Technology adoption, contributions from fast-growing eyewear chain Zoff, and burgeoning loyalty programs for Circle K and Saint Honore have been credited with boosting Convenience Retail Asia’s half-year profit by 22.4 percent.
CEO Richard Yeung said a major part of the group’s success was the effectiveness of Circle K’s online-to-offline (O2O) business model, along with lower production costs at Saint Honore resulting from the depreciation of the renminbi. The group’s O2O CRM programs continued to lead business strategy; Circle K’s OK Stamp It and Saint Honore’s Cake Easy had memberships of 1.4 million and 0.6 million, respectively as at the end of June.
Circle K ended the half-year with 582 stores, including 339 Circle Ks in Hong Kong, 32 in Macau and 14 in Zhuhai. It also had 127 Saint Honore cake shops in Hong Kong, Macau and Guangzhou and seven Zoff eyewear stores in Hong Kong.
During the first half, Circle K’s comparable-store sales increased 4.4 percent, contributing to total sales of HK$2.185 billion against the $2.061 billion during the first six months of last year. The group’s OK Stamp It program drove sales by serving as the core platform for almost all of Circle K’s sales and marketing efforts. OK Stamp It members can download an app to receive exclusive promotional deals and loyalty offers that can be fulfilled instore.
The group also worked with JD to launch a pilot test for a self-checkout service powered by artificial intelligence (AI) at two Circle K locations. The experimental service uses an AI algorithm that can recognize up to five products in just one second with a high degree of accuracy.
“Designed with the new generation of consumers in mind, it marks the first checkout solution in Hong Kong to feature image recognition, and it promises to reduce checkout times significantly,” said Yeung.
Circle K also introduced a Scan & Pay self-checkout counter trial at a pilot store in Kwun Tong that allows customers to scan and pay for their own items.
Saint Honore achieved a single-digit increase in sales despite the macroeconomic uncertainty and depressed consumer sentiment during the half-year. The brand’s Guangzhou store network is being consolidated and it is enhancing its Shenzhen factory operations to implement “lean manufacturing” to reduce baking space, simplify workflow and improve operational efficiency for faster responsiveness between markets.
Convenience Retail Asia remains the only international franchise of Japanese fast-fashion eyewear brand Zoff, which Yeung said “continued to achieve remarkable results” during the half-year.
“Just a year and a half since its launch in Hong Kong, Zoff once again made positive contributions to the group’s results. Its store network also continued to grow: There are now seven Zoff stores in Hong Kong, all strategically located in high-traffic areas popular with younger consumers.”
In April, the largest Zoff store yet in Hong Kong opened at Taipo Mega Mall, carrying more than 1800 stock-keeping units.
Group-wide, Yeung said Convenience Retail Asia will be cautious given the macroeconomic uncertainty in the market. Priorities for the second half of the year are to continue building its O2O strategy for Circle K and Saint Honore and to open more Zoff stores.