How long has it been since you went to the supermarket? What does the supermarket in your memory look like? What are the reasons for going to the supermarket now?
In fact, for many young people, the current "express delivery point" is the "new era supermarket". After traditional "supermarkets" and "hypermarkets" were taken away by new supermarkets and e-commerce stores, they have gradually become the childhood memories of many people.
Against this background, Yonghui Supermarket, as one of the traditional supermarkets, has been actively undergoing transformation in recent years and achieved a counterattack in the first half of 2023. The financial report shows that in the first half of 2023, Yonghui Supermarket achieved operating income of 42.027 billion yuan; net profit attributable to the parent company was 374 million yuan, an increase of 486 million yuan year-on-year.
So, when the overall trend of the supermarket industry is relatively flat and the involution of new supermarkets is intensifying, how did Yonghui Supermarket successfully "escape" and turn losses into profits?
Yonghui Supermarket turned a profit in the first half of the year, with net profit attributable to its parent company reaching 374 million yuan
On the evening of August 30, Yonghui Supermarket released its 2023 semi-annual report. Data shows that in the first half of 2023, Yonghui Supermarket achieved operating income of 42.027 billion yuan, a year-on-year decrease of 13.76%; it achieved net profit attributable to the parent company of 374 million yuan, an increase of 486 million yuan year-on-year, turning losses into profits.
Regarding the decline in revenue, Yonghui Supermarket stated in its semi-annual report that the company actively carried out store optimization, eliminated long-term loss-making stores, and cautiously opened new stores. During the reporting period, the company's overall store number decreased compared with the same period last year. Data shows that in the first half of 2023, Yonghui Supermarket added 4 new stores and closed 29 supermarket stores. As of the end of the reporting period, Yonghui Supermarket had a total of 1,008 open stores and 105 signed but unopened stores.
Although the reduction of stores will have a certain impact on short-term revenue, in the first half of 2023, against the background of the performance differentiation of offline supermarkets and the diversion of customer flow and market by vertical category community stores, Yonghui Supermarket benefited from the growth of offline consumption and batch Stores have been optimized in stages and in stages. Since April, Yonghui Supermarket’s customer flow has returned to normal. Data shows that as of early August this year, nearly 70% of Yonghui Supermarket’s first batch of planned nearly 300 stores to be optimized had been completed, and the customer traffic of some of the renovated stores increased by nearly 10% month-on-month in the second quarter.
In addition, another highlight in terms of revenue is online business. In the first half of 2023, Yonghui Supermarket’s online business contributed revenue of 7.92 billion yuan, a year-on-year increase of 4.4%, accounting for 18.7% of total revenue. It is worth mentioning that thanks to the optimization of category structure and improvement of supply chain efficiency, the gross profit margin of Yonghui’s online business has been the highest in the past three years.
As for the increase in net profit attributable to the parent company, Yonghui Supermarket said that it was mainly due to factors such as an increase in the company's comprehensive gross profit margin and a reduction in various expenses. Data show that in the first half of this year, Yonghui Supermarket's comprehensive gross profit margin increased from 20.35% in the same period last year to 21.99%, and various period expenses decreased by 642 million yuan compared with the same period last year.
In short, the above positive data shows that in the first half of 2023, Yonghui Supermarket is returning to the track of profitability. However, the supermarket industry as a whole is still in the stage of transformation and adjustment, and the losses of many companies are still expanding. However, Yonghui has successfully reversed the loss situation in the face of adversity. This has inevitably made many investors curious. What is Yonghui Supermarket? How to "survive" it?
As the involution intensifies, how can Yonghui counterattack and become a top student?
In the first half of the year, the "store closing trend" of traditional hypermarkets such as Carrefour, Wal-Mart, and RT-Mart continued. Taking Carrefour as an example, data shows that Carrefour closed 106 stores in the first half of the year and currently has only 41 supermarket stores. This makes many investors sigh - what happened to traditional supermarkets?
From the appearance point of view, the closure of traditional supermarkets can be said to be the inevitable result of the "diversion" of the market to a certain extent. At present, in the retail industry, in addition to traditional supermarkets such as Yonghui Supermarket, Zhongbai Group, BBK, and China Resources Vanguard, there are also online supermarkets such as Meituan Selection, Dingdong Maicai, Duoduomaicai, and Douyin Mall, as well as Sam’s Club New supermarkets with more vertical categories such as Hema Fresh Food Store, Hema Fresh Food, Busy Snacks and so on.
Behind the diversion is the development trend of online and offline integration of supermarkets and supermarkets.
On the one hand, online supermarkets are expanding and integrating with offline stores. As online traffic gradually peaks, the competition among online supermarkets has entered the second half of the competition and has begun to shift from online to offline. It is reported that online supermarkets, through continuous linkage and investment with offline supermarket chains and brand owners, have gradually divided the offline supermarket market into two camps - Alibaba and Tencent. For example, the increasingly fierce price war between Sam's and Hema is one of the results of the confrontation between these two camps.
Second, the online supermarket itself is also developing independent business units in new retail. Taking JD.com as an example, it is reported that JD.com Group will establish a new innovative retail department in the future, integrate Qixian, Pinpin and other businesses into independent business units, deepen its retail offline business layout, and explore innovative models.
On the other hand, offline traditional supermarkets are also constantly undergoing digital transformation and transforming to online aspects. According to the "2022 Supermarket Business Survey Express" recently released by the China Chain Store and Franchise Association, online sales contribute significantly to corporate sales growth. Data show that in 2022, 82.9% of supermarket companies will achieve positive year-on-year online sales growth, and 45.7% of companies will have online sales growth of more than 20% year-on-year. At the same time, more companies said that in the future, companies will continue to focus on online business expansion, in-depth integration of online and offline businesses, and improving product competitiveness.
It can be seen that both online supermarkets and physical supermarkets are working towards online and offline integration. It can be said that the integration of online and offline supermarkets has become a general trend.
Under this trend, it is becoming increasingly difficult for traditional supermarkets and supermarkets to survive as they are constantly being "diverted". It is reported that in addition to Yonghui, 13 listed supermarket companies such as Lianhua, Jiajiayue, and Bubugao have released their financial reports for the first half of 2023. Judging from the financial report data of various companies, although the net profits of most companies have rebounded, more than 60% of companies still experienced a decline in revenue. Among them, the losses of BBK, Lianhua Supermarket, Renrenle and other companies are still expanding...
As a member of traditional supermarkets, although Yonghui achieved profitability in the first half of the year, the company's revenue still showed a downward trend, and the company's online business's contribution to revenue is also constantly increasing. According to the 2023 China Online Retail Top 100 list jointly released by CCFA and Deloitte, the proportion of online sales of offline supermarkets such as Walmart, Wumart Supermarket, and Yonghui Supermarket has increased significantly, ranking among the top 20 on the list.
So, under the trend of online and offline integration, can Yonghui, which "goes in the opposite direction", always maintain its reputation?
First, change the "warehouse-store-in-one" model, and Yonghui will "change horses at the post station" before going on the road.
In ancient times, post roads were equivalent to modern highways, and there were post stations along the way. Messengers and officials could rest and change horses at the post roads before setting off again. However, Yonghui has now changed to the "warehouse-store integration" model, which is similar to the "inn-station changing horse" model.
Data shows that as of August 2023, Yonghui has launched a total of 940 e-commerce warehouses, including 135 basic full warehouses (covering 15 cities), 131 high-standard half warehouses (covering 33 cities), and 652 integrated store warehouses. (covering 181 cities) and 22 satellite warehouses (covering Chongqing, Fuzhou, and Beijing).
Under the "warehouse-store integration" model, Yonghui stores and their home-delivered warehouses can achieve common online and offline customer groups and complementary products, and further improve the intelligence and efficiency of contract fulfillment with the help of technology. Taking the Beijing region as an example, data shows that in January this year, the average performance on-time rate of 12 online full warehouses that have been renovated in the Beijing area increased by nearly 25% month-on-month, the after-sales rate dropped by 5.7% due to merchant reasons, and the out-of-stock rate dropped by nearly 25%. 14%.
Judging from the results, after Yonghui replaced the "thousand-mile horse" of "cangdianheyi", the speed of turning losses into profits can be said to be "a thousand miles a day."
In the second step, from "people's rule" to "mechanism", Yonghui's self-developed YHDOS system started a "dark horse" counterattack.
It is reported that Yonghui has positioned its science and technology strategy as the direction of its efforts in the next ten years. In order to achieve the goal better and faster, Yonghui uses YHDOS system development and application as the first step in basic digital transformation.
The reason is that the "warehouse-store integration" model requires high-performance software and hardware systems to maintain the operation of a large number of customer order management and inventory management, and requires the use of platform digital systems for rapid large-scale replication.
At the same time, with fast-paced living habits, people have more stringent requirements for delivery time. Data shows that 62.8% of users accept instant delivery within 30 minutes to 50 minutes, and more than 18% of users hope to receive the goods within 30 minutes of placing an order.
The YHDOS system developed by Yonghui is equivalent to the carrier of Yonghui's large business. Through this self-developed system, Yonghui can streamline procurement, operations, employee management and other aspects. In the future, Yonghui will realize the "transformation" from traditional retail enterprises. Digital transformation from “rule by people” to “mechanism”. Judging from the results, according to the financial report for the first half of 2023, Yonghui's digital initiatives have achieved initial results, and operating efficiency continues to improve.
At the same time, after betting on onlineization, Yonghui has not forgotten its roots and is still steadily advancing its store expansion strategy. Data shows that as of August 8, Yonghui Supermarket has opened 35 new stores this year and completed the opening of its first stores in the new areas of Shandong and Tibet. Currently, the company's business covers 29 provinces across the country.
Summarize:
Nowadays, the once-leading hypermarkets are also caught in the dilemma of constantly closing stores. Therefore, how to survive the changes has become a proposition for all traditional supermarkets. However, Yonghui Supermarket actively strives for change and uses online technology to redo itself from the inside out. Judging from the latest semi-annual financial report, Yonghui Supermarket has gained a new lease of life. It is reported that within 6 months, a total of 15 institutions have rated Yonghui Supermarket. Among them, 6 institutions have rated "buy", 4 institutions have "overweight", 2 institutions have "recommended", and 2 institutions have "better than". "Big Market" and 1 institution is "Neutral".
In the future, as offline consumption gradually recovers, Yonghui, as the big brother in the fresh food field, will continue to maintain a good ranking by leveraging its existing online advantages and store advantages across the country.
Source: Pinecone Finance