Retail: Suning Plays on Strength, Macy’s Timid Step　　苏宁巧借实体店支持电商业务

By newsdoug on June 9, 2012

There are a couple of interesting stories from the retail space today, one involving a shrewd new move by Suning (Shenzhen: 002024) to leverage its real-world stores in the e-commerce space, and the other involving a baby step into China by US department store giant Macy’s (NYSE: M) that looks like too little too late. Let’s look first at Suning, as that’s the most exciting news and a move that could quickly give this company an advantage over more established rivals like Alibaba and Jingdong Mall in the fast-growing e-commerce space. According to media reports, Suning, best known for its chain of 1,800 home electronics shops, plans to use that real-world store network to give consumers an easy option for quickly picking up the products they purchase online. (English article) Under the current system, most e-commerce companies use couriers to deliver their products, with most only able to make same-deliveries if the buyer lives in a major city and a purchase is made early in the day. Suning’s proposition could change that equation, as it would presumably allow buyers to purchase their items online, and then simply walk over to their nearby Suning store and pick up the item an hour or 2 later at their own convenience instead of having to wait at home for a courier. While it sounds good in theory, of course the big factor will be execution, as Suning offers far more products at its online stores than it sells at its traditional brick-and-mortar shops, meaning it will have to find a way to stock its real-world stores with many of its most popular e-commerce products. But this shouldn’t be a huge problem for a company like Suning, which has shown a strong record for executing its e-commerce strategy, propelling it in a relatively short time to one of the industry’s top 5 players. Meantime, Macy’s, one of the top US department store operators, is making its own timid move into China e-commerce, investing $15 million in a company called VIPStore, which specializes in luxury and fashion goods. (English article) As part of the deal, Macy’s private-label merchandise will be sold in China through VIPStore’s Omei.com site. This deal, which looks quite modest to me, represents a big move for Macy’s, whose main step outside the US up until now has been to open 2 stores in Dubai. From my perspective, this step looks quite conservative and reflects the stiff competition in both China’s traditional and e-commerce retail spaces that Macy’s will face from both major western and Chinese names. I do agree to some extent with the go-slow approach that Macy’s is taking, as it’s never good to rush into a strange new market like China. But at the same time, this kind of ultra-conservative approach means that Macy’s probably won’t gain any meaningful experience for at least a few years, by which time it will be so far behind its other western and Chinese rivals that its chances for success will be miniscule.

Bottom line: Suning’s leveraging of its real-world stores to boost its e-commerce business looks like a smart move that should help it steal share from bigger names like Alibaba and Jingdong Mall.

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