In 2023, with the rise of e-commerce and other retail formats, traditional retail formats faced unprecedented pressure and challenges. Especially in the post-pandemic era, consumer shopping habits have undergone significant changes, making market segmentation and competition more detailed and intense. According to data from the National Bureau of Statistics, per capita consumer spending in 2023 was 26,796 yuan, a nominal increase of 9.2% year-on-year, and real growth of 9.0% after adjusting for price factors, indicating a faster recovery in consumer spending. In 2023, total retail sales of consumer goods reached 47,149.5 billion yuan, up 7.2% year-on-year, but by retail format, supermarket retail sales declined by 0.4% year-on-year, indicating that the development environment and competitive pressure for traditional supermarkets remain challenging. From the 2023 and Q1 2024 financial reports of listed retail companies, more and more traditional retail enterprises are mired in poor performance and struggling to recover. According to New Distribution's statistics of 35 retail companies, 18 saw revenue decline in 2023, and 20 saw revenue decline in Q1 2024. Supermarkets Lianhua Supermarket: Both Revenue and Profit Decline According to Lianhua Supermarket's Q1 2024 performance and 2023 annual report, in 2023, Lianhua Supermarket's turnover was approximately 21.836 billion yuan, a decrease of about 2.845 billion yuan year-on-year, down about 11.5%; loss attributable to shareholders was 791 million yuan, expanding by 283.15% year-on-year. In Q1 2024, Lianhua Supermarket's unaudited revenue was approximately 7.039 billion yuan, a year-on-year decrease of 7.86%; unaudited net profit attributable to owners was approximately 74.2876 million yuan, a year-on-year decrease of 7.50%. The financial report attributes the decline to the slower recovery of the supermarket industry compared to other consumer sectors such as catering, affecting store traffic, and to more rational consumption and a clear trend of consumption downgrading. This explanation attributes the decline to external factors, but it is noteworthy that Lianhua Supermarket has been in a loss-making state since 2015, with losses for nine consecutive years, accumulating losses exceeding 3.5 billion yuan. Sanjiang Shopping Club: Both Revenue and Profit Decline Sanjiang Shopping Club was established in 1995, with its main business being fresh food chain supermarkets. It currently operates three formats: community fresh supermarkets, Hema Fresh (joint venture), and Anxian Life neighborhood stores, mainly located in Ningbo. In 2023, Sanjiang Shopping Club's revenue was 3.896 billion yuan, down 4.75% year-on-year, and profit was 138 million yuan, down 11.61% year-on-year; in Q1 2024, performance continued to decline, with revenue of 1.062 billion yuan, down 2.74% year-on-year, and profit of 52 million yuan, down 1.41% year-on-year. Although both revenue and profit declined year-on-year, there has been no loss yet. The financial report did not elaborate on the reasons for the decline in performance and profit, but provided a detailed review of the main operational work over the past year:
Through raised funds, the company invested in the construction of a cold chain distribution center, expected to be completed in Q3 2024, enhancing logistics service capabilities.
The company successfully completed the food supply task for the Asian Games, enhancing brand influence and logistics distribution capabilities.
The unit canteen business was digitized, bringing new growth points.
In talent development, the company built a talent pipeline, optimized recruitment processes, and strengthened training and assessment mechanisms, laying a foundation for sustainable development. It is difficult to predict future performance, but in the face of intense market competition and digital transformation needs, Sanjiang Shopping Club is actively responding with clear plans for existing operations, and the future looks promising. Summary: Lianhua Supermarket and Sanjiang Shopping Club faced double declines in revenue and profit in 2023 and Q1 2024, but their online businesses achieved significant growth. Sanjiang Shopping Club's online sales revenue in 2023 reached 565 million yuan, a year-on-year increase of 6.5%, accounting for 14.78% of total main business revenue, up 1.56 percentage points. Online order volume surged 58.56% year-on-year, with revenue growth attributed to meeting customer needs, increasing online store numbers, and optimizing online business management and fulfillment capabilities, thereby enhancing customer experience. Similarly, Lianhua Supermarket's online home delivery business grew steadily in 2023, with online sales increasing 12% year-on-year. In today's fiercely competitive retail market, for some traditional retail enterprises, the slow improvement of existing businesses may make online business development a breakthrough. Better Life (Bubugao) 2023: Both Revenue and Profit Decline In recent years, Better Life has been plagued by debt news, and its financial data is not optimistic. To reduce losses in a timely manner and ensure the company's sustainable operation, Better Life adjusted its business strategy. In 2023, the company closed 113 stores that had no hope of turning around, and began reopening some quality stores in September 2023. By the end of 2023, 84 supermarket stores had been restructured. However, the closure of stores resulted in significant compensation expenses, greatly impacting operating performance with little short-term improvement. In 2023, Better Life achieved revenue of 3.087 billion yuan, down 64.46% year-on-year; net profit attributable to listed company shareholders was -1.889 billion yuan, with a loss reduction of 25.50% year-on-year, with both revenue and profit declining. In Q1 2024, Better Life's revenue was 928 million yuan, still down 10.21% year-on-year, but net profit attributable to listed company shareholders increased 120.28% year-on-year. New Distribution believes that the improvement in Q1 profit may indicate that the effects of store optimization and closures are beginning to show. At the same time, in the first half of this year, Better Life began seeking external help, with Pangdonglai providing assistance, and the results have been significant. According to public data, after Pangdonglai's adjustment, Better Life's Meixihu store achieved an average daily sales of 1.51 million yuan and an average daily customer flow of 12,600 people, compared to an average daily sales of 150,000 yuan and an average daily customer flow of 2,000 before the adjustment, with daily sales increasing 10 times and daily customer flow increasing more than 6 times. If this assistance plan continues to be effective, Better Life's next year's financial report may show a turnaround. Yonghui Superstores: Revenue Continues to Decline in 2023 and Q1 2024 Yonghui's 2023 revenue was 78.642 billion yuan, down 12.71% year-on-year, with net profit attributable to parent company at -1.329 billion yuan, a loss reduction of 51.90% year-on-year; Q1 2024 performance continued to decline, with revenue of 21.665 billion yuan, down 8.98% year-on-year. The financial report explains that the revenue decline is partly due to the company's continuous store adjustments in recent years, actively closing persistently loss-making stores, and partly because in 2023, the national economy continued to gradually recover, and the physical retail industry faced unprecedented challenges. With residents' consumption willingness and ability declining, store revenue also declined. With terminal store performance continuing to decline, Yonghui began an omnichannel strategic transformation, with online business performing well. In 2023, online business revenue was 16.1 billion yuan, accounting for 20.5% of revenue, with product gross margin increasing 0.9% year-on-year; in Q1 2024, online business revenue was 4.1 billion yuan, up 1.99% year-on-year, accounting for 18.92% of the company's revenue. In 2023, "Yonghui Life" self-operated home delivery business covered 920 stores, achieving sales of 8.38 billion yuan, with an average daily order volume of 307,000 and a monthly average repurchase rate of 50%. Third-party platform home delivery business covered 910 stores, achieving sales of 7.7 billion yuan, up 8.15% year-on-year, with an average daily order volume of 208,000. Among them, the self-operated platform "Yonghui Life" APP registered members exceeded 115 million, up 13.86% year-on-year. In addition to developing other channel performance, Yonghui has not given up its original offline business. Like Better Life, it sought external help and became one of the companies assisted by Pangdonglai. After Pangdonglai confirmed in early May that it would start assisting and adjusting Yonghui Superstores, on May 27, Henan Yonghui Superstores issued a store adjustment announcement, designating "Zhengzhou Yonghui Xinwan Plaza Store" as the first store for cooperation with Pangdonglai, with adjustment starting on May 31 and expected to resume normal operations on June 19. Summary: Recently, Pangdonglai's assistance to Yonghui and Better Life has been a major news event in the retail industry, with related topics repeatedly trending on social media and remaining hot. Even if future store improvements are not significant, consumers' curiosity and pursuit of hot topics are enough to attract them to consume. There are already many videos online of influencers visiting Better Life stores. In this era where traffic is king, attention itself has become a driving force. Dashang Group: Good Revenue in 2023, Decline in Q1 2024 Dashang is one of the few retail companies with good performance. In 2023, it achieved revenue of 7.33 billion yuan, up 0.75% year-on-year, and net profit of 512 million yuan, up 19.70% year-on-year. According to the financial report, Dashang's dual growth in revenue and profit in 2023 was mainly due to reducing costs through group centralized procurement, selecting hot-selling products, and innovating sales strategies such as member rewards and points redemption to increase customer repurchase rates. At the same time, the company optimized its business format layout, renovated old stores, and introduced new categories to meet diversified needs. It actively took measures to turn losses into profits, strengthened management, and reasonably controlled expenses. Additionally, the company seized policy opportunities and enhanced sales and brand influence through holiday activities and cultural tourism cooperation. Although Q1 2024 revenue declined 7.92% year-on-year, profit remained good, increasing 22.87% year-on-year. In addition to revenue and profit, Dashang's operating cost segment is also impressive. Retail enterprises generally face pressure on performance growth and rising labor and rental costs. However, Dashang's financial report shows that operating costs in 2023 were 4.489 billion yuan, down 0.49% from the previous year, and in Q1 2024, operating costs were 1.742 billion yuan, down 11.36% year-on-year, indicating continuous improvement in cost efficiency. Hongqi Chain: Revenue and Profit Growth in 2023 and Q1 2024 Hongqi Chain, as the first convenience store chain supermarket listed on China's A-share market, continued to perform steadily last year and in Q1 this year. In 2023, it achieved tax-inclusive main business revenue of 11.3 billion yuan, up 0.97% year-on-year. Additionally, it achieved value-added service revenue of 2.853 billion yuan. Net profit attributable to parent company shareholders was 561 million yuan, up 15.53% year-on-year, of which main business net profit was 414 million yuan, up 6.47% year-on-year. Investment income was 154 million yuan, up 46.89% year-on-year. In Q1 2024, it achieved tax-inclusive revenue of 2.984 billion yuan, up 4.40% year-on-year. During the reporting period, net profit attributable to parent company shareholders was 163 million yuan, up 15.95% year-on-year; among which, investment income totaled 38 million yuan, up 51.09% year-on-year. After deducting this investment income, main business profit increased 8.26% year-on-year. In 2023, the company opened 144 new stores, and as of December 31, 2023, Hongqi Chain had a total of 3,639 stores. While most retail enterprises lament the poor market environment, Hongqi Chain confidently stated in its financial report: For the convenience store segment of the chain supermarket industry, since the products sold are mainly daily necessities for residents, there is generally no obvious seasonality or cyclicality. General Merchandise Retail Suning.com: Both Revenue and Profit Decline Suning.com's 2023 revenue was 62.627 billion yuan, down 12.25% year-on-year; net loss attributable to listed company shareholders was 4.089 billion yuan, narrowing by 74.79% year-on-year. Overall revenue showed a downward trend, but looking at the home appliance business alone, it was growing. In 2023, the company's home appliance business sales scale increased about 11.9% year-on-year, achieving steady development faster than the industry. Bailian Group: Revenue Decline Bailian Group's core businesses include department stores, chain supermarkets, shopping centers, and outlets, with a rich variety of formats. In 2023, it achieved revenue of 30.519 billion yuan, a decrease of 5.47% from 32.286 billion yuan in the same period last year; net profit attributable to listed company shareholders was 399 million yuan, a decrease of 40.79% from 674 million yuan in the same period last year. According to the financial report, the decline in performance in 2023 was mainly due to two reasons: first, subsidiary Lianhua Supermarket's associated company made a significant expected credit loss provision, resulting in a loss of 142 million yuan in corresponding investment income for Bailian; second, the company issued a REITs project in the same period of 2022, generating 709 million yuan in investment income, creating a high base. At the same time, the company plans to distribute a cash dividend of 1.20 yuan (tax included) per 10 shares to all shareholders, with total cash dividends accounting for 53.64% of 2023 net profit attributable to parent company. Snack Stores Yanjinpu Food: Both Revenue and Profit Growth Yanjinpu Food's 2023 revenue was 4.115 billion yuan, up 42.22% year-on-year, and net profit was 506 million yuan, up 67.76% year-on-year, with basic earnings per share of 2.64 yuan. In terms of assets, during the reporting period, total assets at the end of the period were 2.87 billion yuan, and accounts receivable were 211 million yuan; in terms of cash flow, net cash flow from operating activities was 664 million yuan, and cash received from sales of goods and provision of services was 4.55 billion yuan. In Q1 2024, the company achieved total revenue of 1.223 billion yuan, up 37.00% year-on-year; net profit attributable to parent company was 160 million yuan, up 43.10% year-on-year; net cash flow from operating activities was 214 million yuan, up 172.40% year-on-year; during the reporting period, basic earnings per share was 0.84 yuan, and weighted average return on net assets was 10.38%. Overall financial condition is good. Haoxiangni Haoxiangni, as the first listed company in China's red date industry, has been developing very well in recent years. Its online e-commerce accounts for a high proportion of revenue, with e-commerce revenue accounting for 32.85% of revenue in 2023, and specialty store revenue accounting for 22.99%. To maintain sustainable development, Haoxiangni initiated business breakthroughs in 2023 in areas such as strategic upgrading, creation of major products, channel expansion, supply chain optimization, and organizational reform, fully launching a dual-curve development strategy. The first curve focuses on gift business, and the second curve focuses on building the strategic major product Hongxiaopai business, both of which are developing well. Three Squirrels Three Squirrels' net profit in 2023 and Q1 2024 increased by more than 60% year-on-year. In 2023, Three Squirrels' revenue was 7.115 billion yuan, down 2.45% year-on-year; net profit attributable to parent company was 220 million yuan, up 69.85% year-on-year. In Q1 2024, Three Squirrels' revenue was 3.646 billion yuan, up 91.83% year-on-year; net profit attributable to parent company was 308 million yuan, up 60.80% year-on-year. Summary: Driven by increasingly rich consumption scenarios and continuous innovation of products, per capita leisure snack consumption in China continues to grow. The resulting snack store channel has grown rapidly in recent years, in stark contrast to the sluggish traditional supermarkets. In the snack store format, some traditional snack formats have seen growth slow in recent years due to the impact of new discount snack stores. To address this challenge, they are actively exploring new business models. Taking Three Squirrels as an example, to cope with the impact of new discount snack stores, at the end of 2022, the company took the lead in proposing the "high-end cost-effectiveness" strategy, and after a year, relying on this new strategy, it helped the company emerge from the downturn cycle. From the second half of 2023, it achieved a counter-trend recovery, and in Q1 2024, it continued the results of the 2023 transformation, achieving dual growth in revenue and profit. In contrast, snack stores that persist with original business channels and do not make changes face an unfavorable development outlook. Final Thoughts From the financial report data, among listed retail companies, more than half experienced performance declines in 2023 and Q1 2024, with only a few achieving growth. In fact, both online and offline retail are facing unprecedented challenges. Online e-commerce attracts traffic through continuous low-price strategies, and live-streaming e-commerce has risen rapidly, leading to intense competition. Offline physical stores face fierce price wars and an influx of new competitors, and even upstream suppliers have begun to directly participate in retail, making market competition increasingly fierce. Consumers have become more rational, tending to seek cost-effective products, leading to customer flow dispersing to websites, apps, or physical stores that offer high cost-performance. The diversification of shopping channels also allows consumers to easily complete purchases by watching short videos. Market segmentation is intensifying, with various formats competing. Facing industry changes, many traditional retail enterprises have begun to explore new formats, attempting to open warehouse stores, discount stores, and develop online businesses. However, many attempts have not yielded ideal results. Pangdonglai's assistance to Yonghui and Better Life may bring new insights to the industry: For large enterprises, if it is difficult to transform and reform on their own, leveraging external forces may be one direction for change. From August 20-22, 2024, the 2024 6th China FMCG Conference & 3rd China FMCG Hard Discount Conference & 3rd China FMCG Distributor Conference, themed "Crossing the Shrinking Era," hosted by New Distribution, will be grandly held in Shanghai. This conference will focus on a top guest matrix from leading Chinese FMCG brands, authoritatively interpret market trends, professionally analyze industry status, provide precise business docking and cooperation opportunities, help companies accurately grasp market pulse, formulate effective response strategies, and achieve resource sharing and coordinated development. At the same time, it will invite national leading retail platforms to thoroughly explain the hard discount retail competition model from multiple perspectives, interpret long-term trends and opportunities through practical cases, help companies find key opportunities, and achieve hard growth across cycles. It will gather 500+ outstanding distributors from across the country, comprehensively interpret distributor business from enterprise growth paths, challenges and opportunities, operational practices, etc., helping distributors expand their survival radius and solidify their product offerings! Recommended Reading