Facing surging land costs and changing consumer habits, Metro China has decided to explore new business models in China, its largest Asian market.
Redeveloping stores following an asset-light strategy
Metro has previously been building and holding its own Metro Cash & Carry stores instead of renting from third-party landlords, which, at the time, was an advantage from competitors. However, the asset-heavy strategy is no longer an option as the land costs surge rapidly in China. Metro is now trying to redevelop some of its stores into shopping complexes and hotels.
The first store that is being redeveloped is located in Wuhan, the capital of central China's Hubei Province. The store will be turned into its first shopping complex - a 167,000 sq.m German-themed town, consisting of a smaller cash and carry shop, shopping mall,office buildings and apartments. Metro has partnered with a local developer to jointly build this project, and has transferred the property ownership to the developer.
Metro is also considering redeveloping some of Metro's stores in Shanghai and other cities into five-star hotels, office buildings or neighbourhood centres.
Tapping into convenience
Metro is testing the convenience stores under the banner My Mart as the demand for proximity shopping rises. My Mart offers Metro’s exclusive imported products, private label lines and fresh fruits, as well as about 100 ready-to-eat items. The stores also feature its online shopping app and provide seating area with free charging stations. Currently,there are two My Mart stores in Shanghai and Metro plans to roll out the concept to other cities through franchise.
Metro operates 86 stores in 56 cities across the country, two thirds of which are owned by the company. Despite the pressure from ecommerce, Metro plans enter new cities in western China, while developing the convenience channel via franchise.
Click here to learn more about Metro's strategies globally.
Click here to see Metro's new convenience store format My Mart store in China.
Shirley Zhu, Programme Director, IGD Singapore
Based in Singapore,Shirley heads up all of IGD's research on Southeast Asia. Contact Shirley at [email protected] for further insight on the region.