Germany’s Metro closes all its convenience stores in China
December 12, 2017 Category Retail, Weekly
German retail and wholesale firm Metro has closed all its convenience stores in China less than two years after setting them up, citing what it said were “drastic changes” in the business environment, including skyrocketing rents in major cities.
Its four MyMart stores in Shanghai, which sold fresh and cooked food, as well as snacks and goods under Metro’s own Aka brand and which were located near mid to high-end commercial sites, closed at the end of September. “Due to drastic changes in the market, like the quick increase in property prices in many cities in China, the management of Metro China has decided to suspend its efforts in the convenience business,” a company statement said. “But this will not affect Metro China’s commitment to long-term development in China. We will keep expanding our sales network in China and continue to focus on four pillars – O2O stores, food service delivery, welfare and gifting and other e-commerce channels, where we can provide added value to Chinese customers,” it said.
Metro announced its move into the convenience store business in April 2016, with the first two Shanghai stores opening a month later. Metro China’s CEO, Jeroen de Groot, said at the time that convenience stores would become a key pillar to support the company’s development, and that they would work in tandem with the rest of the business to provide a further platform for consumers. However it came up against a market full of mature foreign and domestic players, while unmanned stores that are very similar to traditional convenience stores are also springing up, making for a tough operating environment, analysts said.
“One of the reasons could be that the Metro stores were very similar to Japanese convenience store chains like 7-Eleven,” said Luo Xianfei, Retail Analyst at Northeast Securities. “My Mart stores’ fresh food supply chain might not be as competitive as other players,” he added. China’s convenience store business experienced a period of rapid development in the first half of 2017, with e-commerce giants like Alibaba and JD and traditional retailers including France’s Carrefour and China’s Yonghui Superstores all accelerating their presence in the sector, the South China Morning Post reports.
Metro entered the China market in 1996, and now operates more than 80 big supermarkets in more than 50 cities.
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