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author: yang mei

source: business figures

when it comes to gambling, hubei native ye guofu stands out this time.

ye guofu is the founder of the "10 yuan store" miniso. at a time when survival is king, eight days ago he spent 6.27 billion yuan to acquire 29.4% of yonghui supermarket's shares, becoming the largest shareholder of yonghui. not to mention that yonghui supermarket has suffered a huge loss of 8 billion in the past three years and has been closing stores to survive. in terms of their respective sizes and scales, ye guofu's move can be regarded as a big gamble.

the financial report shows that as of the end of june, miniso’s cash balance was 6.233 billion yuan.this means that in order to reach this deal, ye guofu used most of his chips.in terms of revenue, in 2023, yonghui’s revenue will be nearly 80 billion, while miniso’s revenue will only be 15.2 billion. no matter from which level, it can be called a snake swallowing an elephant.

the capital market was not optimistic about this transaction. after the acquisition plan was announced, miniso’s share prices in hong kong and us stocks plummeted. however, ye guofu responded to the doubts from the outside world in a "domineering" manner.

to summarize ye guofu’s recent speech, there are four main reasons why he is optimistic about this investment: one is betting that yonghui will be successful in the reform; the other is that it is bargain hunting and has financial investment value; the other is optimistic about yonghui supermarket’s channel value and supply chain synergy advantages; the other is confident in minso’s own brand experience, thinking that he can assist yonghui in developing its own products.

first, from the perspective of low investment cost premium, this statement seems to be valid. yonghui's historical highest stock price is 11.89 yuan. ye guofu's current trading price is 2.35 yuan/share, which can be regarded as bargain hunting. and thanks to multiple favorable policies, a-shares and hong kong stocks are soaring. currently, yonghui supermarket’s share price has risen to 3.63 yuan, 154% higher than ye guofu’s trading price, and its market value has also skyrocketed by 12.5 billion compared with 8 days ago. after all, in seven days, ye guofu's book wealth increased by more than 3 billion due to this transaction.

in addition, zhang jingjing, chief financial officer of miniso, explained that although miniso has less than 7 billion in cash on its books, it has little debt, with interest-bearing liabilities of only 6.4 million yuan. it can achieve this through low-cost financing from banks. the transaction does not affect the cash flow health of miniso itself.

yonghui's channel value and the collaborative integration of both parties in the supply chain can also be explained. at the channel level, yonghui occupies many good positions across the country and has certain brand influence in the commercial real estate circle. if the two jointly open stores, it can indeed help miniso win a better business district position; at the supply chain level, yonghui, which specializes in fresh food, and miniso, which specializes in daily household items, can theoretically complement each other's product puzzles.

assistance in the development of private brands is because most of yonghui's products are third-party brands. ye guofu believes that assisting it in developing its own brand can help it increase its gross profit margin.

but listen carefully, none of the above are the key reasons for ye guofu's stud performance. the fundamental reason why he bet a huge amount of money to win yonghui is actually because he is optimistic about yonghui after fat donglai's explosive transformation. the big bet is actually on the future of yonghui after the adjustment. what lies behind this is ye guofu's commercial imagination for the retail business.

ye guofu has always been "crazy" about how to do retail. ye guofu was forced to drop out of school at the age of 19 and started a business selling trinkets at the age of 27. in 2013, he founded miniso and has since reached the peak of his career and wealth. he has been in the retail industry for twenty years. being able to speak out and being good at marketing are his major attributes. especially regarding the term "new retail", ye guofu has always been a high-profile dissenter.

the concept of "new retail" was first proposed by jack ma at the yunqi conference in 2016. at that time, jack ma believed that there would be no distinction between online and offline in the future, and traditional e-commerce would also be replaced by new retail in the future. subsequently, major internet companies launched a rallying call for the offline retail market. alibaba launched hema and bought rt-mart, jd.com continued to increase its holdings in yonghui supermarket, and suning proposed "smart retail."

but as an offline veteran, ye guofu has always been unconvinced. he has criticized jack ma many times. in 2016, he took over the front pages of guangzhou daily and 21st century business herald. he called himself "guangzhou afu" and called "hangzhou lao ma". he once said, "e-commerce has replaced physical retail. the cruel words "it's just a fool's dream" spoke ill of alibaba's transformation of rt-mart.

combing ye guofu's speech, we can find that he currently has two distinct views on the retail industry: one is that it is not that offline retail is not good, but that there are problems with traditional retail and traditional supermarket business models; the other is that there are only two future retail options. road, either low-price retail or specialty retail.

he believes that sam’s club, costco and miniso are all specialty retail stores, and they are all doing well. the fundamental reason why traditional hypermarkets such as yonghui and rt-mart are in decline is that they are far away from the real needs of consumers in terms of products, services and shopping experience. they are only obsessed with making quick money and are divorced from the essence of retail.

the topic returns to yonghui supermarket. a large part of the reason why yonghui's performance has continued to decline in recent years is the impact of new shopping methods such as fresh food e-commerce and instant retail. yonghui's fresh food business accounts for more than 40% of its revenue. the rise of fresh food e-commerce platforms has largely eroded yonghui's market in this field and formed strong competition for it. according to the 2023 annual report, yonghui is also actively undergoing online transformation and cooperating with third-party e-commerce platforms, but online business only accounts for about 20% of overall revenue.

fat donglai’s radical changes to yonghui actually bypassed online and focused on creating differentiated competition offline. for example, a large number of original products have been eliminated and removed from the shelves, and popular internet celebrity products from fat donglai have been introduced; temporary rest areas, direct drinking water dispensers, hand washing stations, etc. have been added for services. in other words, it is to transform yonghui, a traditional supermarket that originally followed the channel + brand route, into a new field that can provide "emotional value" and take the path of offline high-quality service experience.

this coincides with ye guofu's vision of the future of the retail industry. it is this transformation direction of offline retail that ye guofu is betting on.

"it's okay if you don't understand", "i will never do anything wrong in retail"... ye guofu has made a lot of rhetoric to the outside world these days.just to make a joke, he confessed that fat dong lai, gambled heavily on yonghui, and confidently opened the microphone. to a certain extent, he actually couldn't let go of jack ma and the battle between online and offline retail back then. he was still unconvinced.

however, it is not easy to put the direction in the right direction and put it into practice. especially the transformation of yonghui, which is huge in size and personnel, cannot be easily completed in a short time. moreover, in terms of business model, miniso focuses on franchising and follows an asset-light, low-risk route, while yonghui operates a self-operated model and focuses on large stores, so offline costs cannot be underestimated. even with ye guofu's rich retail experience, it is still difficult to turn the elephant around.

what awaits ye guofu is a tough battle.