Gao Xin retail affirms the preliminary completion of the new retail transformation, Da Runfa’s Oshang Integration

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Gaoxin Retail announced its first half of 2019 results, revenue and profits increased, and Ali’s new retail transformation achieved initial results. The announcement said that the 1-hour distribution model had run.
Picture/Official Screen of Gaoxin Retail Co., Ltd.
On the evening of August 7, Gao Xin Retail announced its performance in the first half of 2019. In the first half of this year, it achieved a total sales revenue of 54.396 billion yuan, an increase of 0.6% over the previous year, and an operating profit of 3.014 billion yuan, an increase of 32% over the previous year. The report affirms the role of the new retail transformation in improving the company’s performance, and calls B2C business on the right track, and the store “one hour distribution to home” model is well established. Aiming at the integration of OSHAN and Darunfa, which is concerned by the outside world, Gao Xin retail said that it has been “preliminarily completed” at present.
Full access to Taoxianda, 1 hour distribution to home mode
New Beijing News reporter noted that in 2018, Gaoxin retail revenue declined. For the first half of this year, Gaoxin retail confirmed the new retail transformation. Among them, the B2C business model dominated by Taoxianda has become an important means to improve Gaoxin retail performance.
According to public data, in November 2017, Alibaba Group invested about HK$22.4 billion (US$2.88 billion), directly and indirectly owned 36.16% of Gaoxin Retail, and carried out new retail transformation to access Taoxianda. According to the financial report, in March 2018, two Darunfa stores in Shanghai and Suzhou began to pilot access to Taoxianda’s one-hour home business under Ali’s banner. By the end of 2018, all Darunfa and Oushangmen stores under Gaoxin’s banner had access to Taoxianda. By the end of March 2019, the distribution radius had expanded from three kilometers to five kilometers.
In order to enhance customer stickiness, improve store differentiation and competitiveness, Gao Xin retailers said that they continue to develop 3R products (i.e. burning, instant heating and instant food). At present, about 18,000 items are provided in one-hour fresh-to-home service, with online fresh performance accounting for more than 50%. As of the first half of this year, the company’s B2C business has been on the right track. The “one-hour delivery to home” model of stores has been established. The daily average order has reached 700 orders, and the Tianmao 618 period once exceeded 1000 orders.
Gao Xin retail said that the B2C business model based on Taoxianda has matured and become its competitive advantage. The goal of the second half of this year is to accelerate the expansion of scale and increase the daily average order volume.
The integration of OSHAN and Darunfa has been preliminarily completed.
However, it is worth noting that in the first half of this year, Gao Xin’s retail sales (excluding the sales of household appliances, household appliances department from self-owned to Suning commission sales since August 2018) fell by 1.76%. In this regard, Gao Xin retail mentioned, on the one hand, due to the integration of Da Runfa and Oscar, which has a certain impact on performance, on the other hand, due to the fierce competition faced by non-food sectors.
For this reason, Gao Xin retail said that it hoped to change the current situation of the same store sales decline by restructuring the stores. According to the financial report, the renovation of stores is based on big data, reconstructing the types and display of fresh commodities, increasing the number of fresh fruits and vegetables, seafood, frozen products and processed and self-made items, and supplementing the commodities suitable for middle and high consumption groups and online sales. In addition, it is also in the living Department store, through the way of commodity upgrading and life scene display, reflecting the professional, texture and high cost-effective mental positioning of the store. This enabled the first renovated store to achieve positive growth in the same store, while the fresh Department achieved double-digit growth in the same store sales.
According to its description, more than 40 stores will be renovated this year. After the renovation, the stores will “pay more attention to the consumer experience, and find the reasons for reviewing customers’arrival at offline stores.”
The semi-annual report also explains the general concern about the integration of Da Run Fat and Auchan, saying that since Da Run Fat and Auchan dual brands began to integrate the operation system and supply chain at the beginning of the year, in the process, Auchan stores adjusted the product mix, supplier structure and operation process. From the current progress point of view, the integration has been roughly completed, and the store performance is expected to return to normal in the second half of the year.
From the point of view of store expansion, by the end of the first half of 2018, the total number of Gaoxin retail stores was 485, of which 76 were Oushang and 409 were Darunfa. In the first half of this year, only two stores were opened, and the expansion rate slowed down significantly.
According to Tencent’s “front-line” news, Huang Mingduan, CEO of Gaoxin Retail, revealed at the performance meeting in Hong Kong that in the future, Gaoxin Retail will continue to increase cooperation with Ali, such as developing new formats, which is also one of the important business strategies of Gaoxin Retail in the future. In the future, Gaoxin Retail will go online to cooperate with Ali’s SuperCat Sharing Inventory Project. In addition, Gao Xin retail will further cooperate with Ali community group buying and pre-warehousing.