China’s retailers must shift online to mitigate risk, says consumer goods giant

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China’s retailers must expand online presence in wake of coronavirus to survive future ‘black swans’, says Chinese lifestyle goods chain Miniso
 

• Miniso says it will broaden its e-commerce presence at home and overseas, and launch new brands starting from online channels
• E-commerce operations accounted for 5 per cent of the company’s revenues in the first three quarters of 2020, up from less than 2 per cent a year earlier

 

The Guangzhou-based chain is known for its fashionable but affordable products ranging from household goods to cosmetics and food. Photo: AP

 

Chinese lifestyle goods retailer Miniso Group Holding says the industry needs to embrace digitalisation, as it expands its e-commerce business and uses online channels to develop new brands.

 

The Guangzhou-based chain known for its fashionable but affordable products ranging from household goods to cosmetics and food, has expanded its e-commerce business as a result of the pandemic.

E-commerce operations accounted for around 5 per cent of the company’s revenues in the first three quarters of 2020, up from less than 2 per cent in the same period of 2019.

“The outbreak of the coronavirus has had a huge impact on China’s retail industry. Bricks-and-mortar retailers needs to take the opportunity to embrace the trend of digitalisation. This will help to mitigate future risks,” said Robin Liu, Miniso Group Holding’s chief marketing officer and head of the company’s e-commerce business, in an interview. The group raised US$608 million in its initial public offering (IPO) on the New York Stock Exchange in October.

 

“The pandemic was a black swan, and also a catalyst that has accelerated our digital transformation and embrace of online channels.”

 

The containment of the pandemic in China has helped the group’s business operations in the mainland recover quickly.

 

By May, Miniso’s revenues there had clawed their way back to 90 per cent of where they were in 2019, and by October revenues had exceeded those during the same period of the previous year.

 

The company’s overseas operations, however, had taken a greater hit.

 

As a result of the temporary store closures, reduced opening hours and shipment suspensions caused by Covid-19, revenue generated from international markets decreased by 70.5 per cent to 350.2 million yuan (US$51.6 million) in the three months ending September 30 compared to the same period in 2019, according to the company’s interim report.

 

This prompted Miniso to actively expand its e-commerce operations in countries such as Indonesia, India, Vietnam, the United States, Canada and Singapore, said Liu.

 

Going forward, the company will continue to expand its online presence in 2021 and broaden its online sales channels, said Liu.

 

In the mainland Chinese market, Miniso will be expanding its reach to e-commerce platforms it had not previously been involved with, such as Gome and Suning.

“Miniso will still be positioned as a brand and retailer with very strong physical store operations,” said Liu.

“Miniso’s advantage lies in its offline retail channel network and capabilities in developing new products. In the medium to long term, we will continue to give full play to our advantages.

 

“We are also incubating more new brands and may start developing them using online channels.”

The company also plans to launch unmanned stores, he added.

 

 

“Miniso is a retailer, but it is also a brand which covers a wide range of products. Frankly, it is very difficult for a single brand to cover every product category equally well. That’s why we may try to operate multiple brands in the future, and use online channels to develop their presence,” said Liu.

 

The group had 4,330 stores scattered across more than 80 countries and regions as of September 30, with around 60 per cent of them in mainland China.

It has over 120 stores in Guangzhou, the most in any city, and close to 500 stores in the Greater Bay Area, accounting for around 22 per cent of its shops in mainland China.

“Miniso started its business in Guangzhou. There are many advantages for businesses developing in the city, such as the municipal government’s supportive policies, the dynamic business environment, and the city’s location in the Pearl River Delta industrial chain cluster,” said Ye Guofu, founder and chief executive of Miniso. These advantages would continue to support the development and innovation of the retail industry, he said.

 

The city’s positioning in the bay area as an international transport hub and its deep foreign trade ties has also helped Miniso expand and develop its export business, said Ye.

 

 

Source: China’s retailers must expand online presence in wake of coronavirus to survive future ‘black swans’, says Chinese lifestyle goods chain Miniso