A familiar sight on the Chinese physical retail urban landscape is changing hands as Nanjing’s Suning lets go of its loss-making chain of convenience stores; Suning Xiaodian.
The 5,000 branch chain has been acquired by Yunzhixiang (云之香).
Suning is much lauded as Nanjing’s biggest commercial, and non-government, success story. Well-known all over the country, but especially in Nanjing, the company has its fingers in just about every pie imaginable. Today, hardly a day goes by without chancing upon another Suning investment, launch or venture into hitherto-unchartered waters.
Starting life in 1996 as Suning Domestic Appliance, the now commercial behemoth has stamped its name on everything from appliances to online retail, hotels to supermarkets and football clubs. Recently, the firm obtained a controlling stake in Carrefour China, while most famously, in international circles at least, was the firm’s purchase of a majority share in Inter Milan in 2016.
So Suning knows a good thing when they see it.
Or do they? Suning Xiaodian (苏宁小店; Suning Little Shop) only opened its first branch, in Shanghai, last year. Despite their now-nationwide presence, the chain has yet to record a profit.
The most interesting part of the acquisition, and most revealing, however, is the fact that Yunzhixiang is controlled by Zhang Kangyang, son of Suning founder and chairman, Zhang Jindong.
Hence, there is obviously more to the acquisition than the mere offloading of a loss maker. A visit to any one of the stores reveals an on-the-surface formula that offers a variety of merchandise choices based on the core needs of users; fresh fruit and vegetables, hot foods, snacks and drinks. The stores are generally located beside large residential community complexes, offering convenience in speed of shopping for essentials during the working week.
On a deeper level, Suning Xiaodian’s model is more accurately physical store plus APP, one that achieves effective customer satisfaction and addresses daily needs through online and offline operations, together with intelligent logistics. Customers further benefit from the promise of a half-hour delivery service.
Given that Yunzhixiang is a Nanjing-based retail and technology services company, keeping the chain of convenience stores in the family, so to speak, might not be such a bad idea, after all.
