Traditional Retail Solution Electric quotient: left or right?

face the menacing electronic commerce, how should the traditional retail enterprise face?





the courage to live with the arm to embrace the electrical business, we call the left-leaning route. Conversely, return to the physical retail of an acre of three points, we call the right line. The game rules of business do not care about right and wrong, the key lies in how to cultivate the core competitiveness of enterprises based on their own choices, and build up a "moat" successfully. This is our basic judgment on route selection.





home appliances can be said to be China's retail chain development of the most mature industry. In the early years after the warlords, the industry has gradually established a Su ning, gome confrontation between the duopoly pattern.





in the last five years of the Soviet-American hegemony, they also experienced the baptism of e-commerce. Over the past five years, we have been able to clearly feel the difference in their attitude towards the electrical quotient.








Suning to the left: the status of the electric business is continuously promoted





Su Ning is undoubtedly the representative of the left-leaning route. Suning Electric business has been developed for a full decade, suning Tesco has been active in China's electricity business for a full five years. From 2009 to surpass the United States began, Suning is constantly combing strategy.





from the three-year strategy to 10-year planning, and then to the cloud business model and one-wing Internet road map, in the face of more and more urgent situation, suning strategic adjustment frequency is more and more high, the intensity is also more and more big. But throughout the whole is the electronic commerce in the entire Suning group's position more and more important.





in Suning's newest one Wings Internet road map, E-commerce has been promoted to the main position. Su Ning is the Electronic Business center of the entire group of organizations and traditional services to the Internet transformation. This has to be said to be a major feat in the retail industry.





but Su ning can be so tossing, is also based on its strong offline foundation. Suning line business has been relatively stable development, and it started early in logistics, deployment of information systems and upgrade marketing model for it to embrace the electricity business lay a foundation. In addition, suning on the strategic importance of the electric business, so that suning easy to buy to stabilize the position of the top three of the electricity trader.





But even so, Su Ning's current transformation is also facing the pain: the decline in revenue, deep losses. Fortunately, Su Ning accumulated enough capital for the winter, some early investment business such as logistics also began to bring returns, such as logistics.








Gome to the right: electric business twists and turns development





Gome is typical of the right-wing route. But Gome's right-wing choice is "forced".





2008, Gome has just completed the incorporation of Yongle, Dazhong, peak star electrical appliances, the number of stores nationwide reached 1333. So when the financial crisis hit, Gome positioned 2009 as a strategic contraction year. But the fast-moving 4 trillion of the Chinese government quickly changed the direction of China's economy, with the electricity industry taking the wind. This let the city at that time the expansion of Suning appliances grabbed the opportunity.





at the same time, Gome Soul character Huang Guangyu in jail, and the subsequent outbreak of "Chenhuang war", have slowed the pace of further development of Gome. In 2011, Gome was on the road to expansion after settling civil unrest. This year, Gome breathed 417 new stores.


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but the creator of the People, 2012, China's home appliances industry soon into the cold winter. After the Great Leap forward gome should recuperate, but the market did not give it such a chance. This year, Gome entity retail store comparable growth burst 24.5%, the annual net profit of listed companies also from the previous year's earnings 1.8 billion drama slipped to loss of 810 million yuan. This is gome electric business development background.





in the second quarter of 2012 years, the United States Gome Power, launched the most "gold" in the history of the price war, and even led the quarter Gome Group's gross margin fell sharply. Gome's subsequent data show that in 2012, Gome's business margin of 2.7%. Gome line under the traditional home appliances combined gross margin of more than 20%, gome really down the drain.





Gome's price war effect is also immediate, from the electricity dealer's revenue from the first quarter of 470 million yuan soared to two quarter of 1.45 billion yuan. Gome has been lagging behind for so long that it seems to see hope again.





but it's not. At that time, the situation of the Gome line has been very grim, let the electricity dealers wantonly burn money. Gome Sprint Electric Business this quarter, the whole company recorded a net loss of up to 580 million yuan. That is Gome's worst loss so far.





Gome is unable to maintain such a situation, so bugle has not yet blown, Gome's electricity business has been defeated. Gome's electricity business slowed, and the quarterly record of Gome's sales two years ago was not refreshed until today.





2012, Gome has achieved 4.4 billion yuan in pre-tax sales, shrinking to 3.5 billion in 2013. But the electricity business sector is still Gome's loss black hole, the past two years to the group has brought 760 million yuan and 540 million yuan net losses.




The
electric Dealer's fold did not push Gome to the brink of ruin, Gome's subsequent development has been flourishing. In the fourth quarter of 2012, Gome successfully made a loss. Gome's revenues resumed growth in 2013, and its financial position was further improved and consolidated.




After
, we found that Gome's income in the first-tier cities except Beijing has barely increased in recent years and even slipped. According to the category, Gome from it, digital and mobile phone products are also very weak revenue growth, and their core consumer electronics is seen as the potential share of home appliance retail industry.





withdrew from the power of the United States, in the two or three-line market in the traditional home appliances field to find their own living space. According to Gome's current 2017-year reconstruction of a gome development strategy, from the electricity quotient of revenue accounted for only about One-fourth of the future revenue increase, the traditional household appliances chain of endogenous and epitaxial growth is still regarded as the main growth. Product differentiation and operational refinement is Gome's current efforts to break the direction.





Gome also put forward with supermarkets, department stores associated with the development of business strategy. In the two quarter, Gome's revenues from the sector have only just reached 136 million. Although it is a way of thinking, but it is far from the positioning of the pillar business.


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you may think that Gome's "holed up" strategy has deprived it of its future, a death-like tactic. But the medium and short term stable development has won the time for it, but also has secured the space which breeds new business for it, for example supermarket, department store associates. In other words, back-end supply chains and front-end stores are the core assets of traditional retailing. As long as its efficiency is high enough, the cost is low enough, its supply chain is valuable. As for the store, if the retail industry is really unsustainable, it can also be downgraded to two landlords. As long as people go shopping, stores are valuable.





from another angle, to the current Chinese retail industry's goods and user capabilities, blindly embrace the electricity business is like a moth to the flame.








to find core competence from strategy to result





the choice of the basic line, we tend to be overly concerned about strategic planning, and ignore the implementation of the strategic landing. For example, the price war is an unavoidable problem for all standard goods, but how can the price war be fought?





from the statistical reports published by many comparison tools before, the bowser net has maintained a price advantage in most categories, which we can also confirm from Gome's earnings. And Su Ning in the analysis of the latest stage of business performance, mention of a thing that makes people laugh and cry: Su Ning's price is fixed on the east, but the price of the Gome line store is cheaper than Jingdong, Suning line on the same price, and at present Suning chain store employees do not have the power to change prices, resulting in the reporting period under the insider performance damage.





based on the above facts, we can generally draw such a formula for the price of home appliances: Gome online ≦ gome chain ≦ su ning chain = suning easy to buy ≦ Jing Dong. However, the Gome, Suning, Jingdong, the performance of the electrical quotient of the difference?





answer is self-evident, Jing-dong than suning easy to buy, Suning easy to buy and better than Gome online.





Jing-dong by virtue of digital products to establish their own low-priced brand image, and then gradually infiltrated into the home appliance industry, and stared at Suning, Gome's chain retail price war. Jing Dong has been mainly 3 C, home appliances supplemented, and suning, Gome category structure just the reverse. Home appliances high gross margin, and 3C gross margin is very low. 3 C Online shopping habits are relatively mature, and the market of home appliances network is still in training. 3 C is the best drainage category, home appliances is the profit section. Suning, Gome to line the category structure to the line, such a price war strategy really appropriate?





It is easy to link the results directly to the strategy, with good results due to wise strategies, bad results corresponding to silly strategies. But in fact, more often than not, the quality of execution is the key to the consequences. Su Ning has been very diligent in the strategic planning, but the implementation of their landing has also done a bit?





as to the traditional retailer, should it be left or right when confronted with the electric dealer? The key is to find the core competitiveness, left to the right to find their own living space, but there is one thing to be sure: if you do not understand the goods, do not understand the user, do not understand the operation, then please be sure to stay away from the electricity business.





(editor/World Network Business Shengting, this article starts in the "World Network Business Manager" November issue, reprint please indicate author and source)