Gome 2013 to Establish 50 Superstores in First-Tier Cities
Tencent Tech, 3/29/13
At a signing event today for a new memorandum of understanding between Chinese home appliance and consumer electronics retailer Gome (0493.HK) and Microsoft for efforts to promote the adoption of licensed software, Gome said that it will set up more than "Microsoft Product Experience Zones" in its offline stores. Gome also announced its 2013 3C strategy:
1) Superstores: Gome will set up 50 "Superstores" in first-tier cities around China this year, both through upgrades to store decor and through expanded product offerings. Gome will also attempt to quickly ramp up offerings of major brands and new products in its nearly 700 stores in second-tier cities.
2) Inventory management: Gome will step up inventory management efforts, and will promote sales-based management models such as one-week order/settlement periods.
3) Increasing product display numbers: Gome will reorganize display product offerings on the basis of store levels, with the largest stores having more than 500 models of notebook computer on display, and stores around the country having a total of more than 70,000 unit models on display.
4) Increasing peripheral and accessory sales for one-stop shopping services: In late 2012, Gome established an accessory management system comprising a dedicated management team, partnerships with nearly 100 providers of top-tier accessory and peripheral brands, and nearly 1,500 peripheral and accessory markets to provide Gome customers with a rich range of high-quality hardware and software products to choose from.
Over the coming three years, Gome plans to develop a unique 3C development model that will see the company developing partnerships at all links of the industry chain. In particular, Gome will use a new ERP system for seamless information connections with 3C industry partners, enabling the following transitions:
1) A "Superstore" policy in first-tier cities: Gome will continue to upgrade and optimize its major stores, and will work to ensure a rich selection of products to choose from.
2) Expanding second-tier markets: Gome will connect its first- and second-tier city supply chains, and will step up efforts to build logistics centers and after-sales service points in second-tier markets, and will use major "central" stores to drive the development of "satellite" stores in the same region as a means of promoting faster growth in second-tier markets and boosting Gome's market share. Gome will also restructure its product structures and logistics systems in second-tier markets in order to better accommodate varying customer demands, enrich product offerings, and increase the company's competitiveness and 3C market share in second-tier markets.
3) Implementing a converged, multi-channel strategy: Gome will work to incorporate online and offline suppliers, and will increase product diversification through a combination of shared procurement, logistics, sales, and customer data resources. Gome will also partner with major domestic and international suppliers to drive development and sales of differentiated products through ODM/OEM partnerships and exclusive sales agreements.
4) Increased supply chain capabilities: Gome will develop a low-cost, highly efficient supply chain platform, and will use open ERP informatization platforms to share order, inventory, account, and billing information with suppliers in order to boost turnover efficiency, decrease the frequency of product shortages, boost the efficiency of Gome's partnerships with suppliers, and decrease transaction costs.
Editor's Note: For more background on this topic, please see "Gome to Integrate Online/Offline Procurement, Adjust Operating Model" MD 12/21/12 issue.
Keywords: legal consumer electronics hardware procurement software strategy Gome Microsoft 0493.HK retail home appliances
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