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Chow Tai Fook turns failing China shops into logistics hubs

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Chow Tai Fook Jewellery Group, one of the largest publicly listed jewellery chains in the world, has found a new way to make better use of its struggling stores in China at time of dwindling foot traffic: turning them into logistic hubs for handling e-commerce orders.

The Hong Kong-listed jeweler said it was collaborating with popular e-commerce channels, including Tmall operated by Alibaba Group Holding, to receive online orders so that some 2,100 of its physical stores across mainland China could become logistics points to facilitate delivery.

“We are tapping into out vast network of sales points to achieve online-to-offline interaction.” — Adrian Cheng Chi-kong, executive director, Chow Tai Fook

Cheng said about 30% of the products were only available online to differentiate from offline shops.

While still small, the group’s e-commerce business in mainland China posted a year-on-year growth of 22.5% in retail sales value, accounting for less than 3% of its total sales on the mainland.

Facing competition from e-commerce players such as Alibaba and JD.com, net profit fell 21.5% on the year to reach 1.22 billion Hong Kong dollars ($157 million) in the six months ended in September, the lowest since it listed in 2011.

SEE ALSO: Chow Tai Fook sales value weakens in Q2

Chow Tai Fook added seven shops to its retail network of 2,300 sales points in the region in the same period.

The jeweller also opened two shops in Malaysia and South Korea in the same period but closed six shops in Hong Kong and Macau due to fewer mainland visitors to these markets.

Retail sales in Hong Kong fell for the 19th consecutive month in September although the contraction eased slightly as mainland Chinese arrivals began to stabilise after months of declined.

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