Top retailers ring up more sales and growth

By Liu Jie | China Daily | Updated: 2008-04-04 07:29

Chain retailers saw fast growth last year, with mergers and acquisitions helping major players to consolidate their positions.

That's according to the China Chain Store and Franchise Association, which recently released a list of the nation's top 100 chain retailers.

Combined sales of the top 100 retailers - both local and foreign - exceeded 1 trillion yuan last year, up 21 percent on 2006 and accounting for 11.2 percent of total sales of consumer goods, the association said in a report.

The top 100 retailers had a total 105,191 outlets in China by the end of last year - 58 percent more than in 2006.

Local electrical appliance chain Gome notched up the highest total sales of 102.35 billion yuan and the most stores at 1,020. Shanghai-based Bailian, Gome's arch-rival Suning, State-owned Vanguard and Dalian-based Dashang followed, with sales of 87.14 billion yuan, 85.47 billion yuan, 50.29 billion yuan and 50.22 billion yuan respectively for 2007.

"The top five are the same as last year's ranking, which indicates Chinese chain retail giants are stable and making healthy progress," the report said.

The industry is seeing strong progress, with market leaders developing quickly, overseas brands doing well, plenty of mergers and acquisitions and more competition, the report said.

The association put together its first "top 100" in 2003. Since then, the top 100 chain retailers have seen annual growth of 45 percent, 39 percent, 42 percent, 25 percent and 21 percent. But growth has slowed in the last two years as the market has become more sophisticated and competitive, the report said.

The electrical appliance segment - including digital and telecommunications - stood out as particularly robust, with major players Gome, Suning, Best Buy's joint venture Five-Star, high-end computer retailer PCMall and mobile phone shop Dixintong all ranked in the top 30.

The five retailers' average annual growth rate for sales was 28 percent and for outlets 34 percent - noticeably higher than retailers in other sectors.

Chain department stores also performed well, with 12 on the top 100 list, annual average sales growth of 23 percent and outlet growth of 5 percent.

Chain retailers are also cashing in on the rural market. Beijing Xinhezuo Group, a State-owned retailer set up in 2003 that specializes in county and village operations, has streaked ahead since it entered the rural market.

This year is Beijing Xinhezuo's first appearance on the top 100 list. Its outlets increased 145 percent from 21,210 in 2006 to last year's 52,000.

Overseas retailers continued to expand their presence in China last year. Fifteen key foreign chains generated 182.5 billion yuan of sales in the nation last year through their 3,956 outlets.

Nine foreign hypermarket operators including Wal-Mart, Carrefour and Metro have a total 533 outlets in the nation, with annual sales of 230 million yuan at each. The nine retailers opened 91 new outlets in China last year.

Chain retailers are also seeing more industry consolidation through State-owned asset restructuring and mergers and acquisitions.

Last year, the top 10 retailers notched up combined sales of 502.9 billion yuan - over half that of the total for the top 100. But that figure was 42 percent in 2003, the report said.

Retailers on the top 100 list posted average sales of 10.02 billion yuan in 2007, up from 8.55 billion yuan in 2005.

New retail behemoths emerged after the State-owned assets reshuffle. Shanghai Bailian Group is one of them - a commercial aircraft carrier composed of four large State-owned companies.

Retailers are also consolidating their positions through more M&As. Gome acquired its domestic rival Dahong, Wal-Mart took a stake in Trust-Mart, Beijing Jingkelong merged with Beijing Shoulian Group and Vangaurd bought The Home World.

Local and foreign retailers are developing fast and trying to be more competitive, the report said.

New retail models are also emerging to cater to changing consumer tastes. They include premier supermarkets, regional wholesale centers, fresh food convenience stores and online stores that deliver.

Meanwhile, some retailers such as Wal-Mart, Carrefour and Suning have set up their own food supply networks, direct procurement centers and stock management systems to improve food safety and quality and cut costs.

The industry is also placing more emphasis on consumer rights, food safety, natural disaster relief donations and community involvement.

The association predicts chain retailers will continue to develop this year, but will face higher operating costs and more competition. Innovation and corporate social responsibility will become increasingly important, the report said.