Low-price strategy helps Dia expand

For Zhang Jingfang, a 62-year Beijing resident living in Huixin Dongjie, Chaoyang district, life has become convenient in recent years because she has at least three options for her daily shopping, all just a short stroll away.

"Within a five-minute walk from my apartment there are Dia, Shouhang and 7-Eleven outlets where I can buy almost everything I need, from food to cleaning products," she said. "It is very helpful since I'm getting old and have problems walking long distances."

The Dia discount store, which operates under Carrefour, is Zhang's favorite choice.

Every morning Zhang goes to the store with her 3-year-old grandson to buy vegetables for lunch and dinner, using the same cloth bag that she's used for the last 20 years. She also gets fruit and some snacks for the little boy.

"In the late 1980s I had to walk for at least half an hour to buy vegetables in a small and dirty bazaar and had to go even more further for other daily necessities," she said. "Since the 1990s more small stores and even supermarkets have popped up close to the place I'm living," Zhang said.

Unlike Carrefour outlets in Beijing, the Dia stores are small and selling goods at low prices.

"Vegetables are always at a good price and you sometimes can get surprises," she said.

In the middle of the 1990s Carrefour and Wal-Mart, two retailing giants, started business in China. In the early 2000s, more foreign and local retailers jumped into the market, including Spanish discount store operator Dia Group, which integrated with Carrefour in 2000.

Dia established its representative office in Shanghai in October 2001.

In May 2002 Dia signed an agreement with Beijing's Shoulian Commercial Group and submitted a joint venture plan to launch 20-30 discount stores, each 300 to 500 sq m in size, in Beijing's residential areas and other cities in northern China in 2003.

In December 2002 Dia Group signed another agreement with Shanghai Lianhua Supermarket Co Ltd in an effort to capture the markets in northern and eastern China.

According to the company's statistics, Dia currently owns 275 stores across China with 2,787 staff.

Dia initially planned to focus on selling food and beverages, pricing its products 10 percent lower than Carrefour.

But Zhang said vegetable and fruit prices at Dia are nearly equal those at Carrefour. "We visit the Dia store mostly because it is close to our homes," she said.

She still goes to Carrefour or Wal-Mart once a week to get vegetables not available in Dia, Shouhang or 7-Eleven.

Some Chinese people are less enthusiastic about Dia.

A netizen named Fu Lei'an on Internet forum Dianping.com said that Dia stores are especially designed for old housewives. Others on the forum complained about service and shopping environment.

"Workers at Dia stores are not nice or helpful to their customers and they seldom smile," he said.

(China Daily 03/16/2009 page9)