2011 Retail Business Capital Operation Continues?

From the point of view of the regional distribution of online shopping, the four major cities of northern Guangzhou and Shenzhen occupy an absolute leading position, while the top ten cities are basically distributed in the eastern coastal developed areas. The difference between the degree of economic development and the development of logistics industry is the main reason for the obvious difference in the distribution of online shopping areas.

From the product pattern of online shopping, in order to make up for the lack of consumption experience, the main selling products of online shopping channels are mostly standardized products, and products with less consumption experience and more basic consumer needs. According to the 2009-2010 year report on China's online shopping popular cities released by Taobao, 3C products (computers, personal digital and household appliances), games and communication recharging cards show obvious male consumption characteristics, and cosmetics, clothing and footwear products are presented as female consumption characteristics.

As a result, the impact of online shopping on the traditional retail entities is likely to be followed by home appliance chains, middle and low end clothing chains, department stores and supermarkets.

If investors are worried about the impact of online shopping in department stores and supermarkets, it is necessary to conduct a more in-depth analysis of Suning and Gome, which sell standardized appliances and 3C products.

Judging from the scramble for best buy and Amazon in the field of online shopping, online enterprises have achieved high turnover and high efficiency with the advantage of technology, and have had a certain impact on traditional offline sales. However, the offline businesses also have good synergy on the basis of nationwide entity store network, brand awareness, perfect flow distribution and after-sales service system.

In essence, the core competition of any product sales channel is the front stage competition consumption experience, the background competition and logistics distribution. At this point, the rapid rise of online consumption means opportunities rather than disasters.

Many traditional retailers in China have set up online shopping platforms to participate in this huge space market.

According to the statistics of China Chain Store Association, as at the end of May 2010, at least 37 traditional retail companies have opened online platforms.

Retail enterprises seek change and commercial real estate is born.

From the perspective of development, many enterprises began to develop commercial real estate in order to avoid the upward pressure of rent in the future expansion process.

The large-scale development of commercial real estate and the upgrading of its format and consumption behavior will become the future trend of the industry with online shopping.

The essence of the commercial real estate mode is the internal and external value brought by the business collector to obtain the resources at low prices (usually land), and to obtain high profitability and good cash flow through renting and selling non core business part of the property, while subsidize the development of the commercial sector by selling back money; the main business is low rent.

The core of the model lies in the collection of business. The difficulty lies in the fact that enterprises need to become "full operators". The booster of development lies in the quick sale of money, and the risk is that real estate regulation will affect financing and sales.

In the process of traditional department stores and supermarkets, the good cooperative relationship between retailers and suppliers and the customer loyalty caused by brand effects make them gain advantages in the development of commercial real estate projects. The more successful business enterprises, the higher the development power of commercial real estate, the lower the price in the future, so as to avoid the upward pressure of rent.

From the case of Baolong Group and Wanda Group developing commercial real estate, they are at least 50% cheaper than the urban average price. The cost of leasing land and property of Guangzhou friendship Changlong ole is only 3.5%-5%, and the land rent of Changsha 100 thousand outlets of youa shares is only 6 million / year. Once these projects are successful, their profit level will be significantly higher than that of the traditional department stores.

{page_break}

Institutional change and industrial integration: "gossip"

In the face of intensified competition, rising costs and the growing impact of new formats, retail enterprises' internal demands for core competitiveness are becoming more urgent.

On the one hand, the power of enterprises to break the defects of governance structure under the state-owned enterprise system is increasing day by day; on the other hand, the vertical integration that accelerates horse race enclosure, realizes horizontal integration and industry innovation, extends to the industrial chain upstream and downstream.

Since 2009, many of the listed companies' restructuring, restructuring, overall listing, mergers and acquisitions and other incidents have been realized. The reason behind this is the deepening of institutional reform and the acceleration of industrial integration.

In view of the capital market, retail companies often has sufficient power to release its earnings and frequent bull stocks.

Because of the historical development, China's retail enterprises mostly have the background of the old state-owned enterprise system. Many problems left by the state-owned enterprises such as the company's equity structure are not smooth, the management lacks incentive and redundant staff, which restrict the vitality of the company's performance release.

A detailed comparison of AH shares' retail companies's management capabilities and profitability shows that AH has little difference in gross margin, and A share companies even have more property advantages. However, because of the extremely poor cost control caused by redundant staff and horse racing leaks, there is a clear gap between them and the net profit rate of H-share companies.

Take the department store industry as an example, the net interest rate of domestic mainstream department stores in the mainstream market is only around 4%, while the average net interest rate of H-share companies is above 9%.

Although the defects in the governance structure of A shares are still normal for the formation of performance, once the institutional problems are solved, there will be great room for future profitability.

With the introduction of some opinions of the State Council on encouraging and guiding the healthy development of private investment in May 2010, the process of marketization of private enterprises and the retail industry has accelerated, and the proportion of management incentives has been raised. The shackles of many retail companies systems have begun to be removed.

Industrial integration and concentration increase is the inevitable path for the development of the retail industry.

After the opening of China's retail industry at the end of 2004, competition is becoming increasingly fierce.

The rapid growth of domestic and foreign retail enterprises was mainly due to extensive expansion, and the number of stores and operating areas increased significantly, especially in recent years, showing a clear trend of regionalization and extension to the two or three tier cities.

The scarcity of retail network resources determines that the scale effect can be quickly realized through acquisition and integration, and the advantage in the increasingly fierce competition becomes a means for the retail giant to build the national network layout.

Especially since 2009, this round of industry consolidation has speeded up significantly. With the integration of Shanghai (friendship merger and acquisition of Bailian), Beijing (Xidan's acquisition of new Yansha), Chongqing (heavy purchase of new century department store), Wuhan and other large state-owned retail platforms, as well as the integration of Anhui (100 other department stores in Wuhan), Fujian (Xinhua bought both Minnan small supermarkets) and Guangzhou (Huarun Wanjia acquisition of Hongcheng supermarket) and other areas, the retail enterprises with core competitiveness will be strong Heng Qiang.

Capital operation continues, industry drama continues.

Under the joint promotion of the two inevitable trends of institutional change and industry integration, the events of capital operation in the industry will occur frequently.

As of March 7th, the listed companies that had adopted the financing intention to be implemented through the shareholders' meeting included 9 Hefei department stores and Wangfujing. Besides, according to the investigation and tracking information, there were many companies that did not disclose the announcement but had strong financing expectations, such as big business shares, Nanjing China merchants, 100 contacts and so on.

Whether it is from the Finance Companies number or from the financing quota, it is possible to usher in the peak year of retail sector financing in 2011.

Not only that, but because of the large number of retail companies assets and the large shareholding ratio of the large shareholders, through the capital operation, a small amount of funds can be used to control retail companies with stable cash flow and huge hidden assets value. The retail industry has always been a target of industrial capital.

With the introduction of some opinions of the State Council on encouraging and guiding the healthy development of private investment in May 13, 2010, it is expected that many obstacles to industrial capital investment will be gradually relieved, and the explicit support for the development of trade and circulation will speed up the integration process of the retail industry.

A review is made of the performance of Listed Companies in the history of industry, where there are expectations or demands for capital operation. These companies often become bull stocks because of sufficient power to release their performance or good performance improvement expectations.

It is expected that the retail industry will continue to play a major role in the continuous expansion of industrial capital in 2011.