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Self-operating stores boost Q4 results for Suning
- February 9, 2021
- Steve Rogerson
Chinese retailer Suning says Q4 product sales through its retail cloud platform increased 33.61% year-on-year, while sales from self-operated stores were up 45.28% year-on-year.
Suning, a Fortune Global 500 company, achieved an annual operating income of around RMB258bn between January and December 2020.
As Suning’s smart retail capabilities mature, the company has evolved its retail cloud platform strategy. Suning.com has conducted benchmarks of online retail platforms, integrated ecommerce businesses and introduced strategic investments, delivered plans to increase employee equity incentives, and explored an independent business listing.
These developments have resulted in a large spike in user activity in the fourth quarter, with the number of shoppers increasing 52% year-on-year. In December alone, monthly active users on Suning.com increased by 68% year-on-year.
Revenue from Suning’s self-operated merchandise retail and logistics arm is also poised to achieve rapid growth, brought about by reducing the share of listed companies on its platform and increasing the share of small, medium and micro-retailers.
Furthermore, Suning’s financial position and external resources have been enhanced with a string of strategic partnerships. In 2020, Suning’s retail cloud franchise stores expanded rapidly, with 3201 new stores opened throughout the year. The business has also maintained rapid growth with annual sales volume increasing more than 100% year-on-year.
Benefitting from the rapid development of business, Suning’s cash flow has continued to recover in 2020. Net cash flow from operating activities in Q4 are expected to improve its position and bring annual net cash flow into the green for 2020.
Suning also released phase four of its employee share scheme plans, which include the company’s development goals and performance indicators at a company and individual level.
The evaluation period will span three fiscal years from 2021 to 2023, with performance evaluations tied directly to Suning and the scale of revenue linked to the deduction of gross profits. Suning has issued an announcement stating it intends to use up to RMB1bn of its own funds to repurchase shares for employee share schemes and equity incentives.
Suning has further clarified its logistics development strategy, with a focus on providing integrated warehousing and distribution services for suppliers and merchants on its platform. This move saw Suning rank first on a list of the top 50 Chinese logistics companies in 2020.
At present, the company’s warehousing and support facilities cover an area of over 12 million square metres with different models, ranging from large warehouses to smaller facilities, cold-chain storage, cross-border logistics and community-based facilities. To expand its footprint, it has established a three-tiered warehouse network, which includes a centralised regional warehouse group, forwarding warehouse group and front-line warehouse group. This layout covers over 20,000 outlets and terminals, enabling Suning to reach 95% of the country in under 24 hours.
In 2020, Suning implemented a series of actions focused on reducing costs, enhancing efficiency and strengthening business focus in light of the effect Covid-19 has had on offline sales. Before releasing the report, Suning also announced its strategy for the next decade pledging to focus on its major retail business. With plans in place to optimise and adjust its existing storefronts, and the steady recovery of the market, sales and profits are expected to rebound in 2021.