Retail chain store Wumart says "goodbye" to Wal-Mart
05 Jul '05
6 min read
So the resourceful Wenzhong decided to open a living, breathing store of his own, to showcase his software. And so Wumart was born. "The first store was very successful. It had annual sales of over 100m renminbi (£6.6m), so this just encouraged me to spend more time on supermarket development in China," says Wenzhong, in his first interview with a British newspaper.
So the chain that started by accident grew. Pre-tax profit for the year to December 31 was R175m (£11.6m), up 62 per cent on the previous year, on sales of R2.6bn (£172m), again up 62 per cent. Profit is forecast to grow by 45 per cent, 35 per cent and 21 per cent over the next three years, according to US bank Citigroup.
Wumart's format is simple. It sells low-priced branded and own-label food and consumer goods from stores of three distinct types: hypermarkets, supermarkets and mini-mart convenience stores.
The main difference between Chinese and Western shopping habits is that Chinese consumers tend to buy their food from stores on a daily, rather than weekly, basis.
"The Chinese consumer wants high-quality and low-priced goods but they also want convenience. We even have two dozen stores underground in subways," says Wenzhong.
Wumart's growth has been helped by booming economic conditions. Retail sales grew by 13 per cent in China last year, outpacing GDP by 4 percentage points. And for store groups, Beijing is the most wonderful market.
The city has a population of 15m, four times that of New Zealand, and has seen sales through so-called "organised retail chains" (as opposed to markets) grow by 40 per cent a year since 2000. The Beijing region sees annual retail sales of a whopping R600bn (£4bn). Wenzhong wants to capitalise on this and is planning to have 1,000 Wumart stores within five years.
marketing@alchempro.com
