BIZCHINA / Top Biz News

Carrefour keeps pace with expansion
By Dai Yan (China Daily)
Updated: 2006-05-31 09:02

Customers of China's Carrefour hypermarkets spend an average 110 yuan (US$13.8) each visit; a significant figure when multiplied by the country's consumer base. And the world's second-largest retailer said it plans to keep pace with the rapidly expanding domestic market.

Jose Luis Duran, CEO of Carrefour Group, said the company will open 20 hypermarkets this year compared with 14 in 2005.

The new stores represent one-fifth of Carrefour's expansion worldwide for 2006, Duran said. In total, the company plans to open 45 hypermarkets in Asia, 30 in Europe and 25 in Latin America.

"That pace will continue through 2008 at least," says the CEO.

Carrefour currently operates 76 supermarkets in China. In 2006, Carrefour has already opened seven new stores in the country and will introduce another 13 this year, he said.

Carrefour has also opened 230 Dia outlets, its discount store, in China, and plans to open 70 more this year.

With the national economy growing at more than 9 per cent a year, China's retail market is expected to expand by 8 to 10 per cent a year, to US$2.4 trillion by 2020.

To grab a bigger part of the huge domestic retail market, foreign retailers are opening more stores as China relaxes its policies on the industry. Wal-Mart, Carrefour's global rival, intends to open 18 to 20 new stores throughout the country in 2006.

The quick expansion is also part of the French retailer's global strategy; its rate of new store openings will increase sharply during the 2006-08 period in its key market, Duran said.

The company intends to open about 100 new hypermarkets in 2006  its largest number of openings in a single year and double the average for each year between 2001 and 2004.
In total, taking into account other formats, supermarkets, and discount and convenience stores, Carrefour plans to open 1,000 new outlets in 2006. These figures are equivalent to 1.5 million square metres of retail space.

"In short, we will be opening more square metres in fewer countries in order to increase the impact of each euro invested," Duran said.

Carrefour has withdrawn from countries such as South Korea that were not sufficiently profitable and decided to focus its efforts and investments on key markets in which it can lead.

"It will still take some time for China to become truly significant, but we have opened more stores in China in 10 years than we opened in Spain and Brazil in 30 years," Duran said.

Carrefour had revenue of 2 billion euros last year in China, only about 2 per cent of the group's total worldwide revenue.

Besides the expansion, Carrefour will have more debuts in the market, said Luc Vandevelde, chairman of Carrefour's supervisory board.

The retailer will open its first environmentally friendly supermarket in the world here.

The "green" supermarket will be built in Beijing and will use 30 per cent less water and electricity than other Carrefour stores, said Vandevelde.

Plans for the store, which will open before 2008, include recyclable bags and special electric trams.

This is also the first time that Carrefour has bought real estate to open a store rather than renting an existing space.

Duran said Carrefour believed it would not have any difficulty finding the right locations and people for its expansion.

"We will stick to co-operation with local partners who are good at finding the good sites," Duran said.

The company itself also has a group of 40 development managers to seek locations for hypermarkets.

The retailer recently signed an agreement with China Europe International Business School (CEIBS) to support the school over a 3-year period. In return, Carrefour will have priority to recruit elite masters from CEIBS.

More local people will take senior positions in the company, said Vandevelde. Eighty per cent of the hypermarkets' general managers are Chinese and the share will continue to increase in the near future.

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