Yonghui Superstores Beating Competitors in Chinese Hypermarket Industry

Source: Goldman Sachs, Thursday, Jan 16, 2014

A leading investment bank has found that hypermarket Bravo YH, owned by Chinese retailer Yonghui Superstores, is shown promise in Shanghai so far in 2014. Yonghui has opened two new hypermarkets in Shanghai in the past three weeks: one at Hongtaiyang Shopping Center in the Baoshan district and one at Huijing Center in the Huangpu district. Bravo YH is currently winning customers in the two districts, with researchers finding that each store’s daily sales are approximately US$124,000 versus roughly US$50,000 at rival hypermarkets in close proximity.

Researchers also found that Bravo YH’s fresh goods, which are more than 20 percent lower than competitors, contribute about 45 percent of total sales. The low price is achieved by providing fee discounts to suppliers and leveraging its nationwide procurement advantage. As a result, shoppers are increasingly choosing Bravo YH over competitors.

On an employee level, Yonghui’s salary is attractive relative to its peers, according to management. The retailer typically divides staff into groups by product category or counters to assess performances, and subsequently uses a store partner system to provide incentive compensation and improve efficiency. Yonghui is planning on opening an additional three hypermarkets in Shanghai in the near future.