Aeon Hong Kong looks to its Daiso network to restore profit
In this article (5)
AEON Stores Hong Kong have lost HK$470 million in 2021, but the retail group is still planning to expand its footprint in the city by launching more retail stores under the brand Daiso Japan.
In the recent announcement of its annual result for the financial year ended on 31 December, AEON Stores (Hong Kong) said it lost HK$470 million (US$60.04 million), representing an increment of HK$433.2 million (US$55.34 million) compared to 2020. The company said in the year 2021, the group’s revenue decreased by 4.1% year on year to HK$9.56 billion (US$1.22 billion). Moreover, the group received fewer government subsidies from the Hong Kong government and municipal governments in China in 2021. The amount of subsidies decreased from HK$146.4 million (US$18.7 million) in 2020 to only HK$10.0 million (US$1.27 million) last year.
The group added that as the pandemic was gradually brought under control in 2021, daily social, business and economic activities resumed, resulting in the decreasing sales performance of some merchandise spurred by the pandemic including food and cleaning products. At the same time, due to the prolonged pandemic and its subsequent disruption, the local economy was slowly recovering, and the sentiment among citizens was generally cautious about consumption. As a result, the group’s apparel merchandise demand did not improve significantly.
In the third quarter of 2021, with the assistance of the launch of the consumption voucher scheme and a relatively stabilised pandemic environment, sales performance recorded a slight improvement but such improvement were relatively weaker in the subsequent rounds of consumer voucher scheme launched in the fourth quarter of 2021. To strengthen this company’s position in the Hong Kong market, in February, AEON Stores (Hong Kong) February 2021, the group partnered with foodpanda mall to provide Topvalu food products, HÓME CÓORDY household products and frozen food products. By June, the whole line of supermarkets was online, offering sales and home delivery services for a variety of supermarket items.
“In February 2022, the group opened its fourth “AEON STYLE” store at Domain Mall, Yau Tong to meet the demand of customers in the district.”
Moving forward, the group will open stores in accordance with its preset investment plan. In February 2022, the group opened its fourth “AEON STYLE” store at Domain Mall, Yau Tong to meet the demand of customers in the district.
When it comes to this new store, the company previously said that due to the nature of its retail businesses, the group has to enter into tenancy agreements for the leasing of retail stores from time to time. According to AEON, the retail fronts contribute to and maintains the group’s scale of operation which in turn benefits the group in lowering the overall operation costs. Along with the store space, the company has also rented one internal advertising light box on the ground floor and two outdoor advertising banner spaces outside the building facades for the display of the company’s name and advertising of the company’s business at the premises.
At the same time, the group will further expand the business of small specialty stores under the brand Daiso. When it comes to digitalisation, to improve operational efficiency and control costs, the group will optimise its mobile assistant for employees and increasing the utilisation rate via “Mobile Assistant”. In addition to strengthening the use of the self service cashier system “POS Express”, the group will further deploy cashiering machines to accept and change cash to customers, reducing the workload of cashiers and using its resources better.
Questions & Answers
Q.What was the main reason for Aeon Hong Kong's significant financial loss in 2021?
What was the main reason for Aeon Hong Kong's significant financial loss in 2021?
The group reported a HK$470 million loss due to reduced government subsidies, lower revenue, and decreasing sales of pandemic-boosted merchandise. Cautious consumer sentiment also affected apparel demand, contributing to the substantial loss.
Q.How is Aeon Hong Kong planning to improve its financial position in the future?
How is Aeon Hong Kong planning to improve its financial position in the future?
Aeon plans to expand its Daiso network by opening more stores, increase digitalisation through mobile assistant optimisation, and strengthen self-service cashier systems. They also continue to open 'AEON STYLE' stores.
Q.Did the consumption voucher scheme significantly help Aeon Hong Kong's sales performance?
Did the consumption voucher scheme significantly help Aeon Hong Kong's sales performance?
The consumption voucher scheme, along with a stabilised pandemic environment in Q3 2021, led to a slight sales improvement. However, subsequent rounds of the scheme in Q4 had a weaker impact on sales.
Q.How did the pandemic affect the types of products Aeon Hong Kong sold?
How did the pandemic affect the types of products Aeon Hong Kong sold?
As daily activities resumed in 2021, sales of merchandise spurred by the pandemic, such as food and cleaning products, decreased. Also, the prolonged pandemic meant demand for apparel merchandise did not improve significantly.
Reader pulse
Aeon's Daiso expansion plan:
20,485 votes so far