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Liqun Department Store IPO: Cross Regional Business Risks, Market Competition Intensified

2014/8/1 19:01:00 31

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Liqun Department Store Cross Region Operation Storage Risk Market Competition Aggravate

although the company is mainly engaged in retail chain operation of department stores, supermarkets and electrical appliances, the demand for food and beverage, daily necessities and other commodities in department stores and clothing stores and supermarkets is relatively rigid, and the price elasticity is relatively small, which is less affected by the cyclical fluctuation of Macro-economy. However, if the economic downturn occurs, the consumption expenditure of the residents will decrease or the consumption structure will change, which will adversely affect the company's business, thereby affecting the company's business performance. 
 1, market risk 
 (1) market competition risk 
 the main business of the company is retail chain operation of department stores, supermarkets and electrical appliances. The main competitors are comprehensive department stores, large supermarkets and electrical appliance stores in the area where they operate. In recent years, with the continuous development of China's economy, the level of urbanization has been greatly improved, and the development of regional commercial enterprises has been developing rapidly. With the gradual liberalization of foreign retail enterprises entering the Chinese market, large foreign retail enterprises have entered the Chinese market, relying on mature operation mode and advanced management concepts to seize market share, and have a great impact on local retail enterprises. 
 the company's retail stores are mainly located in Qingdao and the surrounding Shandong peninsula. The main competitors include WAL-MART, Carrefour, big RFA, AEON and other international well-known retail chain enterprises, including regional chain shopping malls, such as Ginza shares in Shandong Province, Yantai Zhen Hua, Jia Jia Yue, and Qingdao's urban customers. In view of the above situation, the company has made advance layout through cross regional expansion and existing store decoration and upgrading, so as to effectively cope with market competition. However, if the industry competition is further intensified in the future, the company's profitability and market share will probably have a downward risk. 
 strong > (two) the risk of macroeconomic fluctuation on market demand is less than /strong > /p >
 macroeconomic fluctuations will affect the GDP, disposable income and annual consumption expenditure of a country, and affect the consumption demand of the retail market. Therefore, the retail industry is more vulnerable to macroeconomic fluctuations. In recent years, China's GDP and other important economic indicators have maintained a relatively fast development trend. However, under the influence of the global economic downturn, the pressure of China's future economic development is gradually emerging, and the uncertainty of the future economic trend is increasing. 
 although the company is mainly engaged in retail chain operation of department stores, supermarkets and electrical appliances, the demand for food and beverage, daily necessities and other commodities in department stores and clothing stores and supermarkets is relatively rigid, and the price elasticity is relatively small, which is less affected by the cyclical fluctuation of Macro-economy. However, if the economic downturn occurs, the consumption expenditure of the residents will decrease or the consumption structure will change, which will adversely affect the company's business, thereby affecting the company's business performance. 
 (three) the risk of emerging business format 
 in recent years, with the continuous progress of science and technology and the rapid development of the Internet, e-commerce and other virtual retail channels have been increasingly welcomed by consumers in recent years. For consumers, the convenience and convenience of online shopping search products save consumers a lot of time. For producers and retailers, online shopping reduces transaction links and broadens sales channels, so online shopping has become a new developing retail format in recent years. The rapid development of e-commerce has occupied some market share of traditional retail channels, and has a certain impact on the retail chain enterprises including the company. 
 the essence of commercial retail activities is to earn as much as possible the difference between sales and sales. At the same time, the profit margins of consumer goods have been continuously compressed. How to integrate the supply chain efficiently becomes an important factor for the retail enterprises to win the market competition. The emergence of e-commerce is a major innovation in the sales channel, rather than a significant change in the sales mode. Large commercial chain enterprises, including companies, have fully integrated and strengthened the supply chain with the help of good supplier resources and strong scale advantages over the years. By improving the shopping environment, increasing shopping comfort and enhancing customer perception, they can effectively cope with the competition of new business formats such as e-commerce. At the same time, the company uses the popularity, reputation and customer loyalty of the group to expand the e-commerce business of its own brand "Liqun shopping mall", and effectively reduce risks through the combination of online and offline sales. In recent years, the rising cost of resources and labor has led to a gradual increase in the production cost of consumer goods, and the fierce market competition environment has hindered the retail price of commodities. Although the company has formulated a more detailed development plan for the development of the new business in the coming years, but if the future e-commerce continues to maintain a high speed of development, it may have a certain impact on the company's market share and business performance. 
 (four) the risk of seasonal fluctuation is less than /strong > /p >
 there is a seasonal fluctuation in the sales revenue of the domestic retail industry. According to the industry characteristics and operating data in the company's reporting period, sales revenue is relatively high in the first quarter and fourth quarter of the year, due to the impact of holidays and festivals such as new year's day, Spring Festival, national day and so on. The sales revenue in the two or three quarter is relatively low. In addition, there are seasonal consumption of clothing, shoes and hats, supermarket dumplings, moon cakes, electrical appliances, air conditioners, fans and so on. To some extent, seasonal fluctuations affect customer's consumption behavior and company's inventory arrangement, and have a certain impact on the company's business performance. 
 (five) the risk of fluctuation in performance caused by other business income changes 
 other business income mainly accounts for company's service charge, management fee and rental fee. In 2012 and 2013, the proportion of other business income to main business revenue was 3.53% and 3.62% respectively. If further adjustment of the business policies of the future countries may lead to such income reduction, although the major companies in the retail industry will raise the gross margin to reduce the decrease in other business income by adjusting the deduction ratio and the difference in the selling price, in order to maintain their own profit level, it may still cause the risk of performance fluctuation. 
 two, business risk 
 (1) store location risk 
 the development of retail enterprises needs to rely on the improvement of the management level of existing stores, and the improvement of the shopping environment to achieve endogenous growth. However, when regional competition is fierce and the market tends to be saturated, enterprises usually need to set up new stores to achieve exogenous growth. Location selection plays a very important role in the company's extension and expansion. It not only needs to analyze the market environment, competitors, but also consider local consumption habits, brand awareness and many other factors. If the company misplaces or does not have the ideal location to open a store, the expansion speed will slow down, and even will have a negative impact on the company's future performance. 
P, a company engaged in retail business for many years, has rich market experience and location experience. The company has strict standards for site selection, feasibility study and demonstration. For example, this fund-raising fund is invested in new stores in Nanjing and Lianyungang areas of Jimo, Laixi, Pingdu and Jiangsu, Qingdao. The fund-raising investment projects are strictly selected by the company and passed by the board of directors and shareholders' meetings. Although the company's location criteria are strict, if the location fails to achieve good results, it will not only achieve the target market positioning, but also bring greater business risks. 
 (two) centralized business risk 
 as of the date of signing the prospectus, the company has 42 stores all located in 7 cities in Shandong Province, most of which are located in Qingdao and Shandong peninsula. Among them, there are 28 stores in Qingdao, accounting for 66.67% of the total number of stores in the company. The operating area of the company in Qingdao area is about 570 thousand and 800 square meters, accounting for 54.67% of the total operating area of the company. In 2013, 2012 and 2011, the main business income in Qingdao accounted for 80.06%, 79.17% and 77.54% of the company's main business revenue, respectively. Although the company will expand the risk of centralization through cross regional expansion in the future, if there are significant changes in the retail market environment, residents' disposable income, consumption habits and urban planning in Qingdao, they will have a greater impact on the business development of the company. 
 (three < a href= "http:// http://sjfzxm.com/news/index_s.asp >") commercial < /a > property lease risk /p >
 as of the signing date of the prospectus, 31 or 42 of the total property of the company is operated by lease. The operating property area of the company is about 679 thousand and 200 square meters, accounting for 65.05% of the total operating area of the company. Most of the property contracts signed by the company are signed earlier, the lease is longer and the rent is lower. In addition, the company has gained a lot of trust and support from consumers in Shandong area with its strong popularity, reputation and customer loyalty. It can ensure the smooth implementation of the lease and help to lock down the rental cost. In addition, the company has 11 ownership of the property, and its own property area accounts for about 34.95% of the total operating area. However, in recent years, the price of real estate leasing, including commercial property, has continued to rise. If the lease term expires or the company opens a new store through leasing, the company will face the risk of a substantial increase in rents and a substantial increase in costs. 
 (four) part of the property right risk of commercial and logistics operation property 
 as of the signing date of the prospectus, the company has 42 stores and 3 logistics centers. Among them, Fuxing Xiang distribution is located in the Hefei road of Shibei District, and the property of the Jiaonan road has not yet obtained all the housing ownership certificates. In addition, the property located in Renmin Road of Jiaonan commercial sub branch is handling the relevant procedures of land transfer and transfer of real estate. 
 at present, the company leases operating property area of about 679 thousand and 200 square meters. In addition to underground civil air defense works, there are 9 premises where rental property is mortgaged before being rented, or no rental certificate has been provided due to the reason of the lessor, and 7 of the lessor has confirmed in the lease contract. The lessor is responsible for the loss caused by the lessor's reason to the Party B or third during the lease term. However, the above reasons may still cause the company and the controlling shareholder to continue to lease the property under the lease contract or to be punished or liable for compensation. In addition to underground civil air defense works, the company has not handled the property registration area of 172 thousand and 600 square meters, accounting for 14.68% of the total operating area of the company. 
 > a href= "http:// http://sjfzxm.com/news/index_s.asp >" although most of the above stores have been in operation for many years, they have not been affected by the problems of property rights and lease defects. However, in order to ensure that the above property will not have a significant impact on the future operation of the company, the company will further urge the lessor to improve the housing property rights procedures and solve the problem of property rights defects. On the other hand, the company will actively seek and select suitable and alternative commercial property, further reduce the proportion of the operating area of the defective property stores to the total business area of the company, so as to effectively reduce the adverse effects of property rights defects on the company's business performance. 
 > in addition, < a href= "http:// http://sjfzxm.com/news/index_s.asp >" company /a /a > the largest shareholder, Liqun group undertakes that if the company and its controlling subsidiary fail to continue to lease the premises due to the defects in the ownership of the rental housing, they may not be able to continue to lease the houses in such areas, or fail to find suitable alternative legal offices in time in the relevant areas, or if the company and the controlling shareholder are punished by the real estate management department because the housing fails to fulfill the rental registration procedures, Liqun group will be responsible for the losses caused by the operation and financial status of the company and the controlling shareholder, so as to ensure that the company is not subject to loss. 
 (five) cross regional business risk 
 at present, the main stores are located in the Shandong peninsula area of Qingdao and the surrounding areas. They understand the shopping environment and consumption habits of Shandong Peninsula, and have a strong scale advantage. In the future, the company will raise funds to cross regional development, including entering the Jiangsu market and setting up new stores in Nanjing and Lianyungang. Due to the large differences in regional consumption habits and market environment in China's retail industry, how to successfully achieve brand investment in the process of cross regional operation and expand the influence of Liqun brand in Jiangsu area through marketing and a series of measures, will form certain opportunities and challenges for the future development of the company. When a company enters a new area to set up a store, the profit time may be longer than that of the mature market. If the cross regional operation fails to achieve the expected revenue, it will have an impact on the company's business performance. In addition, the cross regional development of the company will put forward higher requirements for the comprehensive utilization of supplier resources and possible cross regional logistics and distribution. If the company can not make full use of the existing resources or adjust its business strategy according to the actual situation, it will face the risk of cross regional operation control and management. 
 (six) the risk of selling unqualified goods is less than /p.
 according to the 122nd provision of the general principles of civil law of the people's Republic of China promulgated in 1986, the product manufacturer and seller shall bear civil liability in accordance with the law. If a company sells a product with unqualified quality, it will bear the corresponding responsibility. Although most suppliers who cooperate with the company will provide guarantee for product quality or compensation, the company can not guarantee that the supplier will make full compensation for the customer, nor can it guarantee that the company can make full claim to the supplier to compensate for the loss after the compensation has been made to the customer. In addition, it is difficult for the company to avoid the quality problems of some products in the sales process, and affect the consumers' trust and dependence on the group brand, which has a negative impact on the company's business performance and sustainable development. 
 (seven) safe operation risk 
 as a famous retail chain enterprise, the company has more retail stores and rich commodities for consumers to choose. The company needs to face large consumer groups in its daily operation, and during the holidays, the passenger flow will increase significantly, so the safety operation and emergency handling capability of emergencies are particularly important. Although no major safety incidents have occurred since the establishment of the company, and the safety operation has always been taken as a top priority, a more comprehensive safety management system has been formulated and relevant insurance has been purchased. However, if a sudden safety incident occurs, it will have a negative impact on the company's brand and store operation.