(Yicai) Dec. 7 --  Gome Supermarket, a Chinese grocer owned by Huang Guangyu, the founder of cash-strapped home appliances retailer Gome Retail Holdings, is operated by multi-channel network agency Jinyi Media, Yicai has learned.

Gome Supermarket’s headquarters are located at the same address as Jinyi Media’s office in the Baiyun district of Guangzhou, Yicai found during a recent visit there. Jinyi Media is also one of the supermarket’s major shareholders, an employee said.

Jinyi Media has a live broadcast e-commerce business on Douyin, TikTok's sister app in China, according to the employee. It has monthly turnover of CNY300 million (USD42 million) and will integrate resources with Gome Supermarket, the person noted.

Shares of Hong Kong-listed Gome Retail [HKG: 0493] surged by as much as 81 percent on Nov. 17 following a report that Gome Supermarket plans to open 10,000 outlets within three years.

The Beijing-based firm dismissed the report on the same day, saying it has no connection to the supermarket business, which it understood to be run by Huang, a major shareholder, and his companies in cooperation with independent third parties.

Gome Retail's stock tumbled 6.6 percent to close at 6 Hong Kong cents (1 US cent) today.

Gome Supermarket has opened four direct demo stores near its HQ and is seeking partners in China, Chief Operating Officer Luo Jianfeng told Yicai. Some overseas companies have recently inquired about cooperating, so Gome will likely explore overseas markets in the future, Luo added.

Every outlet of Gome Supermarket can do livestream events, and the HQ will help the stores train anchors and charge them CNY2,000 (USD279) each, according to the employee. The company will sell goods in 10 categories and focus on snacks and drinks to help brick-and-mortar stores quickly attract shoppers, she added.

The competition in food retailing is already cut-throat, so it is quite difficult to engage, and the operating revenues of leading brands Bestore and Three Squirrels are even shrinking, an industry insider said.

“The key to a retail’s store’s success is product competitiveness and store management capabilities, and it’s impossible to achieve sustainable development by relying solely on advertising,” the person noted.

Huang has been committed to revitalizing Gome since he was released from prison in 2021, but the business has yet to improve. Gome Retail's operating revenue shrank 97 percent to CNY415 million (USD58 million) in the first six months of 2023 from a year ago, while its net loss widened 19 percent to CNY3.5 billion (USD489 million).

Editors: Dou Shicong, Martin Kadiev