Click to read the original article for details. In 2018, the performance of listed supermarket companies diverged significantly, with the strong getting stronger. Listed supermarket companies once again faced their annual performance review. The Lianshang Network Big Data Research Center conducted an in-depth analysis of 15 listed supermarket companies from five dimensions: growth capability, profitability, operational capability, store layout, and innovation and transformation, including 13 indicators such as revenue, net profit, net margin, gross margin, comparable store sales, sales per square meter, new store openings, store closures, total number of stores, operating area, store distribution, property ownership, and business model, to gain insights into the industry's development trends. Note: Liqun Group was listed in 2017, so the sample for 2016 was 14 companies. According to statistics from the Lianshang Network Big Data Research Center, the 15 listed supermarket companies achieved total revenue of 319.261 billion yuan in 2018, a year-on-year increase of 4.85% from 304.506 billion yuan in the previous year; total net profit was 5.181 billion yuan, a year-on-year decrease of 3.25% from 5.355 billion yuan. Looking at individual companies, 7 achieved growth in both revenue and net profit: Lianhua Supermarket, Better Life, Zhongbai Group, Jiajiayue, Hongqi Chain, Liya Retail, and Sanjiang Shopping. 3 saw revenue growth but net profit decline: Yonghui Superstores, Liqun Group, and CP Lotus. 4 saw revenue decline but net profit increase: Beijing Jingkelong, Hualian Supermarket, Renrenle, and New Huadu. 1 saw both revenue and net profit decline: Gaoxin Retail (Sun Art Retail). Growth Capability In 2018, 10 of the 15 listed supermarket companies had revenue exceeding 10 billion yuan. CP Lotus successfully joined the "10 billion club" with revenue of 10.122 billion yuan, marking its first positive revenue growth since 2015. Gaoxin Retail and Yonghui Superstores remained in the first tier, far ahead of others, but their development trends were opposite. Gaoxin Retail's revenue growth in 2018 was -0.98%, its first decline since listing eight years ago, and its revenue growth had been gradually slowing in previous years. In contrast, Yonghui Superstores has maintained double-digit growth since its listing, and the growth rate has been increasing since 2015. If the current trend continues, Yonghui is expected to surpass Gaoxin Retail by the end of 2019. Not long ago, Yonghui founder Zhang Xuansong also stated that the company aims to achieve a scale of 100 billion yuan this year. Other members of the "10 billion club" include Lianhua Supermarket, Better Life, Zhongbai Group, Jiajiayue, Beijing Jingkelong, Hualian Supermarket, and Liqun Group. Among them, Lianhua Supermarket exceeded 20 billion yuan, and its 0.65% growth in 2018 was its first positive revenue growth in five years. Renrenle, Hongqi Chain, New Huadu, Liya Retail, and Sanjiang Shopping all had revenue below 10 billion yuan, with Sanjiang Shopping having the lowest revenue at only 4.133 billion yuan, more than 24 times less than Gaoxin Retail, which ranked first. In terms of net profit, 3 of the 15 listed supermarket companies were still in a loss-making state: Renrenle, CP Lotus, and Lianhua Supermarket. Among them, Renrenle's loss reached 355 million yuan, once again becoming the "loss king." Two consecutive years of losses led to the implementation of delisting risk warnings on its stock trading. Due to impairment of goodwill and intangible assets, CP Lotus turned from profit to loss in 2018, after reversing its decline in 2017 following five consecutive years of losses. Lianhua Supermarket, despite improvements in recent years, failed to reverse its losses, narrowing its loss to 219 million yuan in 2018. Gaoxin Retail and Yonghui Superstores remained the most profitable, achieving net profits of 2.588 billion yuan and 1.480 billion yuan respectively in 2018, though both experienced their second net profit decline since 2015. However, Yonghui Superstores rebounded strongly in the first quarter of 2019, with a single-quarter net profit growth of 50.28%. Zhongbai Group and New Huadu both achieved multiple-fold net profit growth, with Zhongbai Group's growth reaching 537.06%, marking its second consecutive year of net profit growth exceeding five times. Thanks to improved gross margins and investment income, New Huadu finally reversed its losses in 2018, but in the first quarter of 2019, it disposed of 19 loss-making stores, putting its performance under significant pressure again. Additionally, Hongqi Chain's net profit growth reached 95.66%, its best performance since listing. Profitability The average net margin of the 15 listed supermarket companies was 1.19%, with Hongqi Chain having the highest at 4.46%, an increase of 2.38 percentage points from the previous year. This was mainly due to Hongqi Chain's significant net profit growth in 2018 through optimizing product structure, improving store management efficiency, and strengthening internal controls. Liya Retail and Jiajiayue also reached 3.44% and 3.34% respectively. Liya Retail achieved substantial net margin growth over the past three years, mainly due to rapid net profit growth. Jiajiayue's net margin exceeded 3% for the first time. Thanks to gains from the securitization of Jiangxia Zhongbai Shopping Plaza assets, Zhongbai Group's net profit growth exceeded five times for two consecutive years in 2017 and 2018, and its net margin also achieved leapfrog growth, reaching 2.88% in 2018, compared to 1.09%, 0.02%, 0.06%, and 0.50% in 2014-2017. Due to rapid expansion, Liqun Group and Yonghui Superstores saw significant decreases in net margins compared to previous years. Liqun Group's net margins from 2014 were 3.15%, 3.19%, 3.52%, and 3.74%, but only 1.77% in 2018. This was mainly due to the rapid reopening of stores after acquiring Lotte Mart stores, which were still in a market cultivation period, and the short-term mismatch between revenue and expenses led to a decline in net profit. Similarly, Yonghui Superstores' net margin decreased from 2.47% and 2.88% in 2016 and 2017 to 1.41% in 2018, mainly due to a significant increase in expenses. Additionally, affected by losses, the net margins of Renrenle, CP Lotus, and Lianhua Supermarket were all negative, and they were negative in four of the past five years. In terms of gross margin, the average for the 15 listed supermarket companies was 22.83%, with only Lianhua Supermarket and CP Lotus experiencing declines. As many as 10 companies, including Liqun Group, Hongqi Chain, Better Life, Yonghui Superstores, Gaoxin Retail, Liya Retail, New Huadu, Zhongbai Group, Sanjiang Shopping, and Beijing Jingkelong, achieved record-high gross margins. Among them, Lianhua Supermarket's gross margin in 2018 was 14.13%, the lowest in six years. Lianhua Supermarket stated that this was mainly due to promotional activities such as full reduction promotions to expand sales. Lianhua Supermarket also had the lowest gross margin among the 15 companies. CP Lotus's gross margin decreased mainly because of the relatively lower front-end profits from opening 11 new stores and B2B business development. Renrenle saw the largest increase in gross margin in 2018, up 4.12 percentage points year-on-year to 25.18%, the highest since its listing. Although Renrenle still faces significant pressure on the profit side, it is attempting to improve gross margins, such as cooperating with Qingdao Kingking to develop Meiyu beauty counters, effectively improving the overall gross margin of the cosmetics category; and developing a baijiu supply chain in 2018, effectively increasing liquor sales and gross profit. Operational Capability In terms of comparable store sales, the two leading companies, Gaoxin Retail and Yonghui Superstores, showed opposite trends. Gaoxin Retail has seen consecutive declines in comparable store sales since 2014, with growth rates of -1.6%, -3.6%, -0.34%, -0.26%, and -1.72% from 2014 to 2018 (2017 and 2018 calculated excluding home appliance sales). In contrast, Yonghui Superstores achieved positive growth in the past three years, with comparable store sales growth of 1.9%, 2.2%, and 1.6% from 2016 to 2018. Better Life and New Huadu experienced declines across various formats. Better Life's supermarket format declined by 0.95% year-on-year, and its department store format declined by 2.99%, with the department store format declining more severely, mainly due to an increased proportion of experiential formats such as dining and entertainment, where revenue shifted from main business to rental income, resulting in lower sales but higher rental income. New Huadu's comparable store sales declined by 11.91% year-on-year, with supermarkets down 12.63%, department stores down 7.85%, and sports down 14.01%. Renrenle and Sanjiang Shopping achieved positive growth in small formats. Renrenle's community life supermarket Le life grew by 3.85% year-on-year; its premium supermarket Le super declined by 3.82%; and its hypermarket declined by 12.25%. Sanjiang Shopping's 144 comparable stores declined by 2.56% year-on-year, with supermarkets (including innovative stores) down 2.89% and small format stores up 4.50%. In terms of sales per square meter, Yonghui Superstores and Sanjiang Shopping both exceeded 1,000 yuan/m2/month. Yonghui's 440 large stores achieved sales per square meter of 1,058 yuan/m2/month. Sanjiang Shopping's 114 comparable stores achieved 1,299.6 yuan/m2/month, with supermarkets (including innovative stores) at 1,281 yuan/m2/month and small format stores at 1,631.4 yuan/m2/month. Better Life, Zhongbai Group, and Renrenle also showed significant differences in sales per square meter across formats. Better Life's supermarket format achieved 1,101.80 yuan/m2/month, and its department store format achieved 965.64 yuan/m2/month. For Zhongbai Group, Zhongbai Warehouse in Hubei achieved 1,416.67 yuan/m2/month, in Chongqing 575 yuan/m2/month; Zhongbai Supermarket 1,375 yuan/m2/month; Zhongbai Department Store 266.67 yuan/m2/month; and Zhongbai Industry and Trade Electrical Appliances 1,000 yuan/m2/month. For Renrenle, community life supermarket Le life achieved 924.79 yuan/m2/month; premium supermarket Le super 978.66 yuan/m2/month; and hypermarket the highest at 1,051.35 yuan/m2/month. New Huadu and Hualian Supermarket were significantly lower than others. New Huadu's comparable stores achieved 652.08 yuan/m2/month, with supermarkets at 640.52 yuan/m2/month, department stores at 745.88 yuan/m2/month, and sports at 353.83 yuan/m2/month. Hualian Supermarket, by region, achieved: Northeast 436.49 yuan/m2/month; North China 660.94 yuan/m2/month; Northwest 637.47 yuan/m2/month; East China life supermarkets 338.97 yuan/m2/month, premium supermarkets 631.87 yuan/m2/month; Central China life supermarkets 293.81 yuan/m2/month, premium supermarkets 556.18 yuan/m2/month; South China 635.40 yuan/m2/month; and Southwest 510.27 yuan/m2/month. Store Layout In 2018, the 15 listed supermarket companies opened a total of 1,107 new stores. Lianhua Supermarket opened the most, with 314 stores, including 211 franchised stores and 103 directly operated stores, marking its highest number of store openings since 2013. New Huadu and Hualian Supermarket opened the fewest stores, with only 7 and 5 respectively. New Huadu had maintained double-digit store opening growth in the first eight years since its listing in 2008, but slowed down from 2016, opening only 8, 6, and 7 stores in 2016-2018. Similarly, Hualian Supermarket's new store openings have declined year by year since 2015, with 6 stores in 2018 being the lowest in five years. At the same time, at least 590 stores were closed. Lianhua Supermarket once again became the "store closure king," closing 364 stores. Over the past five years, Lianhua Supermarket has closed a cumulative total of 2,459 stores. Although New Huadu only closed 7 stores, it was a significant adjustment for the company. In the first quarter of 2019, New Huadu disposed of 19 stores that had been loss-making for a long time and had no prospect of turning around. As of the end of 2018, the total number of stores for the 15 listed supermarket companies was 11,366. Among them, Lianhua Supermarket, Hongqi Chain, and Zhongbai Group each had over 1,000 stores, with Lianhua Supermarket ranking first with 3,371 stores, a decrease of 50 from 2017, and the lowest in five years. Additionally, Yonghui Superstores and Liya Retail both had over 500 stores, while CP Lotus had the fewest, with only 83 stores. In terms of operating area, Gaoxin Retail remained the only company with total operating area exceeding 10 million square meters. Yonghui Superstores and Better Life followed with 6.14 million and 4.15 million square meters respectively, still 2-3 times behind Gaoxin Retail. Sanjiang Shopping and Beijing Jingkelong both had less than 1 million square meters. In terms of store distribution, Gaoxin Retail and Yonghui Superstores remained the two companies with the widest regional coverage. Gaoxin Retail had stores in six major regions: East China, North China, Northeast, South China, Central China, and West China, covering 29 provinces and 233 cities nationwide. Yonghui Superstores mainly distributed in the southeast coast, Sichuan-Chongqing region, Yangtze River Delta, and North China, covering 24 provinces and cities, achieving full coverage from first-tier to sixth-tier cities. Other companies like Better Life, Zhongbai Group, Beijing Jingkelong, Hongqi Chain, New Huadu, and Sanjiang Shopping had relatively concentrated layouts. In terms of property ownership, most stores were leased. For example, Gaoxin Retail had approximately 70.0% leased stores, 29.8% self-owned property stores, and 0.2% contracted stores. Of Yonghui Superstores' 708 stores, 696 were leased properties, with only 12 self-owned. In terms of business model, most companies primarily used direct operation. For example, Sanjiang Shopping was entirely directly operated, and New Huadu's direct-operated stores accounted for 77.27% of its operating revenue in 2018. However, Lianhua Supermarket had as many as 1,860 franchised stores, accounting for a significant proportion. Innovation and Transformation Listed supermarket companies are undergoing unprecedented self-transformation, attempting to comprehensively enhance their core competitiveness through business integration, omni-channel construction, digital transformation, and exploration of new business formats. In 2018, these explorations gradually took shape and even achieved results. In terms of business integration, Gaoxin Retail began integrating the operational headquarters of its two major brands, RT-Mart and Auchan, and established a joint operational headquarters. RT-Mart will assist Auchan in upgrading its IT system and integrating the supply chain. Yonghui Superstores, on the one hand, merged the supermarket businesses of the former Yunchao Cluster 1 and Cluster 2, re-dividing them into ten war zones; on the other hand, it sorted and integrated the Caishixian segment, establishing a joint venture with the help of capital; in addition, it divested the Yunchuang business segment, re-dividing its business segments into: supermarket segment, supply chain segment, big technology segment, and Yunjin segment. Renrenle, following the principle of flat management, reduced its original three-level headquarters to two levels: group and regional. In terms of omni-channel construction, Zhongbai Group had 495 stores launch Duodian home delivery services, with annual sales reaching 177 million yuan. It also promoted the "Higo Zhongbai" WeChat mini-program for warehouse supermarkets; utilized new technologies such as unmanned checkout and face-scan payment; and promoted the development of unmanned new retail formats. In 2018, Yonghui Superstores' supermarket home delivery service covered 88 cities in 20 provinces, with a total of 490 stores, achieving sales of 1.68 billion yuan, accounting for 2.4%, an increase of 1.5 percentage points year-on-year. Lianhua Supermarket promoted the upgrade of home delivery operations, fully completing the introduction of ultra-fast delivery for centralized fulfillment stores, and transitioning all stores to centralized fulfillment. In terms of digital transformation, Gaoxin Retail's Taoxianda project rapidly expanded to all RT-Mart and Auchan stores within nine months. Currently, each store can provide 13,000 to 15,000 items for Taoxianda business, mainly covering fresh food and fast-moving consumer goods. Through the Taoxianda project, member systems, payment, inventory, marketing, logistics, and supply chain are integrated, helping physical stores transform. As of the end of 2018, Better Life achieved 5.008 million digital members, with new customers accounting for 63% and member sales accounting for 63.8%. Daily visits peaked at 680,000, with an average of about 150,000; daily unique visitors peaked at 175,000, with an average of about 70,000. In terms of new business format exploration, Lianhua Supermarket's hypermarket format 3.0 full-food market sample store - Century Lianhua PLUS (Qingpu store) opened on December 30, 2018, creating a community neighborhood center integrating cinema, early childhood education, fitness, dining, leisure, and services. At the same time, it transformed its supermarket format based on different functional positioning, transitioning into three types: selected supermarkets, community fresh food, and community convenience. In 2018, Renrenle opened 15 new format stores in four regions: South China, Northwest, Southwest, and North China, including 14 Le super premium supermarkets and 1 Le life life supermarket. Zhongbai Group focused on Wuhan as a key region, developing new formats such as precision-standard supermarkets and convenience stores, and upgrading food supermarkets and fresh food supermarkets. It also broadened its convenience store development ideas, strengthening cross-industry cooperation with China Telecom, Pu'an Pharmacy, and other enterprises, achieving a new "convenience store+" development layout. Summary Overall, the listed supermarket companies in 2018 mainly showed the following characteristics in their operations: first, significant performance divergence, with the strong getting stronger; second, improved profitability, with effective gross margin enhancement; third, large operational differences, with significant declines in comparable store sales for large supermarkets; fourth, slowed expansion, while optimizing existing stores, disposing of stores with no prospect of turning around, and accelerating store renovations. Source: Lianshang Supermarket Home (ID: chaoshirenzhijia)