Hit hard by the pandemic and facing fierce competition brought by e-commerce competitors, traditional supermarkets will need to adapt their operating models to keep a seat at the table.
Chinese supermarket chain Yonghui Superstores (Chinese: 永辉超市, SH:601933) released its 2022 Earnings Preannouncement on January 31, 2023.
The company estimated a net loss of CNY 2.74 billion (USD 406 million) in 2022, a decrease of CNY 1.20 billion compared to the same period in the previous year. With non-recurring gains and losses excluded, the net loss is estimated to be CNY 2.40 billion, a decrease of CNY 1.44 billion compared to the figure recorded in 2021.
With a strategic focus on building a "customer-centric omnichannel digital retail platform", Yonghui Superstores invested around CNY 700 million in technology and saw 21% growth in online sales in 2022.
In the preannouncement, the company explained the reasons behind the losses, stating that offline shopping in major cities was affected due to the COVID-19 pandemic, and a number of stores suspended operations in 2022. Besides, the trading price of its financial assets in the secondary market dropped significantly and it recorded a fair loss of CNY 640 million in 2022.
Yonghui Superstores was founded in 2001 and became one of the leading supermarket chains in China. Its net profit plunged for the first time in 2018 and its revenues started the first decline in 2021.
According to a survey conducted by China Chain-Store & Franchise Association, 81.4% of the sampled supermarkets saw a decline in store traffic in 2022 and 82.9% of the companies found growth in online sales.