GOME achieved strong earnings growth with business scale and quality upgrade in 2021

Advanced deployment of an integrated & centralized, interconnected and sharing and jointly developed omni-retail ecological sharing platform

GOME Retail Holdings Limited (HKG: 493) announced today its audited annual results for the twelve months ended 31 December 2021.

Closely following national policies to promote the strategic transformation of business and comprehensively implement the second phase of the “Home . Living” strategy

In early 2021, GOME officially launched the second phase of its “Home . Living” strategy, strengthening entertainment and social interaction, with six platforms complementing each other to create a closed-loop omni-retail ecosystem. In October 2021, GOME completed the construction of infrastructure for omni-retail ecological sharing platform covering “omni-scenario, omni-chain, omni-service and omni-mode”, thereby starting a new development phase at full speed. Relying on the establishment of six major platforms and other infrastructures, GOME has developed a strategic path and layout from a single electrical appliance chain to a full-category operation covering the “Home . Living” sector, built a digital and physical economy platform that integrates online and offline operations, and become a model enterprise for promoting the transformation and upgrading to a digital economy in China. To carry out in-depth development in the “Home . Living” sector, GOME established three major core capabilities and competitive barriers. Firstly, it has initially built a grid-based and digital economic entity with nationwide coverage which is constantly expanding and booming. Secondly, it has created an integrated model of scenario-based and household-based consumption, and transformed traditional consumers into consumption-oriented merchants through new models such as entertainment marketing, sharing and joint development, thereby building a closed-loop omni-retail ecosystem. Thirdly, the scope of services has been fully extended to the home scenario, forming an integrated service platform with both online and offline operations as well as supply chain capabilities, integration capabilities and service capabilities.

Against the backdrop of creating a new development dynamic of “Dual Circulation”, the national economy has transformed into high-quality development. On one hand, policies will be introduced to revitalize the supply side, emphasize technological innovation and promote industrial upgrading; on the other hand, policies also need to be introduced to promote the upgrade of consumption to match the industrial upgrade. The recovery of consumption will become the main driving force to support long-term economic growth in the future and is also the foundation for the country to achieve long-term stable growth. GOME closely followed the national strategy and policy direction, actively promoted and realized the successful transformation of its strategy, and achieved leap-forward development of its business. During the Reporting Period, GOME’s sales revenue was approximately RMB46,484 million, increased by 5.4% year on year (“yoy”). The consolidated gross profit margin was approximately 14.4%, increased by 2.2 percentage points yoy. During the Reporting Period, the positive annual inflow has been recorded. The loss attributable to owners of the parent during the Reporting Period was approximately RMB 4,400 million, decreased by 37.1 % yoy.

During the Reporting Period, GOME’s gross merchandise volume (“GMV”) grew by 30.4% yoy to approximately RMB14,687 million. Relying on the entertainment and social “FUN” App, the main trading platform was formed and recorded annual visits of 440 million, representing an increase of 196% yoy. The number of annual active buyers was 16.84 million, representing an increase of 433% yoy while the number of full category SKUs reached 2 million, of which home appliances SKUs were over 0.1 million. The number of merchants on the platform reached 6,081, representing an increase of 728% yoy. Together with the number of members grew by 19% yoy to 250 million, all is showing a good development trend in both the number of consumers and the ecosystem of business partners.

In 2021, GOME continued to stick to its vision of “Better home and lifestyle through GOME” and pursued the mission to meet Chinese family’ demand for a beautiful life in a new era. It focused on the retail industry and household service industry, made every effort to build an “omni-retail ecological sharing platform” integrated with “online, offline, supply chain, logistics, big data/cloud, sharing and joint development”, and fully implemented the second phase of the “Home . Living” strategy, which laid a foundation and opened a new prospect for GOME to comprehensively upgrade and achieve high-quality development. Leveraging on its extensive retail gene, considering the economic and social functions of retail, and with the mission to promote the retail industry to reduce costs, improve efficiency and increase value, GOME is now rapidly developing into an “integrated & centralized”, “interconnected” and “sharing and jointly developed” omni-retail ecological sharing platform. Currently, the core model and key modules of omni-retail have been constructed, which will increasingly strengthen the synergy effects and achieve more results.

Services extended from stores while online and offline have interacted
GOME developed an omni-scenario new retail ecology with the integration of online and offline platforms, in which online and offline platforms have their own emphases and are interconnected. Under the omni-retail model, GOME achieved true O2O integration development through comprehensively activating urban physical commerce, which is an advanced retail solution for the integration of the digital economy and the physical economy and makes GOME to become a standard-setter for offline platforms.

Through precise positioning and one year of promotion, GOME’s existing stores have been gradually upgraded from home appliance stores to new types of stores for display and experience. The offline platform – “GOME Home” has been transformed into a platform covering core functions such as display and experience, home extension, home entertainment and home living services, highlighting the core value of people, products and places. GOME focused on taking advantage of its professional stores to display high-quality products and highlight local lifestyle services, and made a grid-based national layout to continuously optimize the standard for “genuine products provided by selected merchants” and accumulate quality users. In addition, GOME outlets of the new model (including GOME Home) have 35 contracted projects and 70 projects to be contracted, with a management area of approximately 1 million square meters. Among which, the number of the signed new model stores accounted for 95% of the total. GOME Home’s benchmark showrooms will also be completed for construction and operated in 2022.

The online platform – “FUN” APP focused on the advantages of displaying of the full range of products and full-service response and drove online and offline sales through rapid growth in visitor traffic and live streaming with brands, creating a new chapter for the retail industry. During the Reporting Period, the average monthly active users (MAU) of the “FUN” APP reached approximately 42.44 million, with a conversion rate of 3.8%, representing an increase of 1.7 percentage points yoy. With the continuous deepening integration and interconnection of the six platforms managed by GOME, it is expected that the “FUN” platform will achieve significant development in 2022. Leverage over 5,000 selected stores and over 100,000 genuine products are expected to be newly added, coupled with the online video shopping guide model realized a 40% conversion rate, the significant growth of omnichannel GMV is expected to achieved in 2022, these should enable GOME to comprehensively expand in the new retail era.

Creating a super supply chain for “household consumption” covering all categories based on the “Home . Living” strategy and the characteristics of household consumption

As a Company with deep-rooted retail gene, GOME has been deeply involved in the supply chain for many years. The supply chain of GOME has been upgraded from electrical appliances to all categories, with the aim of creating a super supply chain for “household consumption” based on the “Home . Living” strategy and the characteristics of household consumption. Through linkage optimization, improving product competitiveness and strengthening supply price management, as of February, the GOME retail platform has accumulated nearly 2 million SKUs and attracted over 2,000 KOL/KOC, 4,200 manufacturers and 6,000 channel traders. The supply chain covers categories such as home appliances, food and wine, apparel, shoes and bags, home renovation, daily necessities, maternity and baby products, beauty and personal care, etc. By offering a wide range of products, GOME can better meet the needs of household users.

Self-developed warehousing and distribution logistics boost warehousing network expansion to achieve comprehensive logistics solutions

GOME’s logistics platform is a third-party logistics solution platform, committed to providing the society with professional logistics of the full range of products, as well as providing quality services for the entire society, maintaining a dominant position in the field of home delivery of bulky and medium-sized products in urban areas. Currently, GOME’s self-developed logistics system, Anxun Logistics, realizes the logistics of goods covering small, medium and large-sized items and improves operational efficiency through platform standardization and agglomeration effects, while the third-party logistics business accounted for more than 48% in terms of volume. With logistics services open to the public, a new revenue growth driver is expected to be created. GOME has built a platform for the integration and collaboration of information flow, logistics and capital flow in the upstream and downstream of the supply chain to bridge the gap between the supply and sales. In the future, GOME will work together with industry partners to jointly promote the continuous optimization of the supply chain. Through deepening the distribution network, expanding logistics products and platforms horizontally, and extending the upstream services of the industry chain vertically, together with relying on the existing outlet distribution system, it can improve the network layout of express transportation and cold chain, build an open and shared platform of order taking, cloud-based warehouse and online delivery platform, and provide comprehensive supply chain logistics solutions based on the knowledge of business flow and warehouse transportation and distribution capabilities to contribute to the high-quality development of the entire retail industry.

The model of the digitalized physical economy jointly builds and shares data resources to lead strategic partners to achieve win-win cooperation and mutual development

The favorable hardware resources and the optimization of software make a contribution to GOME’s current leadership position in the retail industry. GOME pioneered to propose the innovative model of sharing and joint development and has completed the construction of the supply chain platform and the traffic platform to integrate online data resources. During the Reporting Period, the sharing and joint development platform has integrated and fully opened GOME’s own and its partners’ resources and capabilities, such as scenario/traffic + supply chain + promotion + operation by the third party. By opening and sharing its professional retail resources to external partners online, including membership interconnection, data sharing and bonus points exchange, GOME will share and jointly build infrastructure, system resources and supporting services with manufacturers, promoters, agent operators and other parties. Through the open-up and the integration of the resources and capabilities of various partners, GOME helps the enterprises to achieve a long-term balance between its commercial interests and social benefits while enabling GOME to become a platform for the aggregation of socialized omni-retail resources and the distribution and sharing of all-area digital intelligence to further expand its transaction scale. These advancements have contributed to the overall increase in GOME’s scale. In the future, the six platforms will continue to optimize and upgrade, empowering GOME, users and merchants to achieve win-win cooperation and mutual development.

GOME’s management concluded, “Against the backdrop of technology-driven and consumption upgrade, GOME has seized the momentum to formally put forward its ‘omni-retail ecological sharing platform’ strategy. Looking ahead, GOME will continue to adhere to the new development concept of omni-retail ecology, solve the pain points and difficulties of the traditional retail industry, adopt an open attitude to embrace ecological partners, use entertainment and social platforms to attract consumers, and continue to optimize the standard of “genuine products provided by selected merchants” by serving the public with professional store displays. With users as the core and service as the goal, GOME will open up the whole chain, integrate omni-scenario and construct omni-model to create a new chapter for the retail industry. This year, we will continue to uphold the Group’s mission of ‘enhancing efficiency with technology and creating better living with wisdom’ and the open sharing concept of ‘integration, coexistence, interaction and mutual complementarity’, return the trust and support of all parties with practical achievements and bring you a new GOME that is even better and more valuable.”

About GOME Retail Holdings Limited

Founded in China in 1987, GOME Retail Holdings Limited has been listed on the Hong Kong Stock Exchange since July 2004 (stock code: 493) and is a leading technology-driven, experience-based, entertainment-oriented and socialized “Home . Living” technology retail service, provider. Under the guidance of the second phase of its “Home . Living” strategy, GOME promotes online and offline integration with Internet technology, supports existing business growth with a strong supply chain, introduces new business with new scenarios, develops a post-service market with the Internet of Things technology, drives the refined operation of stores with big data, enhances market competitiveness through network optimization, and raises the retail competitive barrier with strong service capability, and makes all-round efforts to transform from an appliance retailer to a provider of comprehensive home living solutions. GOME will continue to make use of technology and wisdom to create “authenticity”, “speed” and “joy”, and establish one of the most popular platforms for enjoyable selling and buying with sharing.

Please visit our website for more information: www.gome.com.hk