Gome Retail to target smaller cities as restructure begins to show fruit
Gome Retail Holdings will speed up its penetration into lower-tier Mainland China markets during the year ahead, with about 1000 stores slated for opening.
The move is part of a broader strategy dubbed ‘Home.Living’ in which the retailer is rolling out innovation and transformation throughout the business.
For the first half of this year, Gome Retail reported a loss attributable to shareholders of RMB380 million (US$53.1 million), a reduction of the RMB457 million loss during the corresponding period last year as its restructuring began to show results.
Group sales for the first half were RMB34.333 million, relatively stable compared with RMB34.706 billion for the corresponding period last year.
Chairman Zhang Da Zhong says that in the months ahead, the company will further expand into third- to sixth-tier Chinese cities to meet the constantly growing demand of these markets.
Moving into these markets efficiently is possible due to Gome’s advantages in brand, supply chain and logistics, he said.
During the first six months of this year, the group’s total gross merchandise volume (GMV) increased by about 1.8 per cent compared with the same time last year, with GMV of its county-level stores (both self-operated stores and New Retail stores) growing by 339 per cent. Sales through its Me Shops grew by about 123 per cent, while sales from smart products grew by 62 per cent. Sales by its new businesses, such as home solutions and the integration of kitchen cabinets with electrical appliances, grew by 108 per cent, and service GMV grew by 32 per cent.
This year, Gome has entered “a critical stage of its strategic transformation” said Zhang Da Zhong.
“Leveraging on the advantages of internet technology, Gome has set up a user-base interaction and operation platform under the integration of the three terminals – the Gome app, physical stores and Me Shop.”
As well as the company’s foray into smaller cities, the company will begin opening a second wave of new Ixina stores, its self-operating integrated kitchen cabinets and electrical-appliances business collaboration with European cabinet brand Ixina. Stores will open in cities including Wuxi and Nanjing, after Beijing and Shanghai, to further boost the brand’s awareness and reputation. Cozy Home, the home-hardware integration solutions chain, will also be developing at full speed, he said.