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After Beijing SKP surpassed Britain's Harrods to become the world's "king of stores" in 2020, it set a "record" of annual single-store revenue exceeding 24 billion yuan for two consecutive years in 2022 and 2023.

On July 26, SKP officially opened its new store in Wuhan. This is the fourth branch of SKP after Beijing, Xi'an and Chengdu. The expansion of this top enterprise in the industry has brought a long-lost hot topic to the domestic retail department store industry, which was originally considered to be relatively quiet.

According to incomplete statistics from China Business News, at least five large-scale shopping malls have opened or are in trial operation recently: in addition to the above-mentioned SKP Wuhan store, large shopping centers such as Shenzhen’s second Coast City, Guiyang’s first MixC, and Foshan’s Jinbo Center have appeared one after another, indicating that the vitality of the retail industry is gradually recovering.

Mixed earnings forecast

With the release of the 2024 semi-annual performance forecast, the performance of the domestic retail industry has shown a clear polarization. Wind data shows that among the 29 retail stocks, 12 are expected to increase their performance in the first half of the year, accounting for nearly 40%; however, there are also a large number of companies with losses and declining performance, 11 and 6 respectively.

In this wave of earnings forecasts, Baida Group (600865.SH) performed well in the entire sector with an expected net profit of 50 million to 70 million yuan in the first half of the year and a year-on-year growth rate of 141.77% to 238.47%. However, it should be noted that the company's excellent performance is attributed to non-recurring gains brought about by changes in fair value in the secondary market.

Although the retail industry as a whole still feels the chill brought by the macroeconomic environment, some companies have found opportunities in adversity. For example, companies such as Xiangyi Rongtong (600830.SH) and Nanning Department Store (600712.SH) have also shown strong growth through strategic adjustments and cost control.

However, listed companies such as Guofang Group (601086.SH), Dalian Friendship (000679.SZ), Ningbo Zhongbai (600857.SH), and *ST Bugao (002251.SZ) are still facing the dual pressure of relatively large sales decline and performance losses due to macroeconomic fluctuations and industry-specific factors.

Industry innovation and breakthrough

Dongxing Securities analysis pointed out that although the total retail sales of consumer goods maintained steady growth in the first half of 2024, there is still a lot of room for recovery in consumer demand, indicating that the road to recovery in the retail industry is still continuing. In a complex market environment, the retail industry is actively exploring new ways out.

Zhou Jianjun, secretary of the board of directors of Hualian Shares (000882.SZ), said in an interview with Caixin that as an important part of the real economy, traditional commercial enterprises undertake the basic function of meeting people's living needs. Physical commerce represented by department stores must accelerate transformation to adapt to the new market trends under the impact of e-commerce. Traditional commercial enterprises need to accelerate innovation and transformation in order to break through. Therefore, it is of great significance to explore how traditional commercial enterprises can reconstruct the value creation path and enhance their market competitiveness under the new situation, which is of great significance to building a modern industrial system and promoting high-quality economic development.

China Business News noted that in the supermarket sector, some retail companies have recently introduced excellent external management experience, such as *ST Bugao, Yonghui Supermarket (601933.SH), and Zhongbai Warehouse Supermarket, which introduced the "Pang Donglai" management model. From the current perspective, they have all achieved good operating results.

"Retail listed companies have been continuously optimizing their business models and management strategies through adjustments and reforms to adapt to market changes." Zhou Jianjun said that the company recently announced that it plans to acquire all the shares of Beijing Hualian Better Life Department Store Co., Ltd., a subsidiary of SKP. This move aims to learn from the unique business model of DT51, a community-based fashion boutique department store operated by SKP in Beijing, and deepen customer experience and optimize supply chain management around the three elements of people, goods and venues. Through continuous transformation and optimization, the transformation of the retail industry can adapt to consumer needs."

Many investment analysts believe that although the performance of listed companies in the retail industry in the first half of 2024 is differentiated, overall, the "cold" has not dissipated, but through active strategic adjustments and innovative attempts, many companies are looking for new growth points in order to occupy a favorable position in the future market structure. "These are all very positive signals."