Retail evolution

Zeng Xianwei, a director responsible for the local retail market in the Yibin bureau of commerce, part of the local government, says the retail landscape is being transformed.

"The city is like a magnet. The retailers now have difficulty expanding in the first- and second-tier cities because most of the best sites are taken," he says.

"Auchan wanted to expand in the Chengdu city area but the government cannot provide them with a favorable location there; we can do that."

Zeng, who has been a government official for 27 years, makes no bones about the local authority providing help and incentives to foreign retailers.

"We offer some favorable taxation conditions. If you take Walmart, for example, we now operate some bus routes to its store to support its customer base."

Zhou Zhen, marketing manager of the Ikea Chengdu store. Wu Chuanming / for China Daily

One might expect the local Chinese supermarkets to object to the local government luring in new competition for them.

Wu Wenjie, executive director of Lv Yuan, one of the largest local supermarket groups, says the competition is actually useful.

"We are happy to see Wal-Mart here and we see them as a sort of role model. They have good systems and we want to bridge the gap with them."

Lv Yuan was started by two local entrepreneurs, brothers Wang Xuehui, 43, and Wang Xuehua, 41, in 2000. It now has 15 stores, the largest of which is 4,800 square meters, and 1,500 small outlet franchise stores.

Despite originating in a third-tier city, the stores look very bright and modern and wouldn't look out of place in either Beijing, Shanghai or for that a matter a European town, if you ignore that your fish is bought while still alive.

"We try and present a cozy and pleasant environment," adds Wu. "We stock a lot of American and European brands, British chocolate and foreign wine."

Like foreign retailers, Lv Yuan has launched its own loyalty card scheme, which has helped boost sales by 30 percent in just three years.

"It has enabled us to send out a short text message to customers if we have a new product we think they might be interested in," adds Wu.

Not many people in Yibin have traveled much outside the region but those who have don't notice a big difference in Yibin's food retail offerings compared to the big cities.

Yao Yuan, 40, an engineer who was out shopping with his 3-year-old son Zhijie, says there has been a big improvement in the retail amenities in Yibin over the past couple of years.

"I think this is particularly the case since when Walmart came. I don't think compared to Chengdu or even Shanghai there is now a big difference in terms of what you can get here."

The local government points out that Lv Yuan has also benefited from being offered land on favorable terms for store development and tax discounts.

"We adopt a 'negotiable condition' strategy when we cooperate with foreign as well as local retailers," says Zeng at the Yibin bureau of commerce.

Distribution and being able to get goods to a remote city like Yibin is still a barrier to retail growth.