Yonghui reports 20.4% growth in 2019

Charles Chan
Senior Retail Analyst
@RetailAnalysis

Date : 06 May 2020

Yonghui has posted another strong set of annual results, with total revenue increasing 20.4% to CNY84.8bn (US$11.9bn) for the year ending 31 December 2019.

National coverage of China

Despite increasing competition and the market’s slowdown in growth, Yonghui continues to be the fastest growing bricks-and-mortar retailer in China. To maintain growth, it continues to develop innovative formats. In 2019, it focused on expanding in smaller formats, namely its new ‘Mini Store’ format, opening 573 new mini stores. The format covers 19 provinces, with the highest number of stores in Chongqing, Sichuan and Fujian.

Yonghui has presence in 24 provinces and coverage of first to sixth-tier cities. In 2019, it ended the fiscal year with 911 supermarkets with total operating area of approx. 7,300,000 sq m. This increased by 1,255,100 sq m compared with the same period last year. During the reporting period, 205 new stores were opened (including PARKnSHOP Yonghui, excluding mini stores, Yonghui Life, Super Species).

Private label remains a priority

Yonghui continues to develop its own brand strategy in line with market trends. In 2019, sales of private brands were CNY2bn (US$274.7m), up from CNY1.6bn (US$225.4m) compared to prior year. Of total sales of private brands, food sales and fresh food accounted for CNY1.3bn (US$183.2m) and CNY680m (US$95.8m), respectively.

Retail and supply partner, Daymon Worldwide, is creating own brand ranges for Yonghui, "home dinner", "school season" and "PB month". Yonghui has also partnered with Woolworths to sell the Australian retailers’ private label at its stores.

Offline and online integration

Yonghui posted online sales of CNY3.5bn (US$494.5m), an increase of 108% year-on-year, accounting for 4.4% of total revenue, an increase of 2% year-on-year. A key growth driver, Jingdong Daojia (JDDJ), connects 485 of the company's supermarkets offering on-demand grocery delivery. 155 more Yonghui Supermarkets were connected to JDDJ in 2019. While the retailer’s app, Yonghui Life, has reached 51.6m users.

At a store operational level, Yonghui is focused on activities that support category marketing, focusing on the promotion of new products and brand marketing. It is using big data to reach potential customers in a targeted manner, providing coupons in WeChat mini-programs.

Yonghui maintains 29.86% stake in Zhongbai

Yonghui had previously intended to increase its stake in Zhongbai to 40%. Following a board meeting, it decided to cancel acquisition plans and will maintain existing ownership share of 29.86%.

Key strategic priorities

  • Plan to open 130 supermarkets in 2020
  • Achieve 10bn online sales and add 10m APP registered users
  • The mini store segment, rapid adjustment and upgrading of old stores and the development and profitability of new stores
  • Set up a special management and control team to clearly define the responsibilities of "lead management", "special management" and "on-site management"
  • Invest further in online and offline integration and drive digital transformation of supply chain

2020 Q1 revenue up 31.6%

For the first three months of 2020, Yonghui continued to perform strongly. Total revenue increased 31.6% to CNY29.2bn (US$4.1bn) year-on-year. In March, Yonghui Life app's usage increased 56.9%.