Suning expands store footprint
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A Suning outlet in Yichang, Hubei province. The retailer had 885 outlets in 193 cities nationwide by the end of September last year. [Liu Junfeng/China Daily] |
Electronics retailer Suning Appliance Co is expanding its store footprint by 34 percent this year to cash in on increased consumer spending in the country.
Senior company officials told Bloomberg in a telephone interview yesterday that the retailer intends to set up 200 outlets in smaller towns and cities and 100 in rural areas. The company indicated that it would invest between 2 million yuan and 10 million yuan on each new store.
But Suning made no comment in a telephone interview with China Daily.
"The worst-case scenario for the economy didn't materialize and the best of times have yet to arrive, so there's vast room for growth," Sun Weimin, president of Suning, told Bloomberg.
By the end of last September, the home appliance giant owned 885 outlets in 193 cities nationwide, according to company figures.
Suning is committed to boosting its share in the electronics appliances market worth 1.13 trillion yuan, competing with Gome, the second-largest electronics retailer by market value, which owns about 1,300 outlets across China.
Alex Liu, retail analyst at market research firm Euromonitor International, said the move signals the retailer's confidence in the Chinese economy this year. "They are tapping the opportunities arising from the government's stimulus plans," he said.
The government unveiled various programs last year to encourage domestic consumption. It launched a 20-billion-yuan subsidy program for rural families to purchase electrical appliances last February.
At the same time it also announced subsidies worth 2 billion yuan for families in nine provinces and cities, including Beijing, Shanghai and Guangdong, to replace old home electrical appliances.
Liu said the booming property market in China has also driven consumption for home electronics goods.
Electronics sales in China are expected to grow 10 percent this year after increasing 10 percent last year, according to a report by Consumer Electronics Association, a US industry trade group.
The total volume of retail sales in China is expected to grow 16 percent in 2010, Commerce Minister Chen Deming said late last year.
Suning said on Dec 31 that it would spend $28 million to acquire Citicall, a leading consumer electronics retailer in Hong Kong, helping it gain access to 22 stores in Hong Kong and a platform for overseas expansion.
The deal will also help Suning better develop its marketing strategies for the mainland, Sun said.
Last year, the company bought a 27.36-percent stake in Japanese electronics retailer LAOX Co, becoming its biggest shareholder.
Liu said Suning would continue to grow mainly in second- and third-tier cities while overseas purchases would be just tentative moves for its long-term development.
