Appliance Retail Channels: Which Model Would Be More Attractive? - Gome Electrical Appliances, Best

< BR> According to the latest news, Best Buy announced plans to open in China from

7 to 12 new stores in the next five to ten years will open hundreds of new stores in China ... ...


4 24, the largest U.S.

Home Appliances

Retailer Best Buy (BestBuy) that opened in China this year from 7 to 12 new stores. A subsidiary of Best Buy Best Buy (BestBuy International) CEO Robert? Willet (RobertWillett), said the company planned for the next five to ten years in China to open hundreds of new stores.


Best Buy currently has six stores in Shanghai, Beijing 1, together with its wholly owned subsidiary?? Jiangsu

Five Star

[Three years ago, Best Buy acquired a 51% stake holdings gradually, to February 15 this year, already holds all the shares of five-star]'s 170 stores. Best Buy's new trend of course will not be home two of the largest home appliance retailers

Gome

And Suning Appliance ignored. In fact, Best Buy announced as early as before the expansion, China's home appliance retail industry in the ever-changing, the two market leading companies have begun to conduct their business model of reform.


GOME and Suning

Sell

Different model and Best Buy. For historical reasons, they used the store shops on the sale of each brand sold by suppliers directly employ staff, good in the division of exclusive sales in the region sell the brand product. The Best Buy is sold by its own staff of various brands of appliances.


But the game is changing. Such as online shopping networks flourish; 100 Best Buy shopping experience and customer focus more on

Service

, Staff expertise and more abundant. For the local giant home appliance chain, they increasingly need to offer price concessions in addition to creating more value for our customers.


On Best Buy announced its ambitious expansion plans soon, China's largest home appliance retail chain Gome president Chen Xiao chairman and the company's 2008 annual report said that the country focus of operations in the United States in 2009 will be selling shift to growth oriented profit-oriented.


The margin, 'two local boss' has not yet won. Best Buy in fiscal 2008 revenues in the United States is 40 billion U.S. dollars, gross profit was 9.5 billion U.S. dollars, its gross profit margin? Retail core indicators? Has nearly 24% of the country on behalf of the United States only a 9.8% gross margin, the actual gross margin ( including the fees paid by suppliers) are only 17%, 18% Suning.


Both Best Buy, Gome, Suning, or they have to fight is a huge and ever-growing home appliance and consumer market, which last year totaled about 120 billion U.S. dollars.


Rapid expansion


The late 80s, with the collapse of China's planned economy, China's leading appliance maker put tremendous resources to build market

Marketing

Channel, the result is that they must bear the high costs of establishing distribution networks. From 1993 to 2000 (in the electronics retail chain, before the rise), China's largest appliance maker, the average cost of sales ratio (the ratio of cost of sales and revenue) from 2.9% to 10.6%.

Gome and Suning
but by virtue of their logistics systems and scale advantages, gradually began to take control of their relationship with the manufacturer. From their own sales channels squeeze out excess costs, then the low pass to the customer, thereby speeding up the pace of expansion, particularly the expansion of cities in the country faster. The founder of Gome

Huang Guangyu

Through continuous acquisition to expand its sales network, close the end of 2008, the country has acquired the 27 United States and local retail chains.


Huge sales network has greatly enhanced the influence of appliance retailers. In 2005, a national magazine published in the "new wealth" will report on the home appliance chain strategy summed up as' class

Financial

'Approach, that manufacturers provide funding for the expansion of retailers. The article said, "Gome and Suning in cash transactions with customers, but deferred payment of 3-4 months to the suppliers of money ... ... so they can attract funds to expand the supplier its own sales network, and scroll all the way through for their own long-term use ... ... and they continue to improve their bargaining power of suppliers for further extension of the pay period.

by: gaga

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