Warum kann der erstaunliche Umsatz von SKP keine Kapitalvertrauen gewinnen?

Text by He Zhexin

Edited by Qiao Qian

The shopping mall favored by "ladies in the capital" has officially changed ownership.

Recently, the Beijing Municipal Administration for Market Regulation announced that Boyu V Dollar Fund (hereinafter referred to as Boyu Fund) intends to acquire a partial stake in Beijing SKP through its affiliated parties. The transaction amount has not been disclosed yet. Before the transaction, Beijing SKP was jointly held by Beijing Hualian and Radiance Investment Holdings Pte. Ltd. with a 40% and 60% stake respectively. After the transaction, the affiliated parties of Boyu Fund will indirectly acquire a 42%-45% stake in Beijing SKP through financial investment.

According to a Bloomberg report in March, the two parties had nearly reached an agreement on the management and operation of Beijing SKP at that time. The overall value of this business was between $4 billion and $5 billion, approximately equivalent to 29 billion to 36.4 billion RMB.

According to a report by Linkshop.com, Beijing SKP's revenue declined significantly in 2024. Against the backdrop of the cooling global luxury market, this transaction was reasonably interpreted as Hualian "offloading a burden." However, the capital market gave a different reaction. Hualian Commercial Co., Ltd. hit the daily limit down during intraday trading on April 7, dropping 9.82%, indicating that investors were uneasy about the expectations of this transaction. Although Beijing SKP is independent of Hualian Commercial Co., Ltd., they both belong to the Beijing Hualian Group.

Although the contraction of domestic luxury consumption is an established fact, Beijing SKP, with its annual revenue in the tens of billions, remains a remarkable asset. For the seller, Hualian, is this transaction a successful retreat at the peak or the loss of an important cash cow?

The Making of the King of Luxury Stores

Previously known as Shin Kong Place on Dawang Road in Beijing's Chaoyang District, SKP is the abbreviation of Shin Kong Place. Shin Kong Place opened in 2007 and was an important move for Taiwan's Shin Kong Mitsukoshi to enter the mainland's high - end retail market through Hualian. It was also the first stop for luxury shopping in the capital.

Relying on the connections Shin Kong Mitsukoshi had accumulated in the luxury circle, Shin Kong Place attracted more than 700 luxury brands such as GUCCI and FENDI when it first opened. In the domestic market at that time, if a new product couldn't be found at Shin Kong Place, it meant "it wasn't available anywhere in the country."

In 2012, Hualian and Shin Kong Mitsukoshi parted ways due to management disputes, and Shin Kong Mitsukoshi withdrew. In 2014, Shin Kong Place was officially renamed Hualian SKP.

This renaming also signified a complete separation. Ji Xiao'an, the chairman of the Hualian Group, was not optimistic about the "rent - collecting model" of traditional shopping malls. He repositioned SKP as a boutique department store with direct - purchase operations. This is also the business model of Lane Crawford, I.T, Joyce Boutique, Bergdorf Goodman, and Galeries Lafayette. That is, the buyer team of the purchasing party places orders through the wholesale channels of brands and sales agents according to their own positioning and sales plans, plans sales independently, and bears the profits and losses.

A real - estate insider told 36Kr that if the buyers have unique product selections and appropriate positioning, the profits can be substantial. SKP SELECT, a multi - brand store under SKP, introduced many niche designer brands that were not yet available in the domestic market when it first opened, such as JW Anderson, CECL, DSQUARED2, JIL SANDER, SACAL, CFCL, THE ROW, JUUN.J, etc.

SKP has never separately disclosed the performance of SKP SELECT. However, since 2011, Beijing SKP has ranked first in the performance of single - store shopping malls in the country for ten consecutive years, firmly holding the throne of the "king of stores" in China. In 2017, the single - day sales of Beijing SKP's single store reached 1.01 billion yuan, breaking its previous record of 790 million yuan. In 2023, Beijing SKP's sales reached a record high of 26.5 billion yuan.

In 2017, SKP SELECT expanded into the home - furnishing category and continued to introduce some niche European brands. Later, it opened SKP RENDEZ - VOUS, a leisure space integrating art exhibitions and cultural salons. After the renovation in 2018, SKP SELECT, an in - house buyer store, was arranged in prominent locations from the basement floor to the fifth floor in the north building of SKP Beijing.

At that time, the impact of e - commerce on offline shopping was just beginning to show, and the anxiety about homogeneous competition among shopping malls was intensifying. Therefore, SKP's "buyer system" naturally sparked a lot of discussions. RET Ruiyide, a Chinese commercial real - estate service provider, was optimistic about SKP's operation model and published an article on its official WeChat account titled "Looking at Li Jiaqi from a Different Angle: Is the Spring of the Commercial 'Buyer System' Coming?" The article argued that "the operation model of Taobao live - streamers may represent a development direction for physical commerce in the stock era: the buyer system."

At the beginning of the pandemic, as luxury consumption returned to the domestic market, Beijing SKP once again leveraged its advantages by transforming the shopping mall into an art exhibition and an experience center full of novelty. It aimed to attract more young consumers. SKP - S, which opened in 2019, became a hot topic on many platforms due to its various novel display installations, and its consumption influence spread from Beijing across the country.

However, a senior commercial real - estate insider who once worked at RET Ruiyide told 36Kr that although SKP has been vigorously promoting the buyer system, in fact, most of its revenue still comes from rent and sales commissions, taking the higher of the two. "The rent at SKP Beijing is the highest in the Chinese commercial real - estate market. The rent for street - front stores on the first floor can reach over 100 yuan, or even 200 yuan per square meter per day, while the national average for commercial real - estate is only 20 - 30 yuan per square meter per day."

According to industry rules, well - known brands with strong bargaining power can get relatively low commission rates. Some brands even require the mall to subsidize the shortfall when sales do not meet expectations. A senior commercial real - estate developer mentioned in an interview that for the six so - called "blue - blood" brands such as LV, Chanel, Gucci, and Dior, as well as the eight "red - blood" brands including Givenchy, Valentino, and YSL, their commission rates are usually relatively low, only around 6 - 8%.

At its peak, Beijing SKP could even "turn the tables." Its rich displays and novel landscapes provided a better shopping experience for consumers, giving it stronger bargaining power when dealing with brands. Even for an avant - garde retail experiment like SKP - S, top - tier luxury brands like Louis Vuitton followed the rules and changed their storefronts to the "uniform" black background with red characters to match the mall's futuristic style.

In this regard, the "buyer system" seems more like a means for SKP to attract consumers rather than its core business model. In essence, SKP is also a shopping mall that has absorbed excellent operation experience from department stores. This kind of "mixed - reform" has been practiced in the Chinese department - store industry for many years, and SKP has accumulated a lot of successful experience. Hualian's decision to sell at this time should be based on more comprehensive considerations.

Each Party's Calculations

A real - estate insider told 36Kr that luxury brands are shifting from a large - scale westward expansion in the 2010s to a more targeted and planned layout in second - tier and new first - tier cities. In the future, "one store, one city, one network" will be the new norm. "Some cities simply cannot support two Louis Vuitton stores." In the past few years, SKP has entered various new first - tier, second - and third - tier cities in an almost aggressive manner. During the short three - year pandemic period, it successively signed contracts in Guiyang, Hangzhou, Hohhot, Wuhan, Sanya, Guangzhou, and Hefei. Most of these stores have not opened yet.

The "low - tier market" was once a battleground for luxury brands. Data shows that e - commerce can only cover less than 10% of the transactions. For wealthy residents in small cities, local department stores are still a reliable place to buy high - quality branded products, making them an important channel for cultivating luxury consumption.

In good times, venturing out may bring more rewards. However, high - end brands are currently contracting in China: the Louis Vuitton store in Beijing's Sanlitun has been delayed in opening, two GUCCI stores in Shanghai have closed, and Estée Lauder, a benchmark in high - end cosmetics, stated in its earnings report that it has started to transform its direct - operated stores in China into light - asset businesses such as duty - free and travel retail. The tough times for the luxury industry will continue for some time.

Therefore, SKP's positioning as a high - end luxury fashion brand, its heavy - asset operation model, and its uncertain performance growth potential may be the main considerations for the Beijing Hualian Group to withdraw in time, cash out, and reinvest in its core business. It is reported that the shopping malls and department - store retail businesses mainly operated by the Hualian Group mostly target the mass market. The financial report of Hualian Commercial Co., Ltd., which operates supermarkets under the group, shows that in the past year, the company's total operating revenue was 1.398 billion yuan, ranking 32nd among the disclosed peer companies. The net profit attributable to the parent company was 20.33 million yuan, a year - on - year decrease of 26.28%. The latest asset - liability ratio was 45.56%, an increase of 4.97 percentage points compared with the same period last year.

Actually, the strategic plan of the Hualian Group to spin off the SKP business has shown signs earlier. On July 2, 2024, DT51, a community - retail format, was officially spun off from Beijing SKP and integrated into the Hualian Commercial Co., Ltd. system. This strategic adjustment is highly consistent with the Hualian Group's overall development direction of "focusing on the core business and optimizing assets" in recent years. This spin - off was officially completed in March this year, and soon after, news of the sale of Beijing SKP emerged.

DT51 is positioned as a community - style fashion boutique department store. It is a light - asset operation, mid - to high - end consumer - oriented luxury and trendy commercial format created by Beijing SKP, which is significantly different from SKP's high - end luxury and heavy - asset operation model. A set of comparative data shows that in 2023, the revenue of DT51's first store was 240 million yuan, and the net profit was 32.473 million yuan. In the same year, the total revenue of 25 traditional shopping - mall department stores under Hualian Commercial Co., Ltd. was only 1.099 billion yuan, with an average annual revenue of 44 million yuan per store.

Boyu Capital's intention to acquire Beijing SKP may lie in complementing its "high - end consumption ecosystem matrix."

Public information shows that Boyu Capital has successively invested in key links of the consumer industry chain, such as Xiaohongshu, the healthy - food brand FoodBowl, the cross - border fast - fashion brand SHEIN, Wanshi Zongheng Logistics, and J&T Express. According to an industry observer quoted by The Paper, if Boyu Capital can successfully include Beijing SKP in its investment portfolio, it will achieve a full - link layout from online social e - commerce and emerging brands to high - end physical retail, completing the "high - end consumption closed - loop" for its existing investments in property management, healthcare, and technological innovation.

The last question is, where will Beijing SKP go after the change of ownership?

Beijing SKP's success is not only due to the luxury - circle resources of Shin Kong but also to its experiential transformation of traditional department stores. Now, with the contraction of the consumption environment, there are also players in the luxury retail industry that offer more extreme and localized services.

According to reports from media such as Linkshop.com, in 2024, Beijing SKP's revenue may decline by 17% to 22 billion yuan. Nanjing Deji Plaza will become the new "king of stores" with a revenue of 24.5 billion yuan. The latter is a high - end shopping mall known for its "local lifestyle": "24 - hour sales," internet - famous restrooms, and a membership - system service beyond the scope of shopping—for example, members' children can receive consultation on international - school admissions from the mall—all make Deji Plaza the new top - tier luxury destination.

In other words, the wealthy no longer just want to "shop." They hope for more human - touch services and experiences. This can also be seen from the actions of luxury brands, such as opening restaurants, operating spas, and cultivating VIC customers.

This trend is driving traditional department stores to continue to transform into experiential commercial complexes. Whether Beijing SKP can adjust its strategies in a timely manner based on its existing experience will determine whether it can maintain its leading position in the next stage of competition.