The past year has been extremely painful for Gome's management.

November 20, Gome President Wang Junzhou "suffering" to describe. "Last year very painful, look for direction, find a way out." Gome hopes to have a higher profit, frankly, we know what the impact of losses, internal staff psychological pressure, loss that year is our team lost the biggest year. ”

After a year of adjustment, Gome finally slow down, the third quarter of this year's earnings, the business indicators gradually improve the management of Gome to find a point of feeling elated. Do not follow the diversification of Suning, not optimistic about the Beijing-east model of burning money, Gome has found its own strategy, that is, the standard U.S. home appliances retail giant Best Buy, focus on the main business, not to burn money not to diversify, return to the essence of the retail industry.

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." ”

Return to Retail nature

In the past few years, Gome has relied on the fast-opening model as a way of growth, while the fully dependent on the product of the electric dealers came, the ground shop model quickly formed a shock. For a time, Gome could not find its core competitiveness. "Thanks to the rapid growth of China's economy and the growth of the retailer, there has been a boom on the surface, and the underlying foundation has not actually been established." "Wang Junzhou thinks.

In the past year, Gome has done something like "return to the essence of retailing". "Be sure to stand on the basis of customer needs, how to meet the full range of customer needs." For example, to provide customers with better goods, cheaper commodity prices, to create an experience environment. "In Wang Junzhou's view, in order to adapt to competition, Gome's Way out lies in" around the interests of customers, "This is our year deep understanding, sales is the full satisfaction of the interests of customers. Really do what the retail business should be doing.

Gome last year began to adjust stores around customer demand, gome to the Internet and O2O stores to upgrade, increased WiFi and experience parity. At the same time, Gome to the store shopping guide also put forward new requirements, change in the past to introduce customers to the company to recommend products, in turn to customer demand-oriented. From July onwards to now, Gome single store sales increased by 27%. Gome now has 1600 stores, has been to Beijing, Changzhou and other 10 to reform, next year this number will be raised to about 100.

In addition to doing store adjustment, Gome has also made product restructuring. Wang Junzhou revealed that Gome's biggest change is the use of "step price" of the procurement method. In the past, Gome has been using the traditional rebate model, that is, the sale price by the brand maker, Gome every sell a commodity, brand dealers to gome back point. The advantage of this model is that gome need not worry about losing money, as long as the sale of a commodity there is income, surplus inventory returned to the manufacturer;

"Step" mode and rebate is completely different, it is the purchase of the full underwriting by the United States, the retail price by the United States control, but there may be a drop in the hands of the loss of their own risk. "We cut the purchasing products into low, medium and high-end, on the low-end products more than the use of step price model, retail prices according to market fluctuation, others sell how much, I am cheaper than he 100 on the line; High-end products adopt a differentiated approach, some brands such as large-screen 3D TV, to open the fridge, etc. Underwriting can be achieved by underwriting higher profits. "Wang Junzhou said.

In his view, gome through the adjustment of procurement methods to achieve both the pursuit of low prices of goods and achieve high gross margin double effect. "Through the product structure to adjust, on the one hand to do the price, on the one hand, to pull up the margin, so that the company's average gross profit margin every year have an upward momentum." ”

After a year of adjustment, Gome's top three quarterly results show that Gome store rents fell 10.3%, labor costs fell 3.3%, and gross margin 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 other major adjustment is in warehousing and logistics. In the past, Gome's warehousing and logistics belong to all parts of the subsidiary, each subsidiary to build their own logistics for their stores to provide services. But the problem is, they only for their own regional services, can not form a joint effort, so Gome to the various subsidiaries of the warehousing and logistics, unified management, building the overall supply chain management platform.

In the past few years, Gome invested heavily in the establishment of SAP retail management information platform, in order, inventory, reconciliation, clearing and other links with suppliers to achieve information sharing, through the rapid replenishment of stores to promote product sales, speed up sales turnover. In the three quarter of 2013 years ago, the number of inventory turnover decreased 14 days year-on-year, resulting in positive cash flow of 1.09 billion yuan.

Wang Junzhou said, in the past, the selection of Gome is the most important task, the size of the store, location, decoration, and now suppliers are the core of the department. "This no matter what the industry, as long as you do retail industry, you in the supply chain is not good, you can not open a shop anywhere." ”

In Wang Junzhou view, Gome has two major advantages in warehousing and logistics: One is the low cost advantage of long-term business accumulation. "Gome's main warehouses are accumulated in the past years, and other electrical business sites in recent years began to build warehouses, the cost is much higher than gome." ”

The second is the distribution link, the United States only one-third of the goods to be sent to customers, Two-thirds customers in the store, and the electricity business is 100% of goods to door-to-door, only this aspect of logistics costs with the cost of Gome stores is comparable.

Focus on the retail industry, Wang Junzhou that the future, 3C home appliances in the Chinese market still has a huge space. To the traditional large household electrical appliances, suning, Gome occupy 10% of the national market share, the overall electric business platform currently occupies 10%. "There are still 70% of home appliance channels can be integrated, this is Gome's opportunity." ”

Gome in the future will be more focused on the opening of the three or four-tier cities, such as more densely populated Henan, Sichuan and other provinces, including some cities in the Northeast region.

Strategic debate

With the old rivals Suning this year to increase the line two platform open the strength, while involved in finance, insurance, the pace of diversification is different. Gome more attention offline store business, deep industry, conservative input to the electricity business channels. Its Gome online sales this year is about 405 billion yuan, flat last year, accounting for Gome's overall income of about 6%.

Suning 2013 first three quarterly results show that net profit of 625 million yuan, higher than the same period of gome 582 million yuan, but the decline of up to 73.14%. In the first three seasons, Suning closed 150 stores, which were closed because of operating expectations. Nevertheless, Su Ning still carries on a series of great efforts to promote the Internet this year, the same price, open platform, Silicon Valley set up a research institute.

Gome Vice President Yang Frankly, after Gome and suning model is very similar, now two gradually formed their own characteristics, Su ning focus on breadth expansion, and gome more inclined to the depth of the main business.

And this strategy is based on one of the basis, yang that the best alignment is the United States to buy and Circuit City of the development path. "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. "Yang 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."

Yang even believes that the electricity business has not been too much of a shock to gome. After groping for a year, Gome believes finally found the "play" with the online platform.

Beijing East, Gome will become a fitting room? Yang of course said "no". "A certain category may have dozens of pages, but the person who looks at the first page is over 70%, the second page is only 20%, and the next 10% is out." "Yang said. Gome next will be through high margin goods, conventional goods and hit line low-priced goods three kinds of goods, knock off the electricity business "first two pages", "We want to knock out the first two pages of the site products, such low-priced goods accounted for 70% of the site revenue." "Yang said.

And Yang that on the one hand with the increase in consumer intelligence, consumer demand for the product experience is increasingly high, and this is the advantages of traditional retail stores, on the other hand, the advantages of the promotion is becoming a disadvantage. For example, in the price adjustment, the electricity trader will refer to the manufacturer, the entity shop price adjusts, need time to be able to have the feedback on the page, but the entity shop can be more flexible, the electricity merchant displays in the page prices table, "saves us to do the market investigation". Yang said, "it sells 900 (yuan), I sell 890 (yuan) on it." ”

The conservative strategy in the electricity business is rooted in the fact that Gome does not recognise the current model of electricity-burning. "The loss of a share is not stable, and through big losses in exchange for large flows, we will not do it." "Wang Junzhou said. "The company went through a loss and we know what the losses are about." "Wang Junzhou regrets, 2012 is their own and the team the most painful year, but also the company's brain drain the most of the year, the loss of the United States, a front-line shop staff panic, lack of confidence."

In the electric business strategy, Gome Management's idea is "the income target does not insist, the first loss, seeks the profitable business model, then increases the throttle".

Wang Junzhou thinks it's time to test whether the outside world will be the biggest risk to gome. "The end of the market, there is no doubt that there is money in the pocket, I first guarantee that I have money in my pocket, can afford fifty thousand or sixty thousand employees, can continue to let suppliers on this platform shipments, maintain a large customer long-term existence." Each company has different ideas, it is difficult to estimate who is right, whose fault, after all, to see five years. "Wang Junzhou said.