Market Analysis: US And Soviet Hegemony "No Longer: 1 Suning =3.8 Gome"

Gome, founded in 1987, and Suning Appliance, which was founded in 1990, has been competing against each other in the field of home appliance retail because of its close business model.

However, the distance between the two retail giants who had not been matched in their revenues was expanding.

The scale gap cuts the gap for revenue.

According to the annual report of suning.com and Gome retail in the past three years, from the point of view of revenue, three years ago, Gome retail and suning.com were no longer an order of magnitude.

In 2016, Gome retail revenue was 76 billion 695 million yuan, and suning.com in the same year amounted to 148 billion 580 million yuan.

Both sides have nearly doubled their revenues.

At the same time, this gap is expanding year by year.

In 2018, suning.com achieved a revenue of 244 billion 956 million yuan and Gome retail sales of 64 billion 356 million yuan.

The reason for the gap is that when suning.com's revenue continued to grow, Gome retail sales declined for two consecutive years.

Compared with 2016, suning.com's revenue in 2018 increased by 64.86%, while Gome retail sales declined by 16.09%, a decrease of 12 billion 339 million yuan.

In the annual report, Gome retail believes that there are two reasons for the decline in revenue: first, the weaker macro-economy and the traditional business of the group; the two is the normal "labor pains" caused by the group's "strategic pformation" period.

In fact, the difference between the number of stores is also an important reason for the same level of revenue.

As of December 31, 2018, the company had 8881 self owned stores, 2071 suning.com retail cloud stores, and 112 Dia daily convenience stores.

Gome reported 602 new stores in 2018, and did not disclose the closure of the year.

However, even if the number of closed stores is not counted, the number of stores in Gome is no more than 2206, and the number of stores is even less than the number of self owned stores owned by suning.com in 2017.

Visible loss expansion

Compared to the scale of the stop, let Gome retail headache should be the problem of loss.

According to the annual report, in 2018, the Gome Retail Group owned a loss of 4 billion 887 million yuan for its parent company, while the Gome retail sales loss in 2017 was 450 million yuan.

This means Gome lost money for two consecutive years, and the loss is expanding visually.

In contrast, suning.com's net profit has continued to grow in the past two years.

In 2018, suning.com's net profit attributable to shareholders of listed companies was 13 billion 327 million yuan, compared with 4 billion 213 million yuan in 2017.

In fact, in 2016, the net profit of the two companies was less than 1 billion yuan: suning.com 704 million yuan and Gome retail 325 million yuan.

What is the two case of "upward downward" in the net profit of suning.com and Gome retail?

For reasons of loss, Gome retail believes there are three reasons:

1, the decline in sales revenue in 2018 led to a decrease in gross margin.

The annual gross profit margin of Gome retail sales decreased by 1.46 percentage points from 18.26% in the same period last year to 16.80%, according to the annual report.

2, the overall operating costs increase (operating costs include marketing and management costs).

In fact, this is also one of the direct causes leading to the decline in gross profit margin. The total operating cost in 2018 was 15 billion 446 million yuan, up 14.85% over the same period last year.

Among them, the proportion of marketing expenses in sales revenue increased by 1.67% over the same period last year.

In the case of increased marketing costs, revenue declined instead, reflecting the fact that Gome retailing made some mistakes in marketing strategy in 2018.

3, the financial cost increased, an increase of 24.42% over the same period last year.

The annual report shows that the financial cost is mainly due to interest on bank loans and loans.

In 2018, Gome retail interest bank loans and other borrowings amounted to 11 billion 807 million yuan, compared with 3 billion 25 million yuan in 2017, which means that in 2018, Gome retail loans amounted to 8 billion 782 million yuan.

High loans also cost Gome retail only 341 million of bank interest.

In fact, suning.com also suffers from the loss of main business.

Suning.com's annual report shows that its main source of profit in 2018 was "investment income", amounting to 13 billion 990 million yuan, accounting for 100.32% of total profit.

Disposal of some Alibaba group shares brought 11 billion 12 million yuan investment income.

But, compared with Gome's increasingly serious losses, suning.com's "days" are much better.

Can difficult pformation become a life-saving straw?

Today, the "US Soviet hegemony" situation is no longer.

Under the new retail background, the traditional household appliance retailers have also embarked on the road of pformation.

Suning.com, who has already moved ahead, is also accelerating the pformation.

In 2019, suning.com will speed up the layout of new stores in the offline stores, and open up more than 3 thousand Suning stores in 2018, and will continue to accelerate.

At the same time, using suning.com retail cloud to seize the rural market share quickly also appeared in suning.com's schedule.

In fact, the continued downturn of Gome retail is also trying to smart pformation, taking the "family life" overall solution as the entry point, from traditional electrical appliances to home, home decoration, home services, department stores, finance and other fields in depth.

Gome 2018 annual report shows that in 2017, Gome's new business sales accounted for 0.1%, and by 2018, it accounted for 4.7%.

The family's overall solution, cabinet and electricity integration and other new business GMV increased by 116% over the same period last year, and developed the cabinet self-service mode with the European large kitchen cabinets retail IXINA.

When peers walk together on the road of pformation, can "family life" become a life-saving straw for Gome retail?

Everything will take time to verify.