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    Wal-Mart experimenting with small stores in China

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    Wal-Mart, the world’s top retailer, said Wednesday that it had begun a pilot program to open convenience stores in China, which has one of the world’s fastest growing retail markets.

    Wal-Mart, better known for its megastores and hypermarkets, opened three convenience stores in December in southern China in a low-key initiative. ‘‘The three shops, which are roughly300 square meters each, are aimed at providing service to local communities,’’ Vivi Mou, a company spokeswoman, said in an interview. That makes each shop about 3,300 square feet.

    Wal-Mart will observe market acceptance and customer preferences for the stores, named Hui Xuan, or ‘‘Smart Choice,’’ before deciding on future development plans, Mou said. All three are in Shenzhen, not far from Hong Kong.

    She would not give any details aboutthe business performance of the three stores so far, and she declined to comment on a report from National Business Daily that Wal-Mart planned to open 100 of the convenience stores across China this year and 1,000 in five years. National Business Daily, a Shanghai-based newspaper, said its source for its report was an unidentified company official.

    The retail sector in China is valued at$824 billion. Smaller than that of Germany in 2003, the market could be almost twice as big by 2013, according to Euromonitor.

    Wal-Mart now operates 227outlets and employs more than 70,000workers in China, according to its Website. The retail giant has set up similar stores in other markets, including Britain, Japan and Mexico, Mou said.

    Wal-Mart, which is based in Bentonville, Arkansas, will benefit from its clout as the world’s biggest retailer inthe new convenience store initiative, a retail analyst at a major Western brokerage said on condition that his name not be used because he was not authorised to speak to the media.

    ‘‘We will see an immediate impact in terms of competition for prime locations for store operations,’’ he said. ‘‘It is a good move in the longer term for collecting market intelligence, such as consumer behaviour. It will be useful for its other retail operations.’’

    Convenience stores have become a lucrative business segment for retailers in China, enjoying relatively high margins. President Chain, which operates 7-Elevenconvenience stores in Taiwan under a licensing agreement, recently opened its first 7-Eleven store in Shanghai. Other foreign convenience store operators in China include Lawson, which is based in Japan, and two local operators, Kedi and Lianhua.
    Mou said that larger stores would remain Wal-Mart’s main business model in China.

    Analysts say the company still has plenty of room to grow in China, as it shifts its focus from mature markets to less mature ones like those in Mexico, China and Brazil.

    Source: Financial Chronicle