Car­refour shops around for new lo­ca­tions in China

China Daily (Canada) - - BUSINESS - By WANG ZHUOQIONG wangzhuo­qiong@ chi­

French Car­refour SA, the world’s sec­ond-largest re­tailer by rev­enue, plans to open 20 new hy­per­mar­kets an­nu­ally and en­ter 30 new cities in the next three years, a move to keep up a strong ex­pan­sion pace in fur­ther de­vel­op­ing mar­kets in lower-tier cities in western and cen­tral China.

Thierry Garnier, pres­i­dent and chief ex­ec­u­tive of­fi­cer of Car­refour China, an­nounced on Thurs­day in Bei­jing the group is ex­pected to open 60 new stores to ex­pand its pres­ence to a to­tal of 100 cities within three years, with most new stores opened in thir­dand fourth-tier cities in the coun­try. Car­refour now has 236 stores in 73 cities in the coun­try.

De­spite the strong com­pe­ti­tion and chal­leng­ing re­tail mar­ket, Car­refour still sees many op­por­tu­ni­ties linked to new poli­cies from the gov­ern­ment, said the CEO. “We de­cided to cre­ate new ter­ri­to­ries in cen­tral and western China to open more stores and put in more re­sources,” Garnier said af­ter ac­com­pa­ny­ing vis­it­ing French Prime Min­is­ter Jean-Marc Ayrault to a Car­refour store in the Shuangjing area of the Chi­nese cap­i­tal on Thurs­day af­ter­noon. “Our plan is to open new stores to main­tain strong ex­pan­sion speed in the fu­ture.”

The French re­tailer has seen its third quar­ter sales rise by 4.7 per­cent in China, one of its two key in­ter­na­tional mar­kets. Its global sales growth in the third quar­ter, which ended on Septem­ber 30, in­creased 2.7 per­cent year-on-year.

Her­mann Ng, chief ex­ec­u­tive of­fi­cer of Re­tail Na­tion, a con­sul­tancy in Shang­hai, said the com­pany’s growth is still slower than strong Chi­nese com­peti­tors, many of which achieved dou­ble-digit growth this year.

He said the move demon­strates Car­refour’s ded­i­ca­tion to stay­ing in the Chi­nese mar­ket, boosts the morale of em­ploy­ees and en­hances the com­pany’s in­ter­nal ca­pac­ity amid ru­mors that the re­tailer is ex­it­ing the coun­try. The big­gest re­tailer in France has cut jobs and ex­ited over­seas mar­kets it doesn’t dom­i­nate to gen­er­ate cash and re­duce debt as part of a three-year turn­around plan.

Ja­son Yu, gen­eral man­ager of Kan­tar World­panel China, said Car­refour demon­strated its com­mit­ment to fur­ther ex­pand its foot­print and re­vive its busi­ness per­for­mance in China. Ac­cord­ing to Kan­tar World­panel re­port, Car­refour still ex­pe­ri­enced a loss of shop­pers at na­tional lev­els across all re­gions. Com­pared with RTMart, it also showed a weak­ness in the num­ber of vis­its its cus­tomers are pay­ing, Yu said.

Open­ing more new stores in the right lo­ca­tions will def­i­nitely help it to re­cover its shrink­ing shop­per base but, in­evitably, puts it in more di­rect com­pe­ti­tion with ag­gres­sive lo­cal ri­vals that have al­ready built strongholds in lower-tier cities in China, said Yu.

For­eign re­tail­ers have met many chal­lenges af­ter high­speed ex­pan­sion in China in re­cent years. The world’s largest re­tailer by sales, Wal-Mart Stores Inc, has closed 11 stores and will shut 15 to 30 other out­lets in the next 18 months across the coun­try. Wal­mart said the clo­sures will rep­re­sent about 9 per­cent of its to­tal store port­fo­lio and 2 to 3 per­cent of sales vol­ume through next year. United King­dom-based Tesco Plc an­nounced it will form a joint ven­ture with China Re­sources En­ter­prise Ltd, which op­er­ates the Van­guard stores.

Kan­tar World­panel re­ported a 7.1 per­cent value growth for the fast-mov­ing con­sumer goods mar­ket for the lat­est quar­ter up to Sept 6, com­pared with the same pe­riod a year ago. In­creases in av­er­age prices, as well as more shop­pers, re­sult­ing from ur­ban­iza­tion, is driv­ing the value growth.

Lower-tier cities in China are con­tribut­ing heav­ily to the growth, with 73 per­cent of the last quar­ter’s growth com­ing from out­side pro­vin­cial cap­i­tals, ac­cord­ing to the re­port.

The stronger growth has come from shop­pers in the lower-tier cities putting more items in their bas­kets this quar­ter. Gen­er­ally shop­pers in higher-tier cities will pur­chase more fast-mov­ing goods over the year and this trend is now clos­ing the gap.

Merg­ers and ac­qui­si­tions have now be­come com­mon­place. The joint ven­ture be­tween RT-Mart In­ter­na­tional Ltd and Groupe Auchan SA in 2011 formed the Sun Art Re­tail Group and be­came the largest re­tail en­ter­prise in China.

On Oct 15, Wu­mart Stores Inc an­nounced plans to ac­quire 36 stores from Lo­tus which would give Wu­mart a 3 per­cent share of the na­tional mar­ket, mov­ing its rank­ing from eighth to sixth, ac­cord­ing to Kan­tar World­panel. The move would al­low Wu­mart to grow its pres­ence in Shang­hai and fur­ther strengthen its lead­er­ship in North China.


A Car­refour su­per­mar­ket in Mengcheng, An­hui prov­ince.

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