中国实体零售行业展望，2025年1月

Investment Rating - The outlook for the Chinese retail industry is maintained at "negative improvement," indicating that the overall credit quality of the industry is expected to improve from a "negative" state but has not yet reached a "stable" level in the next 12 to 18 months [6][46]. Core Insights - The retail industry in China continues to face significant operational pressure due to insufficient internal consumption momentum and the impact of online retail diversion. The implementation of consumption promotion policies will take time to boost consumer confidence, leading to sustained operational challenges for retail enterprises in the short term [6][8][22]. - The retail sales growth rate for 2024 is projected to be low, with a year-on-year increase of only 3.5%, significantly weaker than the previous year's performance. The overall economic contribution of final consumption to GDP growth has also decreased from over 80% in 2023 to 44.5% in 2024 [10][12]. - The performance of large retail enterprises, particularly in the department store sector, has shown some improvement due to increased policy support, but the operational pressure remains high. Companies are actively seeking breakthroughs through cost reduction and business transformation [8][23]. - The supermarket sector is experiencing an overall contraction, although membership and discount store formats are performing well. Traditional large supermarkets are under pressure to adapt their store formats and product strategies [28][30]. Summary by Sections Industry Fundamentals - The retail industry's景气度 remains weak, with consumer confidence overall being low. The implementation of consumption promotion policies is expected to provide some support, but significant improvements in consumer confidence are necessary for a more robust recovery [10][22]. - In 2024, the retail sales of key large retail enterprises (mainly department stores) showed a cumulative year-on-year decline of 5.0% from January to September. However, household appliance sales benefited from the "old for new" policy, achieving a 3.3% increase [23][28]. Financial Performance - The profitability and cash flow of retail enterprises have been under pressure, but there is considerable room for recovery. Factors such as ample cash reserves, reduced financial leverage, and ownership of properties support debt repayment capabilities [33][45]. - The operating income of department store enterprises rebounded significantly in 2023 due to a low base but has since turned negative in 2024. Supermarket enterprises have seen a more substantial decline in revenue compared to department stores [35][37]. Conclusion - The Chinese retail industry is experiencing sluggish growth due to weak consumer confidence and the diversion of sales to online platforms. While there is potential for recovery, the effectiveness of consumption promotion policies and the establishment of consumer confidence will be critical for future improvements [46].