---
title: "Gaoxin Retail 'Marking Time': Hypermarket Merchandise Sales Negative Growth, Fresh Food Business First to Profit"
description: "Hypermarket performance continues to decline, while fresh food online accelerates. On March 17, Gaoxin Retail (06808.HK) released its 2019 annual report. During the reporting period, Gaoxin Retail's total sales revenue was 101.868 billion yuan, a year-on-year increase of 0.5%; operating profit was 4.890 billion yuan, up 4.1% year-on-year; profit attributable to shareholders was 2.834 billion yuan, up 14.4% year-on-year. Although total revenue and net profit increased, and the fresh food e-commerce business achieved profitability, revenue from sales of goods in Gaoxin Retail's total revenue was 91.279 billion yuan, a year-on-year decrease of 4.5%, marking the second consecutive year of negative growth in this main revenue source."
author: "郑婷婷 黄兴利"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-03-25"
categories: "Management & Methods, Retail Formats"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/gaoxin-retail-marking-time-hypermarket-merchandise-sales-negative-growth-f47c4874/"
markdown: "https://xinjignxiao.com/en/articles/gaoxin-retail-marking-time-hypermarket-merchandise-sales-negative-growth-f47c4874.md"
original_source: "https://mp.weixin.qq.com/s/sc2JG_qyl5ITD5BOJzHpSw"
translation: "https://xinjignxiao.com/zh/articles/%E9%AB%98%E9%91%AB%E9%9B%B6%E5%94%AE-%E5%8E%9F%E5%9C%B0%E8%B8%8F%E6%AD%A5-%E5%95%86%E8%B6%85%E5%8D%96%E8%B4%A7%E8%B4%9F%E5%A2%9E%E9%95%BF-%E7%94%9F%E9%B2%9C%E4%B8%9A%E5%8A%A1%E5%85%88%E7%9B%88%E5%88%A9-f47c4874.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/gaoxin-retail-marking-time-hypermarket-merchandise-sales-negative-growth-f47c4874/"
citation: "郑婷婷 黄兴利. “Gaoxin Retail 'Marking Time': Hypermarket Merchandise Sales Negative Growth, Fresh Food Business First to Profit.” New Distribution, 2020-03-25. https://xinjignxiao.com/en/articles/gaoxin-retail-marking-time-hypermarket-merchandise-sales-negative-growth-f47c4874/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Gaoxin Retail 'Marking Time': Hypermarket Merchandise Sales Negative Growth, Fresh Food Business First to Profit

> Hypermarket performance continues to decline, while fresh food online accelerates. On March 17, Gaoxin Retail (06808.HK) released its 2019 annual report. During the reporting period, Gaoxin Retail's total sales revenue was 101.868 billion yuan, a year-on-year increase of 0.5%; operating profit was 4.890 billion yuan, up 4.1% year-on-year; profit attributable to shareholders was 2.834 billion yuan, up 14.4% year-on-year. Although total revenue and net profit increased, and the fresh food e-commerce business achieved profitability, revenue from sales of goods in Gaoxin Retail's total revenue was 91.279 billion yuan, a year-on-year decrease of 4.5%, marking the second consecutive year of negative growth in this main revenue source.

**Hypermarket performance continues to decline, while fresh food online accelerates.**
On March 17, Gaoxin Retail (06808.HK) released its 2019 annual report. During the reporting period, Gaoxin Retail's total sales revenue was 101.868 billion yuan, a year-on-year increase of 0.5%; operating profit was 4.890 billion yuan, up 4.1% year-on-year; profit attributable to shareholders was 2.834 billion yuan, up 14.4% year-on-year.
Although total revenue and net profit increased, and the fresh food e-commerce business achieved profitability, **in Gaoxin Retail's total revenue, revenue from sales of goods was 91.279 billion yuan, a year-on-year decrease of 4.5%. Gaoxin Retail's sales of goods revenue has seen negative growth for two consecutive years, and this is the main source of revenue.** At the same time, it also faces insufficient same-store sales growth momentum and continued slowdown in store expansion. In fact, this is also a common situation in supermarkets currently; how to restructure hypermarket-type supermarkets is a common topic in the retail industry.
**-01-
****Fresh food becomes the main customer acquisition channel**
"In restructuring the hypermarket part, we have always advocated handing professional categories to professionals. So we handed the home appliance part to Suning for management, and Gaoxin Retail should focus on fresh food categories, hoping to become a fresh food retail expert," Gaoxin Retail management said at the conference call.
As early as 2018, Gaoxin Retail's home appliance department business model shifted from self-operated to consignment by Suning. Since then, home appliance product sales revenue has become commission income, not total sales revenue. In 2019, same-store sales growth (calculated on goods sales excluding home appliances) was -1.01%, of which RT-Mart stores achieved positive same-store sales growth of 0.5%.
In response, Gaoxin Retail stated that on the one hand, the integration of the RT-Mart and Auchan dual brands from the beginning of 2019 affected performance, and it is expected that store performance will return to normal in 2020. On the other hand, non-food categories face competition from different channels.
"Supermarkets are basically dominated by FMCG and fresh food, plus high-margin clothing. Home appliance retail requires some scale effect; without scale, there is no price advantage or procurement and sales advantage, so it is normal for Gaoxin Retail to lease the home appliance department to Suning for cooperation," e-commerce analyst Li Chengdong told China Times reporters.
**For hypermarket-type supermarkets, the main customer acquisition category is fresh food, which is also an industry trend.** In Li Chengdong's view: "Fresh food represents traffic. Alibaba is Gaoxin Retail's largest strategic shareholder, and fresh food is also a very core focus for Alibaba. Offline, there are Hema Fresh and Gaoxin Retail, but now Hema's store count is limited, so Gaoxin Retail becomes very important."
In 2019, Gaoxin Retail opened 7 new stores and closed 5 stores, bringing the total number of stores to 486, of which RT-Mart has 414 and Auchan has 72. The 7 new stores are the fewest opened in a year since listing nine years ago. Store expansion has slowed.
The financial report mentioned that in 2020, it will accelerate the restructuring of hypermarkets, planning to renovate 50 stores. The comparable store improvement rate of restructured stores has significantly improved compared to other non-restructured stores. In 2019, Gaoxin completed the restructuring of 10 stores.
"Now the entire hypermarket industry is being redefined. The area of hypermarkets should become smaller; previously stores of 10,000-20,000 square meters will be reduced to several thousand square meters. Existing hypermarkets will also undergo renovation to increase the proportion of fresh food. Hypermarkets mainly focus on stock renovation, and develop some small and medium-sized stores as a complement," new retail expert Yun Yangzi pointed out in an interview with China Times reporters.
**-02-
****Acceleration of fresh food retail online**
The slowdown in both same-store sales growth and store expansion has inevitably affected the growth rate of Gaoxin Retail's overall revenue. Public data shows that **since its listing in 2011, Gaoxin Retail's revenue growth has been declining year by year; in 2014, revenue growth fell below double digits, and in 2018 it began to show negative growth.**
"The continuous decline in same-store performance growth in hypermarkets is an industry problem. On the one hand, it is gradually affected by smaller community fresh food stores, and on the other hand, fresh food e-commerce also has an impact," Yun Yangzi analyzed.
Although overall revenue growth is poor, Gaoxin Retail's fresh food e-commerce business achieved profitability in 2019. In 2019, Gaoxin Retail's O2O business (online-to-offline business) total sales revenue increased nearly 90% year-on-year. It is reported that this business is mainly in B2C form, where customers choose one-hour fresh food delivery services through RT-Mart Youxian, Auchan Daoda, and partner platform entrances such as Taoxianda, Ele.me, and Tmall Supermarket. **As of the end of 2019, the number of B2C users exceeded 33 million, with active users exceeding 10 million.**
Through close cooperation with Alibaba, Gaoxin Retail has complemented and strengthened its technology empowerment, traffic, and supply chain resources. However, in Li Chengdong's view: "Gaoxin Retail has diverted all traffic to Alibaba, which is not so beneficial to its own business. It may be stronger in technology and methodology, but what plays a decisive role may be more the offline store business."
In addition, Gaoxin Retail management revealed at the conference call that the epidemic had little impact on Gaoxin Retail, with only some stores closed in coordination with the government. Gaoxin Retail provides basic livelihood services, and revenue increased year-on-year. Supermarket operating income was not affected. During the epidemic, customer online demand was very strong, growing about 3.5-4 times, mainly for fresh food and food.
**It is a trend for the retail industry to develop online business, especially since the epidemic. In addition to providing delivery-to-home services through conventional entrances such as apps and mini-programs, supermarkets such as Wumart, Yonghui, and Huaguan have also begun to try live streaming to sell goods, tapping into online traffic.**
Industry insiders point out that **the epidemic has accelerated the online trend of fresh food retail, but it is still mainly offline.** For large supermarkets, store location, supply chain resources, and cost control are extremely important. "The epidemic is a special consumption scenario; the key factor for supermarket operation is fulfillment capability. Because fewer people go to supermarkets. Everyone still hopes for delivery to home. Many supermarkets may not be able to achieve this fulfillment capability, or the efficiency is not high enough," Yun Yangzi said.
Source: China Times
Tips will be paid 400-2000 yuan once adopted


---

## Citation metadata

- Publisher: New Distribution
- Author: 郑婷婷 黄兴利
- Published: 2020-03-25
- Canonical: https://xinjignxiao.com/en/articles/gaoxin-retail-marking-time-hypermarket-merchandise-sales-negative-growth-f47c4874/
- Original source: https://mp.weixin.qq.com/s/sc2JG_qyl5ITD5BOJzHpSw

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671