GOME to move to no-commission sales - ResearchInChina

Date:2007-11-30liaoyan  Text Size:

GOME Electrical Appliances Holdings Ltd, China's biggest electronics retailer, plans to adopt a low-pressure, no-commission sales model similar to Best Buy's that may boost costs but it hopes will lure more customers.

GOME, which operates 760 stores across the country, said on Thursday its first no-commission store, sporting a new logo and product displays laid out by type rather than by brand, will open in Shanghai this weekend.

"GOME already has a vast sales network, so our priority now is to improve management and sales at each store," said Beijing-based spokesman He Yangqing.

"The new sales model would improve customer satisfaction and will be gradually adopted nationwide," He said.

He added that the new approach was decided upon following market research and was not copied from Best Buy.

Beijing-based GOME is competing for market share with Best Buy and Suning Appliance Co in China's rapidly growing consumer electronics market, which is expected to hit $100 billion next year.

Supermarket chains Wal-Mart Stores Inc and France's Carrefour also sell home appliances through their fast-expanding networks in China.

Best Buy made its foray into China last year with a flagship store in Shanghai and plans to open two or three more outlets in the city in the next 18 months.

The biggest U.S. electronics retailer has brought to China its no-commission sales model, which displays products to allow easier comparisons and encourages employees to give unbiased advice. 

In contrast, many Chinese retailers including GOME and Suning hire commission-based sales staff from manufacturers who have incentives to push a particular brand.

"The new sales model would increase staff costs in the short term, but it would attract more customers, so it's the right direction to go," said Xiang Tao, an analyst at TX Investment Consulting Co.

GOME, owned by billionaire chairman Huang Guangyu, will also start using a new green and orange logo at its stores by the end of this year, replacing its 21-year-old blue logo, GOME's He said.

GOME shares were up 2.25 percent at HK$15.44 in late trade on Thursday, underperforming a 4.20 percent rise in the benchmark Hang Seng Index.

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