year, Many actions of Gome have hinted at this direction. In January this year, Gome app was renamed "True Happiness", when Gome said that in the new year, Gome will operate in many aspects such as platformization, socialization, digitalization, and entertainment.
According to media reports, the True Happiness platform has now achieved independent operation. The platform is run by Cao Chengzhi, a former Carrefour China and Hema executive, whose position is vp of gome Retail Holdings Business Strategy and Execution Center; and Ding Wei, former director of operations of Alibaba International Station, ren zhen happy cmo. From the aspect of digging people, it may be seen that Gome attaches great importance to true happiness.
After the platform is launched, the initial results have been fed back to the performance. The company's semi-annual report shows that in the first half of this year, gome's total retail transactions increased by 24.42% year-on-year, the number of communities increased by 30% year-on-year, and the sales order volume and sales amount achieved through community sharing increased by nearly 2 times year-on-year; through entertainment and event marketing, about 75,000 live broadcasts were completed, reaching more than 38 million users, although the company's revenue and profits still came from the offline end.
Immediately after, Gome began to consolidate two other businesses: dressing up the home improvement market and discounting coupon portals. After Gome officially controlled the home at the end of last year, in April this year, Gome announced that in the future, it will land in different levels of cities under the intelligent home improvement o2o experience exhibition hall, ranging from 2,000 square meters to tens of thousands of square meters, "to be a new species in the home store industry"; on September 13, gome dress up home store partner program was officially launched.
In August this year, Gome trial operation of the folding app, positioning a coupon portal that provides a large number of discount coupons, will "integrate discount information for consumers, provide solutions such as card and coupon transfers". Gome said that as an important component of Gome's "home and life" scene, it will also become the largest marketing platform for the future development of Gome's "home life".
However, there is still a great deal of uncertainty about the new model. The self-media "zero state LT" pointed out that the "fold up" does not charge the merchant's fee, and it is still in a stage of "burning money" to attract merchants to settle in and guide traffic to enter. Whether it can truly assume the heavy responsibility of the traffic entrance of Gome Online is still unknown.
Online channels still need to work on
Spin-offs until they went public almost became commonplace for retail giants. Alibaba and JD.com's film and television, big health departments, and financial products are all powerful proofs. "Spin-offs and listings can increase the financing channels of listed companies, optimize the overall financial structure of the parent group, and improve the recognition of the capital market." A stock analyst analyzed the media this way.
However, "the steps are too big", which is the biggest evaluation of Gome by many people. In just over a year after Huang Guangyu's return, Gome has frequently tested the waters on various tracks, and for this reason, the company has encountered many doubts.
The first is the setbacks encountered by online platforms. On August 13, 2020, shortly after Huang Guangyu was released from prison, he set up the Gome online platform in an intensive manner and invited Baidu's second boss Xiang Hailong as ceo. In January this year, Xiang Hailong set a goal of "reducing the overall channel operating cost rate by 8%, reducing gome retail's own comprehensive operating rate by 8%, and reducing the actual shopping price of customers by an average of 8%." However, according to "bt Finance", these 3 8% targets have not been achieved at present.
From the lack of data in shopping festivals such as 618 and live streaming, it can also be seen that gome's online channels are weak. Public information shows that during the 618 period this year, the average daily activity of the True Happiness app increased by 270.32% year-on-year in 2019 and 189.11% over 2020. Although the obvious data is considerable, it is worth playing that Gome has not disclosed online sales data like JD.com and Taobao. The Daily Business Report (www.bizvcw.com) noted that in the monitoring reports of some research institutions, Gome True Happiness was not even included in the observation object, compared with live broadcasting platforms such as Douyin and Kuaishou, which received more attention.
Screenshot source: 2021 Brand Enterprise 618 Promotion Insight Report (Ebang Power)
On the Taobao platform, the number of subscriptions to gome's flagship store is only 50,000, less than a fraction of Suning's 54.84 million, and the transaction volume of home appliances is basically a few or a dozen, which is quite bleak. As for the live streaming with goods, it is even more difficult to say. In 2020, Gome conducted a number of huge live broadcasts, and jointly signed with CCTV and celebrities to spend a lot of marketing expenses to create a live broadcast atmosphere. After the end of the live broadcast, Gome announced the data with goods in a high profile: in 1 and a half months, Gome completed 4 live broadcasts, and the total announced turnover reached 2.4848 billion yuan.
What is the concept of this number? For the whole of 2019, gome retail's online sales revenue was 2.055 billion yuan, and the turnover of these four live broadcasts was 120.91%. But what is surprising is that Gome's results for the first half of 2020 released shortly after can be described as dismal. Gome Retail's current revenue was 19.075 billion yuan, down nearly 50% year-on-year; the net loss attributable to the parent company was 2.623 billion yuan, and the net loss of the same period was nearly 7 times larger than that of the same period.
According to the "Beijing Business Daily" at that time interviewed the live broadcast industry insiders implicitly responded, "The phenomenon of e-commerce platforms in live broadcasting has been a secret that the industry knows." It is not uncommon to place orders during live broadcasts and return goods after live broadcasts."
In addition, Gome's live broadcast activities have also received many complaints, and bad reviews are frequent. During the 618 promotion in 2020, Gome was named by the China Consumer Association for not shipping live broadcasts; on July 17, 2020, Gome's super live broadcast with the theme of "a better life private home" flipped over again, and the "Black Cat Complaint" platform released content, saying that a large number of consumers received 41-40 coupons in the Gome live broadcast room to buy goods, and the order was directly cancelled the next morning. During the period, customer service also did not give treatment, and consumers questioned Gome's deception of consumers and false publicity.
Investors on the Snowball platform have questioned Gome's live data
The new logistics business also depends on the main business
If Gome has always been inferior to online channels, then the spin-off of the nascent business may bring a new hope: Acen Logistics is one of them.
In September this year, Gome announced that Accion Logistics launched its express delivery business, kicking open the door of instant logistics. According to public information, Acen Logistics has now formed a relatively complete logistics network, which has covered Chinese mainland 31 provinces, autonomous regions and municipalities directly under the Central Government, more than 400 large and medium-sized cities and more than 2,800 districts and counties, and more than 45,000 townships and towns, and has formed a logistics value chain through warehouses (national warehousing network) + distribution (terminal distribution network) + after-sales (service after-sales system, delivery, installation, adjustment, repair, and guarantee).
As a veteran retailer, Gome has accumulated a wealth of SKUs and profound manufacturer resources, and established a distinctive after-sales service system and management methods such as delivery synchronization and home appliance life cycle management. These are of course the biggest advantages of Gome. "In the field of real-time logistics, compared with other players, the biggest difference between Gome and Meituan, Ele.me and SF is that the combination of stores + front warehouses used by Gome Axun Logistics has more advantages than other enterprises." Express industry insiders analyzed.
But at the same time, Gome's "express delivery dream" has also been questioned. According to the "2020 China Home Appliance Industry Annual Report", Gome's market share is only 5.3%, far behind the 23.8% of Suning, which ranks first. Gome is likely to need more business to "raise" this logistics system in the future.
In other words, if Gome wants to make its independent business more successful, it still needs to upgrade its main retail business.
It is difficult to alleviate in the short term
In fact, behind Huang Guangyu's vigorous reform is the business dilemma of Gome Retail for many years, which is difficult to solve in the short term.
According to the financial report, in the first half of 2021, Gome's revenue was 26.040 billion yuan, an increase of 36.51% over 19.075 billion yuan in the same period last year. In terms of gross profit, Gome's gross profit was 3.132 billion yuan, an increase of 82.87% over 1.713 billion yuan in the same period last year. Gross margin increased by approximately 3% to 12.03% compared to the same period last year. In terms of financial (cost)/revenue and pre-tax loss, the increase in sales revenue and consolidated gross profit was approximately $1,265 million, a decrease of 36.91% compared to a loss of $2,005 million in the same period last year.
Although the momentum of performance recovery in the short term is obvious, whether it is compared with its peers horizontally or compared with the peak period in the past, it is difficult to call Gome's performance excellent.
According to the "2020 China Top 100 Retailers Ranking" jointly released by the China Chamber of Commerce and the All-China Business Information Center in July this year, Gome Retail ranked 7th according to the sales scale. Although it is still in the top ten, it is not difficult to see from the value that the gap between Gome and "excellent students" is too large, only 4.39% of Tmall and 5.41% of JD.com. Even Yonghui Supermarket, which retails small commodities, has the momentum to catch up.
Historically, the discrepancy in the data is even more shocking. Wind data shows that between 2008 and 2020, Gome Tesco's net profit margin showed a sharp decline: in 2008, that is, the year Huang Guangyu was investigated, the figure was 2.24%, in 2012 it first touched a negative value of -1.65%, and then rose slightly in the next three years, but it only fluctuated around 1%. Since 2017, Gome's net interest rate has continued to be negative, falling to -16.16% in 2020.
At the same time, Gome's financial situation is not optimistic. Wind data shows that between 2008 and 2020, Gome's retail asset-liability ratio soared from 68.36% to 98.20%. At present, Gome, which strives for transformation, will inevitably put forward more demand for funds, and heavy debt has become an imminent problem. It is not difficult to see from this that the business is independent, split and listed, or it also has the meaning of expanding financing channels and alleviating financial pressure.
The difficulty of Gome's turnaround in the short term, it is conceivable that Huang Guangyu may also know this.
This genius figure in the retail industry, while releasing the words of "restoring the status of the United States in 18 months", also sought compensation for himself. On October 11, Huang Guangyu publicly stated that the "18-month restoration of market position" originally mentioned was a backward time for internal strategic planning, not an external commitment. "Given some project synergy issues, this time may be delayed." He said.
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