Rivals one after another across Gome, home appliance chain mode Rimutuqiong

Gome after a variety of internal twists and turns, still holding on the expansion strategy of superstition, but after the rise of E-commerce, the rules of the game has changed.

Rivals one after another across Gome, home appliance chain mode Rimutuqiong. Gome after a variety of internal twists and turns, still holding on the expansion strategy of superstition, but after the rise of E-commerce, the rules of the game has changed.

Loudspeakers repeatedly broadcast promotional messages, but the entire store was almost empty. In a Gome store 2 kilometers south of Beijing's Nest, the sales staff in the store were still busy with customers who had just moved into their new home in the three quarter of 2011, and recently they had to stand idly by and chat at the counter.

From Ahn Zhen to the north of Tai Ping Zhuang less than 3 km range, there are nearly 10 such home appliance chain stores into trouble, the scale of the first Chinese home appliance retailers in this area opened 4 Gome and 6 Suning stores. And in the whole of China, every big city stands a large number of such stores, which used to be the best place for consumers to buy home appliances. But in the end, after the excessive expansion of these home appliances stores are facing the plight of falling sales.

At the end of July 2012, Gome and Suning (002024, shares) gave investors an ugly six-year report card. Suning Appliance (002024.SZ) semi-annual reported that its 2012 1-June net profit of 1.745 billion yuan, a year-on-year decline of 29.49%. More shocking is Gome (00493.HK) performance warning, its announcement that due to sales revenue decline and e-commerce business losses, in the first half of 2012 will "record loss." This is the home appliance chain companies listed in Hong Kong for eight years, the first notice of net loss.

Investors find it hard to believe that the star companies that have been maintaining a composite growth rate of 15% over the past few years have fallen so badly. Gome's shares fell to around HK $0.7, creating a new low since the IPO. Huang Guangyu, the company's founder and former Chinese richest man, is still serving his sentence in prison.

As China's consumer-upgrading trend is clear and e-commerce is in its infancy, rivals have never been as close to the full gome dream as they are now. On the number of stores and the profit of a single shop, the old rival Suning Appliance has a comprehensive lead, and on the development of electric business, Jingdong Mall has firmly grasped the initiative of the market. Having gone through a series of internal struggles, the hesitant Gome missed the best chance of a strategic transition.

"If, at the beginning of last year, the strategy of promoting the profitability of a single store was upheld in the early years of Chen Xiao, instead of continuing to pursue the wolf's extensive expansion strategy in Huang Guangyu's time, it might not face so many problems today." "A senior executive from Gome said to the southern weekend correspondent.

The cost of expansion

This was supposed to be a nearly fulfilling revenge story.

Gome's founder, Huang Guangyu, was arraigned in November 2008 for an economic case and was sentenced to 14 years in jail for insider trading in August 2010. In August 2010, Wong Kwong Yu's prison, the successor of Gome's chairman of the board of Directors of the former Yongle electric appliance founder Chen Xiao and Huang Guangyu family on the control of Gome electric power has been infighting. The series-like internal struggle ended with Mr. Chen's departure in March 2011.

The superposition of various factors, forced to experience a infighting and "lost two years" after the Gome, the number of chain stores in that year by Suning appliances overtook. And as of the first quarter of 2012, in China's home appliance chain market has been the most dominant gome, the quarter of the operating income of Suning only One-third. Not only that, in the single shop profit and even the development of electricity quotient, compared to Suning, Gome has been completely backward.

After Chen's "coup", the chairman of the Gome Board of Directors replacement for Huang Guangyu ally Zhang Dazhang, but in fact its yeh and pioneering the burden, pressure on Huang Yu's wife Cuckoo shoulder. At that time, the cuckoo was the first clear explanation of Gome's new five-year strategic plan and layout to Southern weekend reporters, from the Chairman of the Board of Directors of the United States, two years later, "Du" Gome will return to the Wolf expansion path of 480 stores of the annual expansion target, focus on expanding the two or three-line cities, remodeling stores, 2 billion-3 billion yuan E-commerce sales target and to 2014 to 240 billion yuan sales target.

For a long time, the United States in the Crazy Open shop and single shop operation between the difficult balance, is to rely on performance-oriented Super Executive Force, which in a way to create a fierce nature of the United States of the wolf temperament. But in 2009 and 2010, when Chen was in power, the atmosphere was watered down.

Chen is more advocating intensive cultivation, profit first, established Gome in the next five years of development planning, trying to ease the tension with suppliers. In the beginning of the line of fire in January 2009, in the spirit of the United States, "to enhance the efficiency of a single shop," began far from the "open Shop quantity" indicators.

"I have a disagreement with Huang Guangyu's business philosophy, and I think the old growth model he relies on for success will hinder Gome's healthy future." Chen had told Southern weekend reporters that he had raised ten goals in the early 2007 when he arrived in the United States, but that almost one goal was not implemented by the year 2008. In his view, Gome has missed the best time to transition, "if the top ten goals were completed, today's gome should not slip into the abyss." ”

Since 2009, Chen decisively shut down a large number of poor performance or even loss of the store, only 2009, Gome listed part of the closing up of 189, the pain of decisive closing shop for the Gome store benefits of a significant increase, 2010 Gome even in a single store sales slightly more than suning.

But Chen's move was seen as the biggest failure at the company level at a time of Chenhuang control. "Chen's performance was achieved by losing market share, and we lost one of our core competencies, such as the bargaining power of suppliers," he said. "said the Cuckoo.

Infighting, the industry pattern has changed, suning appliances, Jingdong Mall flooded to the hinterland of the United States, Gome once again came to the crossroads: to scale, or to a single shop benefits? The Cuckoo's management is determined to attack the two or three-tier cities and E-commerce through an unprecedented opening.

In communication with Southern weekend correspondents, the Cuckoo will argue with almost unassailable logic: the Chinese household appliance retail market is still in the extensive stage of happy enclosure, including Best Buy, Gome and even Wal-Mart retailer, its core value is still the scale effect of the network, such as customer loyalty formed, can optimize the network.

Gome's executive power has since been reflected incisively and vividly. In March or April 2011 alone, Gome opened 150 new stores, this is Gome's largest expansion in history, and eventually its annual net increase of 390 stores, even in the second half of the year when the sales of household appliances are obviously declining situation, Gome is still actively open shop, many stores are still open in the original already seriously saturated one or two-line cities.

But the market finally gave Gome a heavy blow.

Good day at the mall?

On July 24, 2012, the results of the early warning notice, Gome eight years to the first net loss of performance summed up to two points: sales revenue decline and e-commerce losses. This really tells the truth, but does not involve Gome's big trouble at the moment is also the top priority of China's home appliance stores: The cost is too high, the store mode Sheng extremely and decline.

Gome and Suning appliances, the two companies are almost synonymous with China's home appliance chain enterprises. Beijing Zhong Yi Kang Times Market Research Co., Ltd. statistics show that 2011 China's home appliance market total retail sales of 1.2085 trillion yuan, gome, Suning accounted for China's home appliance market total retail share of about 18%, two major business performance decline, symbolizing the end of the good era of Chinese home appliances stores.

China's National Business Information Center published data show that in the first half of 2012 the country's major retail enterprises home appliances, household goods sales rose 2.4% Year-on-year, compared with the 2011 annual growth rate of 16.9%. By the end of 2011, China's home appliance sales had maintained a growth rate of more than 10% for 5 consecutive years. The Chinese government's "home appliances to the countryside" and "old for new" subsidies such as the end of 2011, coupled with the slowdown in economic growth, so that more and more consumers in the purchase of home appliances are relatively cautious.

In fact, to Gome as the representative of the chain under the form of the main line of traditional household appliances specialized enterprises, has been encountering including the site, the cost of human resources to increase the squeeze. Gome in 2011 will need to pay 2.62 billion of the retail store rent, home appliances retail industry is generally, the average rent every two years or three years will increase once, but Jingdong Mall and other online retailers do not have to worry about such costs.

In order to make a profit, Gome had to add the cost to the product, pushing up the price of the product, thus bringing consumers online. This is not a new issue, but the issue is becoming increasingly worrisome after online retailers have grown.

The first half of Gome's losses were expected due to the rise in rents, marketing and human costs, and Goldman expects sales to be down 25% per cent year-on-year in 2012, and will continue to fall by 2% in 2013, according to a research report published by the investment agency Goldman Sachs on July 24, 2012.

After the announcement, Gome decided to shut down the underperforming shops and cut the operating area by 10% to 15% in the end of 2012, involving 170 to 250 stores. Its closing reference is the capital sales ratio, which is almost the same as the closing standards of Mr. Chen during the 2009-2010.

"I don't know what the yellow family is thinking," he said. Our first strategic plan, gome in 35 years ago should not be such a development, in Beijing, Shanghai, Guangzhou, several streets, walk can see five or six Gome stores, you see which country needs so many stores? Without a clear and stable strategy, making money by squeezing suppliers is not a long-term solution. "A manager who left at the end of 2011 lamented the Southern weekend reporter.

An electric dealer who keeps burning money

In the past few years, Mr Huang has made multiple bets in the field of electrical business. Gome's former deputy president assistant, current Jiangsu New Day Electric Vehicle Co., Ltd. Vice president Xinri said, since 2003, Huang Guangyu is planning to do online retail platform, but soon died, "there is no way to do the electrical business thinking."

2009, the United States to sacrifice the plan of the electric business, but limited by the dispute, until the April 2011 gome Online Mall on-line, Gome electric dealer layout to completely surface.

Today's gome is more of a catch-up time. Compared with the rapid growth of suning (the first half of the sales revenue amounted to 5.9 billion yuan), and just set up a full year of Gome Online mall apparently lagging behind a lot of the first half of 2012 to achieve only 1 billion yuan sales revenue. Gome has to adopt a multi-pronged policy, not only has gome online mall and Bowser network two online platforms, but also with Dangdang launched a strategic cooperation.

There is news that Wong Kwong Yu hope to use the way of price war on the electricity market thoroughly shuffle. The first half of the United States to restructure the high-level structure to sprint electric business field, in the composition of the staff, Shenyang, the original general manager of the Dingdonghua took over the Bowser network CEO of Gome, but also as the main head of the Gome Electric Online mall, Shandong Gome, the original general manager Handepeng continued to serve as the general March 2012, Gome is also working together with Dangdang, Dangdang sales of large household appliances will be supplied by Gome Online Mall, not excluding the future of the whole category of home appliances products by the Gome online mall fencing. At this point, gome electric business development to three platforms.

"Although all are doing retail, but the group is young, the electric dealer faces the group age is big, the face of the customer group is not the same, the electricity business is not the most direct cause of the loss of Gome." "said Handepeng.

Gome President Wang Junzhou said that 2012 Gome Mall to achieve China's largest online home appliance retailer, the next two or three years to achieve China's online market share 15% of the development goals.

According to Gome prior to the announcement, 2011 its two Bowser network and Gome online mall total net loss reached 390 million yuan. This means that the loss of gome data, or will be enlarged as the size of the electric dealer. For Gome and all traditional retailers, this is a dilemma: like Jingdong Mall as a lot of money to do electricity dealers, investors do not agree;

Will these changes save the sinking gome? It may not be enough for Gome's shareholders. Investment agency BofA Merrill Lynch said the industry faces cyclical slowdown and structural challenges, with the gap between gome and rivals widening and the executive management capacity of its leadership "also a concern".

Markets are also voting with their feet. August 8, 2012, Gome stock price is only 0.73 yuan. Bain Capital, a stake in Gome's strategic investors, was more embarrassed and its book losses reached 30% per cent, along with the plunge in share prices. "I really don't want to say anything to gome right now," Zhu, managing director of Bain Asia, said in a telephone interview with Southern weekend reporters. ”

"In 2009, when Bain Capital came in, the management did not think that China's home appliance chain market changes will be so fast, the electric business Challenge will be so big." The senior executives who left Gome said so.