Global retail giant Walmart is shrinking store sizes in China as it moves into second- and third-tier cities targeting rural consumers.
Compared with a Walmart supercenter, which occupies about 10,000 square meters, Walmart's "compact hypermarkets" are around 3,000 to 5,000 square meters each, Jiang Wei, a Walmart China spokesperson, said via e-mail.
Also tapping into the lower-income market is Tesco, Britain's biggest retailer, which opened its sixth hypermarket Monday in Tianjin Municipality, pushing its store total in China to 89. Li Jia, a spokesperson for Tesco China, told the Global Times Monday that more than 50 percent of current hypermarkets are located in second- and third-tier cities such as Qingdao and Jinan in Shandong Province.
Tesco, the world's third-biggest supermarket group by sales after Walmart and Carrefour, pledged last month to quadruple its annual China sales over the next five years to about 4 billion pounds ($6.22 billion).
Walmart opened its newest compact hypermarket October 26 in Zhangshu, Jiangxi Province, a county-level city of 500,000 people, according to the Financial Times.
Operating under the Trust- Mart banner, it sells nearly 10,000 products ranging from food to clothes to home appliances.
In February 2007, Walmart purchased a 35 percent interest in Guangzhou-based Trust-Mart. To date, Walmart has more than 200 stores in China, Jiang said. According to Walmart corporate data, there are over 100 Trust-Mart hypermarket in China.
Pei Liang, secretary-general of the China Chain Store and Franchise Association, told the Global Times Monday that "The retail market share in first-tier cities is saturated, so the retail giants must turn to the second- and third-tier cities."
Zhao Ping, an official from the Consumer Economics Research Department under the Ministry of Commerce, noting that the purchasing power in those cities is emerging. But she added that even though retailers won't see immediate gains, they will have a foothold for the future.
China's retail sales of consumer goods rose 18.3 percent in the first three quarters of 2010, year on year, the statistics bureau said in November.
