UK retail giant Tesco is planning to open its first Express store in Shanghai next month. The chain, which formed a joint venture with a Chinese company in 2004, already has more than 50 hypermarkets on China’s east coast, and is planning to add smaller stores to the list.
Tesco is trailing American and French retail giants Wal-Mart and Carrefour, respectively, in the race to open hypermarkets across China. The UK retailer moved into China nearly 10 years after Carrefour, but now believes the country – along with Turkey and the United States – will be crucial to its long-term success.
Last year, Tesco opened its first Fresh & Easy convenience stores in California. It is spending around A$700 million a year rolling out its hard-discount stores. If the format appeals to US shoppers, it could have a chain of 1,000 outlets by 2012.
China is one of Tesco’s smaller overseas markets, but the retailer could spend up to A$800 million a year developing stores there if it opens 10 new hypermarkets a year, says analyst Shore Capital.
Tesco is increasingly looking to its 12 international businesses to drive growth. The international business, which accounts for more than half of group space, will continue to become an important source of profits as they mature.
The possible rollout of dozens of small Tesco Express stores comes after the retailer opened its first branded store in Beijing a year ago as part of a process of putting its name above the shop doors of all its hypermarkets.
Carrefour has more than 100 hypermarkets and nearly 300 hard-discount stores – branded Dia – in China. Wal-Mart has 100 wholly owned hypermarkets and an interest in a further 102 Trust-Mart stores, after it struck a deal early last year to buy a 35 per cent stake in a local chain.