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withdrawn from countries such as South Korea that were not sufficiently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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