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04 Business Review
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Underlying sales productivity for the Group’s Grocery Retail business has improved over 20% in 2021 relative to 2019. Operating profit for the division relative to 2019 levels, a better indicator of underlying performance of the business, more than doubled. Total convenience sales increased 7% due to combination of like-for-like sales recovery and strong network expansion. Profitability in Hong Kong increased relative to the prior year as customer traffic normalised.
Group Sales*
Group Profit†
* Including share of associates and joint ventures.
† Based on operating profit before effect of adopting IFRS 16 and share of results of associates and joint ventures, excluding selling, general and administrative expenses and non-trading items.
Grocery Retail
DFI Retail Group’s Grocery Retail business has been serving our customers for over 70 years. Today we lead the industry in Asia, offering the freshest produce, excellent service and great value through a range of iconic brands.
Reported sales for the Grocery Retail division in 2021 were US$4.2 billion. Consistent with the Group’s strategy of proactively managing our business portfolio, the Wellcome Taiwan business was successfully divested at the end of 2020. In addition, following a detailed strategic review, the Group exited its Giant Indonesia operations in July. These portfolio actions accounted for over half of the 22% reduction in reported sales for the Grocery Retail division in 2021. The remaining reduction in revenue was attributable to the normalisation of customer buying behaviours and government-imposed restrictions on movement and trading, particularly in parts of Southeast Asia.
Nevertheless, the headline reduction in revenues masks the underlying improvements in the performance of the business units. Underlying sales productivity has improved by over 20% in 2021 relative to 2019 levels. Own Brand participation continued to gain traction, reflecting our sustained efforts to expand offerings and build a strong brand that resonates with customers.
Underlying sales productivity has improved by over 20% in 2021 relative to 2019 levels
‡ Including 100% of associates and joint ventures.
Own Brand participation continued to gain traction with over 2,000 SKUs launched
Reported operating profit for the Grocery Retail division was US$143 million. A headline reduction in profitability of 46% was primarily driven by normalisation of customer buying behaviours and a reduction in the level of government support received compared with the prior year. Operating profit for the division relative to 2019 levels, a better indicator of underlying performance of the business, more than doubled. This was driven by strong improvements in sales productivity and good progress with business improvement programmes that have been introduced to enhance product range, operating efficiency, customer service standards and the overall customer shopping experience.
All key banners continued to focus on delivering enhanced levels of value for customers in 2021, through a combination of ongoing price reinvestment campaigns, disciplined cost price reviews and the introduction of quality Own Brand products at affordable prices.
Convenience
With over 40 years of delivering the convenience shopping experience, DFI Retail Group operates the 7-Eleven franchise in Hong Kong, Macau, South China and Singapore and offers innovative products and services to customers.
Total convenience sales increased 7% to U$2.2 billion due to a combination of like-for-like sales recovery in Hong Kong and the Chinese mainland, and strong network expansion. Operating profit was US$54 million. The slight reduction of US$3 million in operating profit relative to the prior year was primarily due to lower levels of profitability in the Chinese mainland and Singapore, as the ongoing continuation of the pandemic has impacted customer traffic over the course of the year. Profitability in Hong Kong increased relative to the prior year, as the reduction in transmission of local COVID-19 cases in the year saw customer traffic normalise.
7-Eleven South China’s daily O2O transaction volume has quadrupled during the year
