China hypermarket management company Sun Art Retail Group mainly attributes its 4.2 per cent revenue increase for its latest six months to continuous expansion.
Revenue rose to RMB51,248 million (US$7714.7 million) from RMB49,193 million over the same period last year.
The group opened 22 stores in China in the second half of last year, and a further 12 in the first six months of this year. The new outlets this year were hypermarket complexes. One was under the Auchan banner and the others under the RT-Mart banner.
At June 30, the group had 421 hypermarkets in China with a total gross floor area of about 11.385 million sqm. About 68.8 per cent of this was leased space, 30.9 per cent was in self-owned properties and 0.3 per cent was in contracted stores.
Despite continuous slow growth in the overall domestic consumer market, the group says it still made efforts to develop the market.
Revenue from rental income for the latest six months grew 11.9 per cent to RMB1695 million, primarily attributed to an increase in rentable area from new stores and an increase in rental income from existing stores as a result of better management of tenant mix.
Gross profit for the six months ended June 30 was RMB12,059 million, up 5.5 per cent from the same period last year.
Sites secured
Through lease contracts or acquisition during the period, the group secured 111 sites to open hypermarkets. Already 59 are under construction.
To enhance its differentiation and competitiveness, the group has established a brand strategy: not only to adopt Auchan and RT-Mart as its own brands, but also to create exclusive brands for both banners. These exclusive brands cover a wide range of products mainly in the non-food sectors.
About 20 RT-mart stores in eastern China and five RT-Mart stores in northern China are being use to pilot direct sourcing of a full range of vegetable products, and more than 160 RT-mart stores are participating in a centralised procurement project for vegetables. The centralised procurement project accounted for 40 per cent of vegetable sales in the stores with an average of 20 products.
Sun Art Retail says the model is expected to be replicated in more stores. The approach will also be rolled out to other daily fresh products such as fruit, DVF (dry vegetables and fruits) and fish. The Auchan banner started the same program early this year.
On the eCommerce side, Feiniu HK has more than 16.3 million registered members. In May, the group allocated an extra RMB1 billion for the site’s development over the next two years.
Presented as a high-end eCommerce site, Fields had more than 50 per cent grown in the first half compared with the same period last year.
At the end of June, the group had 139,558 employees. With pressure to increase the minimum wage every year, the group continued to upgrade its IT tools and to optimise processes.