The decline of the industry outperformed the market, and the valuation differentiation of the sector slowed down. From January to November 2021, CS commerce and retail industry decreased by 0.42% and increased by 8.11% in the same period of last year, but outperformed the market by 6.86pct. Repeated epidemics still restrict the recovery of supply and demand, and the performance of the industry market is weaker than that in the same period last year. From the sub sectors, the top three sub sectors in terms of rise and fall are home appliances 3C (+ 151.34%), trade (42.99%) and other chains (22.57%). The sub sectors rose and fell, the chain and department store sectors rose, the supermarket and e-commerce sectors fell, the trend within the sector was divided, and the overall decline of the e-commerce sector was deep. The scale of revenue and profit of the retail industry decreased in the first three quarters, which was mainly affected by the negative impact of e-commerce and supermarket, and the performance differentiation of the sector intensified. In 21 years, the PE valuation level of the industry had a large amplitude, showing an overall decline in the first half of the year and a rapid rise in the shock in the second half of the year, but the differentiation trend of PE valuation in sub sectors gradually slowed down.
Online demand continues to release, and policies add weight to the digital economy. In the first 11 months, affected by the multi-point spread of the epidemic, extreme weather and other factors, the market sales growth continued to decline, but the overall double-digit rapid growth was maintained, the online consumer demand continued to release, and the consumer market continued to recover. At this stage, the epidemic situation has a significant restriction on contact consumption. However, in the long run, the trend of China's continuous expansion of consumption scale and the optimization and upgrading of commodity structure will not change. With the normalization of epidemic prevention and control, the macro environment, population structure and consumption preferences have changed, the consumer industry has gradually returned to rationality, common prosperity has driven the optimization and upgrading of consumption structure, and consumer goods enterprises have accelerated the omni-channel transformation in people and goods yards. At the same time, the state attaches importance to the development of e-commerce at the policy level. Since this year, online retail has maintained rapid growth and online penetration has continued to improve, helping the digital transformation and upgrading of the real economy.
The rise of domestic products: beauty and skin care sink + younger, and online sales dominate. With the change of consumers' economic strength and consumption concept, the scale of beauty and skin care market continues to grow. Domestic products are mostly distributed in the medium and high-end and popular fields. Domestic brands are localized, mainly focus on the sinking market and z-era consumer groups, and compete differently with international brands. The share of traditional offline channels has gradually declined, e-commerce has become the main sales channel, beauty brands prefer new media launch, and innovative content marketing helps sales growth.
Consumption upgrading: jewelry consumption continues to expand and cultivate the rapid rise of diamonds. The market scale of jewelry industry is growing steadily, and the change of consumption concept + online channel drive the incremental demand. At present, there is a situation in which foreign brands, Hong Kong brands and domestic brands are divided into three parts. International brands occupy the main share of the medium and high-end market. Hong Kong brands are highly competitive in the mainland, and mainland brands have obvious channel advantages. With the gradual maturity of the market and the transformation of the concept of consumption upgrading, the industry concentration continues to improve. The imbalance between supply and demand, price advantage, change of consumption concept and other factors have brought opportunities for the development of diamond market. Many well-known jewelers have begun to lay out the field of diamond cultivation.
Channel integration: the rise of interest e-commerce, the normalization of store broadcasting, and the digital transformation of physical retail. Live broadcasting has become a normal marketing mode and sales channel in the e-commerce market. Driven by the common growth of users, brands and anchors, the growth scale and penetration of live broadcasting e-commerce have accelerated. Brands create live broadcast marketing matrix, and store self broadcast becomes the main sales scene of normalization. Short video platform brings new traffic scenarios, and interest providers have brought new sales increments through discovery shopping mode, and tiktok has obvious competitive advantages. Tiktok and Kwai Fu launched preferential hiring policies to attract more businesses to enter. Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration is an important direction for the transformation of physical retail industry. The epidemic affects digital consumption and ushers in new opportunities for development.
Investment strategy: accelerate the digital transformation of new consumption, upgrade the platform, and enable the industry to improve quality and efficiency. The consumer demand catalyzed by the epidemic has gradually normalized, strengthened digital construction, intelligent transformation, improved supply chain efficiency, and reconstructed the underlying logic of the consumer industry. The emerging platforms born in the Internet industry are gradually optimized and upgraded to the comprehensive attributes of content, socialization and e-commerce, deeply enabling industries to improve quality and efficiency, and help the sustainable growth of domestic brands. Under the dual catalysis of Internet infrastructure and capital, new consumption represented by new domestic products and centered on consumer demand has grown rapidly. With the further enrichment of new formats, new models and new scenes in the retail industry, domestic brands in the new consumption field will continue to promote the digital transformation, realize the omni-channel coverage of online touch and offline experience, and constantly upgrade the brand core to tap the medium and high-end market while meeting the needs of mass consumption. It mainly focuses on three main lines: the rise of domestic products, consumption upgrading and channel integration:
1) Misplaced competition, accelerated penetration and innovative content marketing of domestic beauty brands have contributed to the continuous improvement of brand market share. It is recommended to pay attention to domestic skin care brands Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Shanghai Jahwa United Co.Ltd(600315) and Guangdong Marubi Biotechnology Co.Ltd(603983) ;
2) Consumption upgrading + online channels, jewelry consumption tends to be daily, and there is a wide space for new diamond track cultivation. It is suggested to pay attention to gold jewelry brands Chow Tai Seng Jewellery Company Limited(002867) , Guangdong Chj Industry Co.Ltd(002345) , Shanghai Yuyuan Tourist Mart (Group) Co.Ltd(600655) , and Mclon Jewellery Co.Ltd(300945) ;
3) The penetration of online live broadcast e-commerce is accelerated, the brand self broadcast is normalized, and there is enough room to improve the digital penetration of offline stores. It is recommended to pay attention to omni-channel retailers Wangfujing Group Co.Ltd(600859) , omni-channel e-commerce service providers Hangzhou Onechance Tech Corp(300792) , beauty brand e-commerce service providers Shanghai Lily&Beauty Cosmetics Co.Ltd(605136) , etc.
Risk warning: macroeconomic downward pressure; The policy of promoting consumption does not meet expectations; Industry competition intensifies; Expanding new business forms with strong uncertainty; The overseas epidemic continues to spread, and new changes have taken place in the situation of epidemic prevention and control in China.
