Suning’s convenience store arm buys Circle K outlets in Guangzhou
Aug 6, 2019
Suning Xiaodian, the convenience store arm of online retailer Suning.com, has acquired 61 Circle K outlets in Guangzhou from Hong Kong giant Feng Group, consolidating its foothold in southern China.
Why it matters: Under its online-to-offline strategy, Suning has been pushing to increase the number of its retail stores, including department stores, supermarkets, and convenience stores. In addition to setting up new outlets, the omnichannel retailer is also acquiring existing locations from chain store operators.
- The Alibaba-backed firm acquired Spanish multinational Dia Group’s China retail operations in April last year, taking over more than 300 Dia Tiantian outlets in Shanghai. In late-2018, Suning bought 31 stores in the central Chinese city of Xi’an from Grea Convenience.
- Suning acquired 37 department stores from the Chinese conglomerate Wanda Group at the beginning of the year and then paid RMB 4.8 billion ($695.7 million) for an 80% stake in hypermarket operator Carrefour China last month.
“Suning expects the resources and experiences of Circle K management team to facilitate our foray into Guangzhou and the broader South China market in merchandizing, supply chain and regional network.”
—Bian Nong, president of Suning’s consumer goods business group
Details: Circle K operates 61 convenience stores in Guangzhou and more than 300 stores in Hong Kong, Macao, and nearby Zhuhai.
- Having first entered Guangzhou in 2002, Circle K stores offer snacks, drinks, fresh food, fast food, and daily necessities, featuring an in-house food brand Hot & In.
- The business has posted significant losses over the years due to intense competition, slowing economic growth, rising labor costs, among other factors, according to the company.
Context: Suning runs more than 7,500 self-operated and franchised stores, as well as almost 5,400 Suning Xiaodian neighborhood stores and discount chain Dia Tiantian outlets as of the first half of this year.
- Despite a 26.6% rise in operating income, Suning’s net profit fell by 64.4% year on year to RMB 2.1 billion in the first half.
- In addition to building up an offline presence, Suning has also upped investment in logistics, finance, technology, and other core capacities in the first six months to lay a foundation for future growth.