Business Intelligence on Retailing, Franchising, and Consumerism in China

Ten Supermarkets In Beijing's Suburbs To Implement Joint Procurement

To tackle problems such as the lack of major brands and high procurement costs for suburban supermarkets, ten chain supermarkets in Beijing's suburbs, including Fangshan and Miyun, will establish a common procurement center and purchase goods jointly.

Beijing Financial Bureau and the Beijing Bureau of Commerce will give a 0.5% subsidy to these supermarkets for the unified procurement of goods. Goods distributed from the distribution center to directly-managed stores or franchised stores will receive a 1% subsidy.

A representative from Huaguan Supermarket, Fangshan told local media that if the procurement center is established, the distribution centers of the suburban supermarkets will be integrated, which will directly reduce distribution costs. In addition, the joint procurement will attract some big manufacturers and the large-scale orders will also gain some price concessions for the supermarkets.

According to the market operation office of the Beijing Bureau of Commerce, all ten supermarkets in the ten suburban areas belong to the trial corporations of a national village market project. The bureau not only encourages these suburban supermarkets to implement joint procurement, but also encourages them to establish second-tier distribution centers, so as to better develop the distribution network of the suburbs of Beijing.

Although supported by the government, these suburban supermarkets are still facing some practical problems. For example, low consumption levels and old fashioned consumer concepts will discourage the development of the chain sector. Although the Beijing government and the local company are making great efforts to improve the coverage of the chain stores in the suburbs, it did not attract the attention of mature major chain retailers, which still focus on the urban districts of the city.

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