CARREFOUR IS LIKELY TO CLOSE ANOTHER 2 OUTLETS

Customers are shopping at a Carrefour SA supermarket in Haikou, Hainan province, during the Spring Festival. The company's two stores in Changchun, Jilin province, and Shaoxing, Zhejiang province, are likely to be shut down. Shi Yan / For China Daily

Retail giant Carrefour SA is likely to shut down another two stores in China, and experts attribute it to the French company's poor knowledge of local markets and the white-hot competition among retailers in second- and third-tier cities.

Insiders at a Carrefour store in Changchun, in Northeast China's Jilin province, said it has stopped purchasing and is waiting to hear from the China headquarters when it will close, China Business News reported on Tuesday. The store, the company's second in Changchun, occupies 8,000 square meters.

The newspaper reported that the store in Shaoxing, Zhejiang province, is also on the list to be shut down. It quoted Carrefour employees as saying that they are still purchasing some goods but they have heard the store will close before May 1.

Dai Wei, a Carrefour China representative, did not reply to China Daily's request for comment on Tuesday.

Mike Bastin, a visiting professor of brand management at the China Agriculture University, told China Daily that Carrefour has not understood the local market well.

"I have been to Carrefour's outlets in Beijing, Qingdao and Guangzhou, and the food is similar in each," Bastin said. The retailer should attempt to tailor its products and services to meet local people's preferences, he said.

Zhu Kejun, a teacher at Shaoxing No 1 Middle School, told China Daily the store in that city is not popular due to its location.

"Other large retailers, such as Auchan and Lianhua Supermarket, are either in the downtown area or new development zones, but Carrefour is in the basement of an apartment building, and many people don't even know it's there," Zhu said.

Carrefour has closed four stores in Dalian, Xi'an, Jiaozuo and Foshan - all second- and third-tier cities, like Changchun and Shaoxing.

The China Business News report said that Carrefour China has had location problems in second- and third-tier cities because early comers already had taken the best sites.

"When competitors have the best location, for instance RT-Mart rents property in busy commercial areas in Shaoxing, Carrefour chooses cheaper, inferior locations," it quoted a former senior executive at Carrefour China as saying.

China Daily