Gome's net profit of the first three quarters was 582 million yuan, to achieve a turnaround

Gome released its latest earnings this week, showing a net profit of 582 million yuan in the first three quarters, making it profitable. For this large volume of the offline retail hegemony, is an adjustment of the end, but also the beginning of a transformation.

Wang Junzhou didn't think 10 years ago that Gome, which had won more than 1000 stores across the country by 5 years, would face a turnround of more than a year-making money no longer easy.

As the president of Gome, Wang Junzhou is a more than 10-year 3C retail experience "veteran", but more than a year ago, he was in the retail business as a sudden change in the face of the changes also appear unprepared.

As consumers ' spending habits begin to shift to the wire, gome, like other retailers, suffers from a gnawing market share. The fact is that Jingdong, cat and Xun, the representative of the electric business brand began to rise rapidly.

Beijing east has said this year, 5 years of home appliance sales will exceed 100 billion yuan. Gome's old rivals, at the same time for the transformation of the tangled suning performance began a sharp decline, the first three quarters of this year, Suning net profit of 625 million yuan, down 73.41% year-on-year.

In the face of the pressure from the online industry, Suning chose to develop by means of financing and mergers and acquisitions, while Gome embarked on a more conservative and connotative development path.

"Focus on the main business, return to retail nature." Wang Junzhou said it was a new recognition of gome after a period of strategic confusion. "We will not be convinced that 5 years after the market, more importantly, to buy home appliances, Gome, the brand in the hearts of consumers will never disappear." ”

Wang Junzhou's future bet is that 3C home appliances still have huge space in the Chinese market. To the traditional large household electrical appliances (television, washing machine, air-conditioning, refrigerator-oriented), Suning, Gome occupy 10% of the national market share, the overall electric platform currently occupies 10%. "There are still 70% of home appliance channels can be integrated, this is Gome's opportunity." ”

Gome's top three quarterly results show that Gome's store rents have fallen 10.3%, labor costs have fallen by 3.3% and gross margins have increased 19.8%. "The growth in future performance is still dependent on expanding stores and increasing the profitability of individual stores." "This is the strength that Gome needs to stabilize and maintain," Wang Junzhou said.

Gome's performance this year is not only due to the reduction of investment in the electricity business, the closure of poor performance stores, injection of high-quality stores such as large and medium-sized practice is also a major factor. But analysts pointed out that "under the impact of the offline shop is a long-term trend, the electrical business transformation has no big chance, if there is no big strategic changes, the future gome will likely fall into a vicious circle of dilemma." ”

The turnaround point for Gome is still just the beginning of a new test.

The Lost period of transformation

"We were miserable last year, looking for directions and finding a way." "Wang Junzhou said.

Gome in the 2012 strategy, logo also omitted the word electrical. Gome did not lower its promotional and promotional fees despite the red light that began in the first quarter of 2012. 2012 Electric Business 11 war, Gome is also active in the war, even at a huge sum of 400 million yuan to win CCTV ads.

"You can't have no voice at that time, the day cat, Jingdong and so on all the electric commodity cards in CCTV advertising, Gome should have such a voice inside." Gome vice President Yang said.

But the massive burning of money, did not let gome see results, in exchange for continued losses. 2012 years ago three quarter, gome losses amounted to 829 million yuan.

Gome has changed its strategy this year, "If you are still losing money, the more you invest, the more you lose." Frankly speaking is not the way we want to go, we want to go to the road to the cost of the electricity business plan to suppress. Yang said that the electricity business margin maintained 8%-10%, Gome to spend money advertising to buy traffic, so that there is greater value.

When the electrical business structure has been set, Gome's profit target can be fulfilled? Compared to the Beijing-East and Suning respectively in the release of the signal, Gome online this year showed the silence by the industry as an unconventional move.

Yang that retailers need to play a combination of cards instead of losing a business and blindly investing in new businesses.

This year, Gome adopted a sharing of a procurement platform, a set of IP systems and logistics systems to promote the development of online business. With the help of traditional retailer's low cost of logistics, it can reduce the cost of electricity dealers. On the one hand, Gome logistics warehousing up to 423, and third-party cooperation with the leasing agreement has controlled the rental price increases.

On the other hand, compared with 100% of the online delivery probability, offline retail store delivery, only 1/3 products need to deliver, 2/3 product consumers directly removed.

Gome logistics costs around 1.8%. And any one electric company's logistics in 10%. "When it comes to market share, the loss-making companies tend to be uncertain, at least at a discount," Yang.

But Gome does not consider itself abandoning the electricity business, which is still operating as an independent system.

"The electric dealer and Gome each national branch company is one kind of transaction, you give me the goods how much money, the inventory how much money, such platform is for up and down service." "Wang Junzhou said.

Including logistics center in the vertical management of Gome, Gome headquarters set up a logistics center, in charge of the national four hundred or five hundred inventory and thousands of carriers.

Store turnover rate under the lifting line

By the impact of the electricity dealers, the real store turnover can continue to maintain it? Since last year, Gome has been introducing McKinsey's management team to study how to optimize supply chain management.

Gome launched a "low price and high margin" plan at the beginning of this year, seemingly contradictory but not contrary to business rules.

In view of the electric business Platform home appliance products mainly concentrated in the low-end characteristics, Gome adjusted the product structure. First of all, to change the low-end products and suppliers of contracts, the use of price step procurement methods. High-end products through exclusive underwriting, ODM, to obtain a higher profit margins, and further reduce the sales of conventional goods accounted for.

At present, conventional goods accounted for 50% of Gome sales, high-end products accounted for 25%, low-end products 25%.

"Before low-end products our profit of 18%, low-end products and high-end product structure adjustment, low-end product profit will be reduced, but high-end product profit of more than 18%, to achieve a balance." "Wang Junzhou said.

At present, Gome differentiated product sales accounted for up to 22%, comprehensive gross profit margin of 18%, at the highest level in history.

Yang even calculate, the traditional new product update rate compared to other categories to lower, a purchase volume in one months or so, and will not have the risk of a big decline, so as to achieve retail price changes.

In order to accurately position the price, Gome has set up a research group in the supply Chain department to accurately assess the prices of raw materials and industries, and to discuss the price of a most competitive and profitable space with suppliers in the shortest time.

Prior to this, Gome more as a "second landlord" role, with suppliers to return to the form to wait for the proceeds.

"It turns out that retailers can easily make money, and when the electricity business arrives, you have to do a lot of things yourself to make money," he said. "Wang Junzhou said.

In addition to the product structure, gome in the inventory management of a lot of effort. It is reported that Gome inventory turnover has reached 1.5 months or so, the future can achieve 1 months of inventory turnover.

Line driven online flow

At present, Gome has 1600 stores, in addition to product structure adjustment, each store began to adjust the customer needs around the program.

Gome's Internet and O2O transformation of stores, increased wifi and experience parity, from July onwards to now, the Gome single store sales increased by 27%.

At present, Gome has to Beijing, Changzhou and other 10 to reform, next year this number will be raised to about 100.

In the United States to the store evaluation system, respectively, according to the point of the brand, price segments and specifications of the experience.

For example, consumers buy mobile phones and three major operators have a direct relationship, so Gome will be the three major operators in the mobile phone category area to do the most. In the category of mobile phones, Samsung and Apple handset sales accounted for the overall mobile phone market sales of 50%, Gome in the store to the Samsung and Apple region in the best areas, and then to the largest booth and prototype reserves.

At present, Gome door Shop sales of product models through a large data acquisition after analysis into low-cost low-end, conventional and high-end machines, and monitor the number of 100 customers who have seen this product or have a choice of bias, and then based on the prototype sample.

In the overall location of the store products, low-end low-cost models placed in the eye-catching position, high-priced models placed in the experience position. "After these adjustments and management, it is easy for the consumer to find the goods he needs in the store and increase his turnover." "Yang said.

For today's fiery O2O, Gome gives the model is: 1600 stores under the line of sales can sell online products, improve the AOL development of traffic, and sales staff will be holding the main push or best-selling products catalog, marketing high gross margin products.

In the three quarter of this year, Gome and its stores to achieve 8.8% growth, reached the highest level in the third quarter of 2011 years.

"The two biggest retailers in the United States are the best Buy and Circuit City, the former focus on the main business, the latter diversified development including the expansion of automotive, financial and other fields." But the end result is that the circuit city has failed and turned into a competition between Best Buy and Amazon. "Wang Junzhou that Gome's development is the same as Best Buy path, and from loss to profit pains, gome really recognized the nature of retail business."

But as Wang Junzhou admits, the current U.S. 3C competition is already between Best Buy and Amazon. The former in the face of the latter aggressive offensive also thrown out "not to win at low prices" slogan, but still failed to stop the development of online industry trend, gradually reduced to "offline experience shop."

For Gome, profitability and online expansion seem to be the relationship between fish and paws. However, under the continuous impact of the electric business, the market to the Gome to choose the time is not much.