Following the retirement of Hema founder Hou Yi, another new retail chess piece of Alibaba (09988.hk), Sun Art Retail (06808.hk), has also made new moves.
Red Star Capital Bureau noticed that Sun Art Retail announced on March 27 that the company appointed Shen Hui as executive director and CEO of Sun Art Retail. Lin Xiaohai resigned as CEO of Sun Art Retail and was transferred back to Alibaba Group for another appointment.
Screenshot from Sun Art Retail announcement
It is worth noting that Shen Hui is an "old Sun Art person". He joined Sun Art Retail Atomic Company Auchan in 1999 and later served as the general manager of Auchan brand operations. Lin Xiaohai is an "old Alibaba man". He joined Alibaba in 2016 and served as vice president of Alibaba Group and general manager of the Retail Business Department.
Shen Hui took over Lin Xiaohai and released two messages: first, Alibaba once again delegated power to its subsidiaries in the new retail sector; second, the problems faced by Sun Art Retail were finally left to the retail people to solve.
Lin Xiaohai was transferred back to Alibaba
"Old Sun Art Man" to take over as ceo
On December 22, 2020, Lin Xiaohai served as the executive director of Sun Art Retail and will also serve as CEO in May 2021. Previously, Lin Xiaohai served as President of Marketing for P&G Greater China, Vice President of Alibaba Group, and General Manager of the Retail Business Department.
Less than three years after serving as CEO, Lin Xiaohai led Sun Art Retail and made many attempts: adhering to the omni-channel and multi-format development strategy, completing self-operated fresh food supply chain capacity building through digitalization and organizational innovation, and developing m Member store.
So far, Sun Art Retail owns three main business brands: RT-Mart, RT-Mart super, and m member stores, with more than 500 stores across the country.
In the fiscal year when Lin Xiaohai took office (March 31, 2021 to March 31, 2022), Sun Art Retail suffered its first loss in nearly ten years, with a net loss of 739 million yuan attributable to the parent company. In the next fiscal year, Sun Art Retail's net profit attributable to its parent company will turn positive, reaching 109 million yuan. Compared with the net profit attributable to its parent company of 2 billion yuan in 2020 and before, this figure is not high.
Screenshot from Oriental Fortune Network
Regarding Lin Xiaohai’s resignation, Sun Art Retail said that the board of directors recognized Lin Xiaohai’s valuable contribution to the company during his tenure.
According to Sun Art Retail, Shen Hui, who takes over as CEO, has rich management experience in the retail industry. He joined Sun Art Retail Atomic Company Auchan in 1999 and participated in the preparation and construction of the Auchan brand to enter China. He worked at Auchan in France from 2010 to 2013 as store general manager. From February 2016 to May 2017, he served as general manager of Auchan brand operations.
Red Star Capital Bureau asked Sun Art Retail on March 27 whether there will be a new strategy after the CEO change, and whether Shen Hui will strengthen retail and weaken e-commerce after taking office. As of the time of publication, the other party has not responded yet.
Hema founder retires, Sun Art CEO changes
Ali takes half a step back towards new retail
Before Sun Art Retail CEO change, Hema founder Hou Yi also stepped down as CEO and retired, and Hema CFO Yan Xiaolei concurrently served as CEO.
It is worth noting that both Sun Art Retail and Hema were rumored to be sold by Alibaba in early March, but both companies later refuted the rumors.
Sun Art Retail and Hema are both important pieces of Alibaba’s new retail.
Alibaba opened its first new retail model Hema store in January 2016, and invested in Sun Art Retail in 2017. In its annual report, the concept of "new retail" appeared for the first time.
In the past few years, Hema has gone from being an industry benchmark for Internet-empowered traditional retail to being a “bad student” in performance appraisal. It was downgraded from an independent segment to a sub-business segment of a business group. Although it was later upgraded to an independent business group, it finally became a company. Independent company.
Sun Art Retail first experienced a slow decline in revenue, and then suffered a rare loss.
In February 2024, Alibaba Group Chairman Cai Chongxin said that traditional physical retail business is not Alibaba’s core business. “It is also reasonable to withdraw from this type of business, but this will take time and be realized slowly according to market conditions."
Retail e-commerce industry expert and founder of Bailian Consulting Zhuang Shuai told Red Star Capital Bureau on March 27 that the reason why Alibaba acquired physical retail companies such as Intime and RT-Mart was to promote the entry of brands into Tmall, the digitization of the retail industry, and instant retail. The implementation of innovative models in physical retail has huge value. But at present, except for Intime’s clothing brand that achieved the rapid development of Tmall in the early days, the greater value has obviously not been reflected, and related companies have also experienced varying degrees of performance decline and losses.
"I think Alibaba has a misunderstanding about the retail industry," Lai Yang, chief expert at the Beijing International Trade Center Research Base, told Red Star Capital Bureau, "They believe that the difference between retail and e-commerce lies in digitalization. There is a gap, so we used a lot of digital technology to transform RT-Mart, thinking that its performance would be very good, but in fact it was not successful. Because the fundamental problem of hypermarkets is that their value to consumers is too low. Although digitalization will help to a certain extent, it cannot solve the fundamental problem. "
Lai Yang said that hypermarkets have large stores and high rental costs. In addition, the costs of purchasing, selling, adjusting inventory, water and electricity, etc. are very high, and consumer demand has declined (because commodity prices have no advantage compared to the Internet) , forming a vicious cycle. Even Hema’s traditional stores have huge distribution areas and catering areas. Unless the floor efficiency is extremely high, it will take up space, making it difficult to achieve profitability. In addition, the construction of the entire distribution and logistics system , the initial investment is large and the investment payback period is also long. “If you don’t have a cost-effective business model, you won’t be able to survive. "
However, Lai Yang also affirmed the impact of Alibaba and e-commerce on traditional retail: digital transformation has promoted the optimization and upgrading of corporate operations, supply chain systems, consumer demand analysis and other aspects of the entire retail industry. Zhuang Shuai also said that RT-Mart The current situation of Hema and Hema cannot completely deny the role of e-commerce platforms in promoting physical retail.
Red Star Capital Bureau noted that in fact, Hema and Sun Art Retail are not isolated cases. The retail industry as a whole is facing development difficulties, and hypermarkets On behalf of Carrefour, it has withdrawn from many cities. Yonghui Supermarket (601933.sh), the "first supermarket and fresh food stock", has also suffered losses in the past two years...
How should retail go in the future?
Lai Yang believes that retail should start from Optimize on your own. “Future stores must be small in scale and focus only on fresh ingredients, including fast food, fast food and other items, so that consumers will come to buy them, and other items can be eliminated. The smaller the area, the better, which greatly reduces rental costs.
Zhuang Shuai said that physical retail still needs to rely on e-commerce platforms to obtain new growth. "The integration of e-commerce and physical retail has become a general trend and will no longer be separated." If RT-Mart and Hema were not affiliated with Alibaba, they could have entered the platform and developed like Yonghui Supermarket, Wal-Mart, and Sam's. In the future, instant retail and digitalization will be e-commerce’s solution to the dilemma of physical retail.
Red Star News reporter Zhang Luxi Yu Yao
editor Xiao Ziqi
