Industry Watch: Home Appliances Traditional Retail Models Are Down

Recently, the semi-annual report released by Gome (hereinafter referred to as "Guomeo") shows that Gome's revenue in physical stores in the first half of the year has dropped significantly, with revenue of 6272 yuan per square meter, a year-on-year decrease of 34.54%; 763 comparable stores, revenue dropped 28.72% year-on-year, net Loss of 501 million yuan. Recently, Suning Appliance (002024, stocks) (hereinafter referred to as “Suning”) also released the mid-year report. Although there was no loss, the net profit also dropped by about 30% year-on-year.

This coincides with the reporter's feelings. In the first half of the year, reporters visited the Suning, Gome, and Dazhong home appliance stores in Beijing for the purchase of home appliances. They found that they all have one thing in common: No matter on holidays or workdays, thousands of square meters of stores, customers are short-term, sales Service staff are bored.

With the increase in the share of electronics mall sales, the physical stores of Gome, Suning and Dazhong Household Appliances not only suffered serious declines in sales and profits, but also suffered losses. The more fatal is the bottleneck of the development model over the past 10 years: It is the downward trend of home appliance sales under the pressure of its own online shopping mall and other e-commerce companies. On the other hand, the increase in property costs and labor costs, the expiration of the old exchange policy at the end of last year, and the self-built marketing network of some major home appliance companies are all factors. Has brought adverse effects.

Physical terminals are no longer king

Poor performance of the physical store, making the United States and Suning giants began to slow down the speed of opening stores. In the first half of the year, Gome listed companies added 62 new stores and closed 45 low-efficiency stores, bringing the total number of stores to 1096. Within six months, the number of listed companies had a net increase of only 17 stores. Suning's offline store expansion is even less, and the number of newly added stores is only four in half a year.

After more than 10 years of rapid development of home appliance stores, the "golden period" in which terminals are king has ended. Although 99% of current home appliance sales are still online and only take up 1% on the Internet, according to Luo Qingqi, a director of Pall Consulting, the performance decline is the current common challenge for offline retailers. The entire industry is facing the dual challenge of business model innovation and improvement of operating capabilities. From a single sale of sellers to a diversified department store, from offline to online, the transition has become a general trend.

However, Sun Wei, vice chairman of Suning thinks this is still too early to say that the price war with e-commerce is not enough to bring about the subversion of the physical store model. He believes that under the background of the rise of e-commerce industry, offline retail industry has not come to dusk. From the perspective of global trends, the future development of offline retail is still optimistic.

The line is very tangled

In the face of the bad performance of the semi-annual report, Guo Junzhou, president of Gome, stated that the next step will be to increase the gross profit of e-commerce through the procurement platform shared with the offline scale advantage. In terms of e-commerce, Gome achieved sales of RMB 2.2 billion (including tax) in the first half of 2012, a year-on-year increase of 242%. Suning Zhongbao reported that in the second half of the year, on the one hand, it will continue to increase its store closure and adjustment efforts, focus on improving the quality of store operations, and continue to strengthen the control of personnel, leasing, and advertising promotion costs; on the other hand, it will continue to increase e-commerce business. The investment will further enrich product categories, improve customer experience, and optimize logistics and distribution in order to achieve rapid growth in sales revenue.

As early as this year's "two sessions" period, Suning chairman Zhang Jindong made it clear that the "electrical" word in Suning Appliance should be removed. Zhang Jindong pointed out that Suning will formally launch the Suning Expo Superstore, a new-generation physical retail store, on September 28. The category will expand from electrical appliances to daily use and department stores. This means that Suning offline physical retailing is fully open to the process of “de-electricity”. The category of Suning Superstores covers 17 categories and 2,000 major brands at home and abroad. Based on 3C (appliances, computers, and communications) products, it will increase department stores. , daily use, books, finance, virtual products, etc., this is a huge breakthrough for the traditional home appliance retail formats. By then, Suning's online and offline business categories will cover department stores, books, clothing and hats, animation games, toy models and even virtual products including mobile applications.

How to balance the interests of online and offline? How to set the price? How to deploy the strategic focus? This will be an important issue before Suning and the country. Although merchants can use different product models to distinguish between high and low prices, consumers are not so unfamiliar. Why do we not choose more affordable online services when we can see clearly that the quality and quality of products are not differentiated? At that time, just as many clothing stores now become consumers' fitting shops, offline profits will gradually shift to online. However, online e-marts can not only Gome, Suning two companies, like Jingdong, Amazon and other e-commerce are also staring at this huge profit of the "cake."