Affected by the pandemic and supply chain issues, the retail industry faced severe challenges in 2022. In Q1 2023, retail enterprises experienced a wave of recovery and growth. According to incomplete statistics, major retail enterprises such as Yonghui Superstores, Jiajiayue, Better Life, and Zhongbai Group all underwent varying degrees of adjustment and business restructuring in the first quarter to cope with the complex external environment. Internally, enterprises have slowed down expansion and focused on improving single-store quality, while actively promoting online-offline integration and using digitalization to drive business transformation, continuously consolidating their fresh food advantages; externally, new retail formats such as community group buying have gradually stabilized, and the external competitive environment is expected to continue improving.
Yonghui: A Good Start Benefiting from economic recovery and consumption rebound, the external environment continues to improve. Yonghui, a leading tech-driven retailer, achieved profitability at the start of 2023 through continuous transformation, demonstrating strong operational resilience.
Source: Yonghui Superstores official website
On April 28, Yonghui Superstores released its Q1 2023 report. The financial report shows that in Q1 2023, Yonghui achieved operating revenue of 23.802 billion yuan, up 24.07% quarter-on-quarter from Q4 2022; net profit attributable to shareholders was 704 million yuan, up 40.24% year-on-year; non-GAAP net profit attributable to shareholders was 618 million yuan; among which, online business revenue in Q1 2023 was 4.02 billion yuan, accounting for 16.9%. From this data, Yonghui's online-to-home business strategy remains stable and sustainable, with sales proportion not overly aggressive and average order value steadily increasing.
During the reporting period, Yonghui leveraged its offline stores to continuously upgrade full-warehouse, half-warehouse, and store-warehouse models, develop satellite warehouses, improve warehouse infrastructure, and optimize last-mile delivery efficiency and service experience. It also continued to build a stable, flexible, and transparent sunshine supply chain, consolidating its supply chain moat. Data shows that through supplier management systems like "Gongling Yishang," Yonghui achieved significant improvements in key indicators and markedly improved supplier relationships. Additionally, Yonghui effectively increased inventory turnover, with total inventory value dropping 34.95% from early 2022 to the end of Q1 2023, ensuring efficient cash flow and steady growth.
The high-quality development of omni-channel business and the construction of a sunshine supply chain are driven by the 'Technology Yonghui' strategy. In the digitalization process, Yonghui has preliminarily achieved the 'three 30%' goals, i.e., using digital means to improve efficiency by 30% in store productivity, personnel efficiency, and product efficiency, with some benchmark stores seeing personnel efficiency improvements of 30%-50%. In Q1 this year, Yonghui basically integrated all store back-end, store-to-home warehouses, product inventory, purchase orders, and employee tasks into the YHDOS digital management system.
Yonghui stated that looking ahead to 2023, the company will continue to focus on its new ten-year plan of 'building a customer-centric, fresh food-based omni-channel digital retail platform,' insist on opening quality stores, create benchmark stores with consumer reputation and market influence, close tail-end stores, and expect to open 30+ new stores. At the same time, it will continuously improve user experience and promote the depth and breadth of its self-operated platform Yonghui Life. Additionally, it will continue to advance supply chain digitalization, build a sunshine supply chain, and experiment with various sales models.
Jiajiayue: Steady Development On April 28, Jiajiayue disclosed its 2022 annual report and Q1 2023 report. The report shows that in 2022, the company achieved operating revenue of 18.184 billion yuan, up 4.31% year-on-year, and net profit attributable to shareholders of 54.051 million yuan, turning from loss to profit. In Q1 this year, Jiajiayue achieved operating revenue of 4.908 billion yuan, down 3.91% year-on-year, and net profit attributable to shareholders of 137 million yuan, up 5.23% year-on-year.
Source: Jiajiayue Group official website
Jiajiayue is a leading chain retail enterprise in Shandong Province, with over 1,000 stores covering six provinces including Shandong, Beijing, and Jiangsu. It deeply cultivates regional markets and creates a differentiated model. To strengthen fresh food quality control, it pioneered the 'base + supermarket' model, eliminating intermediate links and building its own processing and distribution centers. Additionally, Jiajiayue operates its own factories, producing everything from rice, peanut oil, to shopping bags, capturing consumer mindshare with a sense of scarcity. Moreover, it is common to see 'a Jiajiayue across from a Jiajiayue,' converting large stores into small ones and opening them at customers' doorsteps, which is key to locking in customers and making it a unique fresh food supermarket in Shandong.
Recently, Jiajiayue's snack chain brand 'Yueji·Hao Snacks' opened its first store, marking Jiajiayue's official entry into the snack track. Snack bulk stores operate on low margins and high turnover, with the core being volume-for-price, and the key to scale expansion lies in efficient supply chains and strong management capabilities. These genes perfectly match Jiajiayue, and we are optimistic about the high growth potential of this new format.
Regarding the company's overall revenue and gross margin trends for 2023, Jiajiayue stated: Affected by multiple factors such as the economy and market, consumption capacity and expectations are recovering relatively slowly. The company's Q1 2023 revenue growth faces some pressure, and offline store traffic recovery was below expectations, but gross margins remained relatively stable. The trends for 2023 will depend on market and consumption recovery, and the company will continue to optimize supply chain, digitalization, operations, and services to strive for higher revenue and performance.
Better Life: Continued Transformation Pain Better Life also released its Q1 2023 financial report on April 26: Q1 2023 revenue was only 1.04 billion yuan, down 68.79% year-on-year, with a net loss attributable to shareholders of 94.723 million yuan, down 371.12% year-on-year. The decrease was mainly due to slow consumption recovery, intense channel competition, and strategic adjustments, with store closures reducing business scale.
Source: Better Life Group official website
Better Life is China's first privately-owned listed supermarket chain and a leading retail enterprise in Hunan Province. It was listed on the Shenzhen Stock Exchange in 2008, becoming the 'first private supermarket stock,' and its annual revenue approached 20 billion yuan in 2019. However, with the rise of new retail and e-commerce, Better Life faced severe challenges, performance began to decline, and it recorded its first loss since listing in 2021.
Some professionals analyze that, aside from industry factors, the fundamental reason for Better Life's losses may lie in the failure of its own business strategy: excessive expansion, increasing debt burden, and a precarious capital chain... In June 2022, Better Life, which had been rumored to be on the verge of bankruptcy, received state capital rescue. Xingxiang Group and Hunan Lugu Development Group signed 'Intent Agreements' with Better Life and its controlling shareholder Better Life Group, providing a total of 2 billion yuan in liquidity support. In January this year, Better Life signed a 'Share Transfer Agreement' and 'Voting Rights Waiver Agreement' with Xiangtan Industrial Investment. Two months later, on March 16, the transfer registration procedures were completed, and Better Life officially changed hands to Xiangtan Industrial Investment, with Xiangtan state capital becoming the actual controller. With the entry of Xiangtan state capital and the change in control, Better Life's operating environment may improve. On one hand, epidemic prevention policies continue to optimize, and pro-growth policies from national to local levels have been introduced, leading to rapid recovery in consumer spending and stronger economic recovery expectations. Better Life's state-controlled status will help the company travel light and quickly seize policy opportunities for a turnaround. On the other hand, it will help suppliers regain confidence, and the supply chain will quickly return to normal. However, judging from Q1 performance, Better Life is still in the painful period of transformation and change. The revenue decline caused by network contraction is hard to reverse in the short term, but narrowing losses indicate that Better Life's business adjustments and optimizations are taking effect, and it is expected to enter a virtuous cycle of further improvement in Q2.
Zhongbai Group: Performance Recovery In 2022, Zhongbai Group achieved revenue of 12.197 billion yuan, down 1.08% year-on-year; net loss was 320 million yuan, expanding 1322.6% year-on-year. Regarding the performance decline, Zhongbai Group stated that retail enterprises face multiple challenges, with consumer demand suppressed and diversified shopping channels reducing foot traffic to physical stores.
Source: Zhongbai Group official website
In contrast to offline business, online business performance showed an upward trend. The annual report noted that the company increased investment in third-party platform resources and traffic, with full-year online business sales reaching 1.724 billion yuan, up 31.5% year-on-year. Among them, food ingredient distribution sales increased 25.8% year-on-year, and physical group purchase sales increased 12.73% year-on-year. In 2022, the company actively accelerated digitalization, optimized supply chain systems, and improved operational efficiency. With offline traffic recovering in 2023, Zhongbai Group's Q1 performance showed a good recovery trend.
On April 27, Zhongbai Group announced its Q1 2023 report: operating revenue of 3.512 billion yuan, up 1.94% year-on-year; net profit attributable to shareholders of 12 million yuan, up 424.72% year-on-year; non-GAAP net profit attributable to shareholders of 9 million yuan, compared to -6 million yuan in the same period of 2022.
For 2023 plans, Zhongbai Group pointed out that the network development target is to add 300 new commercial outlets, including 100 warehouse supermarkets and 200 convenience stores. It will also increase exploration of new formats such as membership stores and discount stores; accelerate the layout of community supermarkets in lower-tier markets, fully expanding to Wuhan suburbs and township markets; vigorously promote the development of 'Zhongbai Supermarket' franchising; accelerate the layout of convenience store networks in Hubei Province; accelerate the construction of its own online business platform and build a self-operated omni-channel e-commerce platform; explore the establishment of a home delivery fulfillment and distribution system; and solidly expand group purchase business.
Summary: The development of the retail industry still faces significant pressure. Therefore, retail enterprises need to alleviate pressure through continuous innovation, supply chain optimization, and operational efficiency improvement. Secondly, the application of new-generation digital technology in the retail industry is in a rapid development stage, and the trend of online-offline integration is becoming increasingly evident. Traditional retail enterprises need to accelerate digital transformation and speed up online-offline integration to gain a competitive advantage in the fierce market competition.
Finally, physical retail enterprises should continue to focus on their main business, return to the essence of operations, and adhere to the business philosophy of 'product-centric' and 'customer-centric.' They should adjust product structures based on consumer demand and consumption trends, increase R&D efforts on fresh and high-margin products, promote supply chain upgrades and digital transformation, and actively expand new retail businesses.