Suning opens first super store in Beijing

China's leading home appliance retailer Suning Appliance Co will open its first Suning Expo super store in Beijing Friday, a move to transform itself from a home appliances retailer to a general hypermarket operator.

The super store, with an area of 12,000 square meters, similar in size to a Wal-Mart store, will offer 2,000 brands of goods ranging from daily necessities and books to auto accessories, though home appliance products will still dominate the store with a proportion of 60 to 70 percent, Yuan Jinxiang, marketing manager of Suning's Beijing branch, told the Global Times Thursday.

Besides the super store in Beijing, another three such stores are expected to open within this month in Shanghai, Guangzhou and Nanjing, with plans for a total of 20 super stores nationwide this year, Yuan said.

Sales of more goods categories will help increase revenues. For example, the sales volume of Best Buy is only one fifth of Wal-Mart, which is a big motivation for Suning to make such a change, Liu Buchen, a home appliance researcher at Zhengzhou-based consulting firm Jiachunqiu Media Institute, told the Global Times.

Suning reported a 34 percent year-on-year decrease in net profit for the first half of the year, mainly due to the economic slowdown and sluggish market. "The weak market has prompted the company to speed up its transformation," Liu noted.

The company also bought Redbaby, a leading online mother and baby product retailer Tuesday, also aiming to diversify its product line.

There have been doubts over Suning's ability to sustain profitability as it continues to make fast expansion offline and increase its investment into the e-commerce sector.

In order to ensure ample cash flow, Suning announced on August 14 to issue 8 billion yuan ($1.27 billion) in corporate bonds to replenish its capital, just one month after it issued 4.7 billion yuan shares through private placement.

It is expected that Suning can maintain profitability for 2012, but the profit will drop due to money-losing e-commerce business, Liu said. "However, the company needs to keep investing into the sector to establish a good market position as it generally takes more than three years for online retailers to make a profit."

A latecomer in the e-commerce sector, Suning was China's fourth largest B2C site in the second quarter of 2012, with a market share of 3.8 percent, below Tmall's 57.1 percent, 360buy.com's 20.1 percent and Tencent's 4 percent, according to statistics released by Internet consulting firm iResearch in July.