Since the opening of our first department store, Nanjing Xinjiekou Store, nearly 18 years ago, the Group has successfully opened 26 self-owned stores, with a total gross floor area of 1,187,023 square meters and a total operating area of 850,061 square meters as at 30 June 2014. These stores span across four provinces and one municipality, namely Jiangsu, Anhui, Shaanxi, Yunnan and Shanghai, covering 15 cities including Shanghai, Nanjing, Nantong, Yangzhou, Changzhou, Xuzhou, Taizhou, Huai’an, Yancheng, Suqian, Liyang, Hefei, Huaibei, Xi’an and Kunming.
Leveraging on our leading position in Jiangsu Province where the Group enjoys strong competitive advantages, the Group also placed strategic focus on its development in Anhui Province and is gradually expanding its market share to achieve a leading position. With respect to the western region of China, the Group positions itself strategically in Xi’an of Shaanxi Province and Kunming of Yunnan Province. The Group will devote more efforts in solidifying and expanding its market shares in these markets while gradually expanding into their neighboring cities. Meanwhile, the Group will gradually build up a nationwide retail chain network by actively exploring opportunities in the first-and second-tier cities and by tapping into the third-tier cities, which have immense growth potential.

 

 

The Group’s department stores are situated at prime shopping districts in their respective cities and the Group always adheres to its core development strategies of developing in self-owned properties. As at 30 June 2014, approximately 59.2% of the total gross floor area of our stores are located in self-owned properties. In order to capture opportunities for development, the Group also secures high quality properties by entering into long-term leases for ten years or longer, hence minimising the impact of rental increase on our department stores’ operation. We also procure landlords to charge rentals with reference to a percentage of the relevant store’s sales proceeds.

 

 

In order to keep abreast of the latest trends, especially the diverse developments in the retailing industry and to satisfying the various needs of our customers, the Group has been proactively developing a comprehensive lifestyle-one-stop shopping concept. The Group has introduced more functions and amenities, such as dining, entertainment, beauty and personal care, hair styling, cinemas and pre-school educations in our retailing complexes in addition to the core functions of department store, so as to enhance the attractiveness of our department stores to the target customers and to promote Golden Eagle’s “Complete Lifestyle Experience (全心全意全生活)” concept.

 

 

The Group develops our own proprietary brands through a team of professionals. Apart from offering a variety of consumer goods under a rich portfolio of brands with high cost-performance, the Group is also dedicated to boosting the competitiveness of our brands so as to meet the target customers’ needs and enhancing the brand equity of “Golden Eagle”.

 

 

The Group fully utilises all the marketing channels such as the Group’s websites, “goodee mobile App” (掌上金鷹) and WeChat to provide timely, direct and effective marketing information to our customers so as to enhance customers’ shopping experience, stimulate buying sentiments and generate further sales. As at 30 June 2014, the “goodee mobile App” application has registered over 1.6 million downloads, had got over 650,000 daily hits and had over 600,000 WeChat followers. The Group has also been actively developing electronicalised business model (商務電子化), through the installation of free full WIFI coverage at all our chain stores, the use of wireless POS cash register system and the launch of the “Electric VIP Card”, the Group has developed an economical and effective marketing channel.

 

 

The Group is devoted to providing more innovative and value-added quality services for all G. Club VIP customers. In April 2014, the Group has officially launched the “iPoint reward points redeeming mall” (iPoint積分兌換商城) for its VIP customers with the service of “Points Plus Cash” redemption so as to enhance the loyalty and degree of satisfaction of VIP customers. Meanwhile, a new point award card (積點卡) was launched to offer the Group’s quality services to potential VIP customers with no minimum spending requirement. This move was aimed at converting these customers into VIP customers. The Group successfully secured over 1,470,000 loyal VIP customers as at 30 June 2014, thus strengthening further the Group’s position for long-term development and expansion. Spendings by VIP customers accounted for 55.8% of the total gross sales proceeds of the Group during the period under review.

 

 

The Group manages every department store with a standardised management system which is connected to our industry leading intelligent e-platform. It is a customer-oriented platform built on a SAP system and is adopted by many companies under Fortune 500. Customer experience was improved and the individual needs of our target customers were adequately satisfied through core elements of business intelligence (BI), precision marketing (PM), supply chain management (SCM) and customer relationship management (CRM). Business value has also been created as the platform and system have raised operational efficiency and optimised the process and flow of the operations.

 

 

The Group appreciates the dedication and contributions of its employees, and fosters their capabilities, competence and worldwide perspectives by conducting regular professional training sessions and overseas study trips for both the management and employees. The Group also implements localised management systems for each local markets. For each of the stores, the Group recruits local talents to form a management team so that the Group can utilise their knowledge on the local market. As at 30 June 2014, the Group had approximately 5,300 employees.

 

The Group has successfully established the" "service logo as one of the most recognized brands and the" "service logo has been recognized as a “Famous Trademark of Jiangsu province" by the Jiangsu Administration for Industry and Commerce since August 2002.

 

The department stores are located at prime shopping district in their respective cities, thereby attracting a steady flow of relatively high-end customers.

 

As at 31 December 2013, the proportion of self-owned properties is approximately 59.5%.This emphasis on ownership enables the Group to largely avoid the adverse effects of future rental escalation and lays a solid foundation for cost control and operational stability. To seize the development opportunity, the Group also manages to secure rights to use quality properties through long-term leasing, which reduces the impact of rental increment on the operation of department stores. The target term of lease is above 10 years.

 

Through the provision of interactive customer services, among others, “VIP Value-added Exclusive Services", the" Three Commitments" and the" Convenience and Repair Services" and continuous improvements in the quantity and quality of services, the Group has secured a group of loyal customers which lays a good foundation for development in the long run. As at 31 Decembe 2013, VIP member spending accounted for about 56.2% of the Gross Sales Proceeds of the Group.

 

The Group has achieved ISO9001 quality management system. The Group has successfully developed the ERP system for the centralized management of chain stores. The Directors are of the opinion that the ERP system is also capable of providing management with important operational, financial and human resources data in a timely fashion. The Directors are of the opinion that the systems currently in place have enabled the Group to formulate its development strategy in response to ever changing market conditions and to effectively monitor the operating status of the Group’s department stores. Members of the Group share the same corporate culture and vision, and manage each of the department stores with a shared professional and systematic management methodology and operating approach.

 

With regard to enhancing competitiveness, the Group is fully aware of the importance of continued expansion of its operating scale and market share through chain store development. At present, the Group is operating 26 chain department stores that, the Directors believe, have achieved economies of scale. This helps to reduce the Group’s fixed costs.

 

The Group has above 18 years of experience in planning and management of department store buildings and has developed a management model in respect of location selection and decoration of department stores, as well as property management. These enable the Group to provide a convenient and unique shopping environment and enhance the operating efficiency of each of the department stores.

 

The Group’s objective is to build a leading nationwide stylish premium department store chain in the PRC. Pursuant to the Group’s chain development strategy, the Group will further increase the number of its chain stores in Jiangsu Province and will implement “single city multiple stores” strategy for cities in which it has established a leading position, so as to strengthen its leading position in Jiangsu Province. Meanwhile, the Group will continue its expansion plan in neighbouring provinces including Anhui Province. Anhui Province is strategically important to the Group, where the Group has planned for profound development. The successful acquisition of two Anhui mid-to-high end department stores, together with Hefei Flagship Store and Huaibei Store, which are about to commence operation, have demonstrated the preliminary achievements of our Anhui strategic expansion plan. The Group will further extend its coverage to include key cities in Anhui Province. Meanwhile, leveraging the Group’s strong foothold in Xi’an city, the Group will expand its store network in Xi’an city in order to increase its market share and its capability of extending its presence to surrounding cities. The Group will further strengthen the branding effect of brand in the Kunming market and enhance customer loyalty through the establishment of a second store in Kunming. The Group will also keep a close eye on other provincial capital cities that possess immense economic potentials and with less competition, so as to develop a more extensive chain store network.