Retailing, Franchising, and Consumerism Business Intelligence in China

Chinese Retailer Closes Stores As Economic Fortunes Disappear

Shenzhen-based retail chain Ren Ren Le recently closed seven additional stores after the publishing of its third quarter financial report.

Prior to this move, the company already shut 11 stores during the first three quarters of 2014.

Shi Yong, chairman secretary of Ren Ren Le, said that at present, the retail industry is severely impacted by e-commerce disruptions and it has become common for hypermarket operators to close stores. Meanwhile, the company believes it is not possible for those loss-making stores to make profit again; therefore, they decided to close those stores to save resources. Shi added that the store closure will impact the performance of Ren Ren Le in the short term; however, it will help the company focus on its transformation to the community supermarket sector.

With the labor and rental cost increases, the survival of the hypermarket model is difficult and the company is determined to transform to a community supermarket model, said Shi. In 2014, the company mainly focused on the exploration of the community supermarket model and did not open new community outlets. In 2015, the company will gradually develop new sites in this sector.

To support its community supermarket strategy, Ren Ren Le launched an online-to-offline e-commerce platform, which has started trial operation in cities like Shenzhen and Xi'an.

Image Credit: d100

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