Sanfo, one of the leading specialty outdoor retailers in China along with Tutwo, has decided to turn to running specialty retailing as this category has been showing interesting developments, starting from virtually nothing a few years ago. Sanfo is determined to equip its existing shops with specialty running corners. On top of this, the chain plans to open its first stand-alone running store in Beijing next spring, possibly under the name “Sanfo Running.”
There are currently only about 70 running events in China, despite the huge size of the country. One of them was a night-running event sponsored by Sanfo and held during the Asia Outdoor show, which attracted around 1,000 participants. Although the number sounds very small, this is a strong development from the small number of running events of the past years.
Sanfo's managing partner, Heng Zhang, told this publication during the Asia Outdoor show that the retail landscape is lagging behind the growing community of enthusiasts who run on trails, roads and streets in the country.
While leading brands such as Asics, Salomon and Tecnica have met the consumers' needs mainly through their own mono-brand stores, the presence of multi-brand running and multi-sport shops continues to be relatively poor in China.
Specialty outdoor retailers welcomed the new “Running Village” at the Asia Outdoor fair as they seem eager to fill the obvious gap in the retail landscape, at least in the booming trail running segment.
Meanwhile, Sanfo continues to expand its network of multi-brand outdoor stores and to push online retailing at the same time. Zhang estimates that the share of internet sales for core higher-end outdoor products is around 20 percent in China, but Sanfo is lagging behind and aims to increase its own share of e-commerce to 10 percent from 7 percent in the months to come.
Sanfo added three physical stores in 2013 and three more so far this year to reach a total of 35 doors, after closing one in a shopping mall of Nanjing. This year's expansion relies very much on the establishment of new shopping malls by Ikea, the Swedish furniture retailer. Sanfo has opened, or intends to open shortly, doors in Beijing and Wu Xi, a city between Shanghai and Nanjing.
In 2013, Sanfo raised its total sales by 18 percent to 300 million yuan renminbi (€36.08m-$48.48), with sales growth by 12 percent on a comparable basis. This includes the smaller turnover of the company's wholesale arm, Beijing Travelmouse, which distributes Nikwax and Lizard in the country. The net profit margin of Sanfo was around 10 percent.
Sanfo is still waiting to get the official go-ahead for its long-planned initial public offering. The Chinese government put IPOs on hold two years ago to cool down the economy. For a few months now, it has again been possible for some Chinese companies to file to go public, but companies such as Sanfo are on a waiting list to be granted a permit. Zhang hopes to move a critical step forward in this scenario in a year's time.
The fresh money generated through an IPO would be used in three ways: investment in new brick-and-mortar stores around the country, the development of online retailing and the development of new services. In particular, Zhang is looking at running travel agencies under Sanfo's helm, initially online.