Carrefour SA, the world’s second-largest retailer by revenue, is expected to open 15 new hypermarkets in China this year and roll out more “convenience stores” aimed at customers in local communities, according to the company’s top executive in the country.
Thierry Garnier, executive director of Carrefour China, said in Shanghai on Thursday that its latest multi-format strategy, which also includes an expansion of its e-commerce business and a new operational structure, is being created in an effort to regain ground in a market that had been affected by what he called a “frugal consumption environment”.
According to the financial report for last year, an expansion of outlets in China managed to generate organic growth of 2.5 percent, while sales fell by 5.3 percent.
The retailer opened 11 hypermarkets in China last year and closed eight stores, but Garnier still considers the hypermarket as its core business, which has been established firmly in China for 20 years.
“The hypermarket format is not going to end. There will be a lot of opportunities in many cities for a long time and it has a great future in China,” he said.
The retailer is also expected to open more what it calls proximity stores branded Easy Carrefour.
Garnier said the format is different from its other convenience stores in that they offer takeaway food. The proximity stores additionally provide services and fresh foods to nearby communities from within what is a slightly larger space, offering varieties of merchandise.
Its e-commerce activities, launched during the first half of last year, are not pure online business but an extension of its existing store network.
Garnier said the retail giant will also continue to modernize and renovate 75 of its existing stores in China.
“We have to be younger, to offer products that young people would buy,” he said.
Jason Yu, general manager of Kantar Worldpanel, said that Carrefour’s China business had certainly been affected by the overall slowdown of the grocery market and the changing shopping habits of consumers.
The most significant shift in the shopping behavior of Chinese shoppers, he said, was that they are no longer satisfied with one-stop shopping in a store designed for everyone.
They increasingly favor different stores to satisfy different shopping needs, and hence “we are seeing a proliferation of retail formats as well as the rapid rise of e-commerce channels”, Yu said.
From a market share point of view, however, the strengthening of its hypermarket sector is more crucial to its future performance in China than its convenience offering.
The company is currently testing the popularity of a Carrefour Express store in Shanghai, which Yu said was merely an exploration of the sector, given the intense competition already in the convenience store sector.