Interesting piece in Reuters about how China has proven to be "a tougher market than expected" for big box stores to find success in the sixteen years since Walmart opened its first supercenter there.
According to the story, "Overseas names from Britain's Tesco Plc to Germany's Metro AG are slowing their Chinese expansion, while Hong Kong-listed Sun Art Retail Group Ltd has overtaken Wal-Mart as the country's top hypermarket chain.
"The move last month by U.S. home improvement chain Home Depot Inc to close its big box stores in China served up the latest evidence of foreign retailers' struggle with a crowded market, slowing economy and tough competition in a country that was once their best hope for growth."
The problem, the story suggests, is that while China has an enormous population, the country cannot handle unlimited retail options; at the same time, the Chinese economy has been slowing down, which has left people with less money to spend. And there remain cultural differences that are not always easy to bridge, which is what Home Depot found when shoppers there did not embrace its do-it-yourself model.
To be clear, Reuters writes, things could be a lot worse: "Overall retail sales growth remains high by international standards -- year-on-year growth has held above 13 percent every month this year, and in fact has not posted an increase smaller than 10 percent since 2006 -- but it has slowed from 17-18 percent growth late last year."
But China is not the slam-dunk that many retailers thought it would be.
According to the story, "Overseas names from Britain's Tesco Plc to Germany's Metro AG are slowing their Chinese expansion, while Hong Kong-listed Sun Art Retail Group Ltd has overtaken Wal-Mart as the country's top hypermarket chain.
"The move last month by U.S. home improvement chain Home Depot Inc to close its big box stores in China served up the latest evidence of foreign retailers' struggle with a crowded market, slowing economy and tough competition in a country that was once their best hope for growth."
The problem, the story suggests, is that while China has an enormous population, the country cannot handle unlimited retail options; at the same time, the Chinese economy has been slowing down, which has left people with less money to spend. And there remain cultural differences that are not always easy to bridge, which is what Home Depot found when shoppers there did not embrace its do-it-yourself model.
To be clear, Reuters writes, things could be a lot worse: "Overall retail sales growth remains high by international standards -- year-on-year growth has held above 13 percent every month this year, and in fact has not posted an increase smaller than 10 percent since 2006 -- but it has slowed from 17-18 percent growth late last year."
But China is not the slam-dunk that many retailers thought it would be.
- KC's View:
