Consumer China

Suning gets boost from property rebound

  • Published 14 May 2009

Electrical appliance retailer hopes to benefit from recent uptick in property sales.

Suning Appliance (002024:SZSE), an electrical appliance retailer, overtook its struggling rival Gome last year to become the leader in its market segment on revenues of Rmb 49.9bn ($7.31bn, €5.39bn, £4.85bn), up 24.27% year-on-year. However, this year has proven more difficult as demand for non-essential items has weakened. Q1 2009 turnover was basically flat – up a meagre 0.16% year-on-year, despite the company’s ongoing aggressive store expansion. Last year, Suning almost tripled its presence across the mainland – entering 26 new cities with a total of 210 new stores. Optimistic for a rebound in sentiment, the company is forging ahead with growth into lower-tier cities. It opened 10 new stores over the May holiday alone, including one in Baishan, a mountain city in the north-eastern province of Jilin that has a population of just 1.3m. The wisdom of this strategy appears to be borne out by the numbers – sales in third-tier cities last year performed better than those in first tier cities.

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