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CASE STUDY

The changing nature of retail in China

BY MARK UNCLES

Retailing in China is changing rapidly, as people are increasingly living in cities and becoming wealthier. The size and potential of the Chinese market is also attracting retailers from overseas. Carrefour and Auchan, both from France, have sizeable presences, as do Walmart (from the United States) and Tesco (from the United Kingdom). Strong forces of convergence are at work, making Chinese retailing less distinguishable from international norms.
First and foremost, there is growing acceptance of modern retail formats. Hypermarkets and shopping malls look fresh and inviting, and in the urban hubs of China there is no shortage of customers willing to adapt to, and accept, new formats. This has not always been easy; consumers have had to learn new ways of going about such everyday tasks as buying goods and services. For instance, despite the fact that numbers of sales assistants (who are often on commission) are more numerous in Chinese stores than is typical in the West, modern formats tend to require consumers to be willing to serve themselves (as at supermarkets and convenience stores) or make use of user-directed technologies (as is the case with online retailing) (Liu et al., 2008).
If these trends gather momentum, the story of retailing in China could mirror the history of the decline in small, independent family-owned stores (known as ‘Mom & Pop’ stores in the USA). However, the jury is out. Even in large cities, shoppers continue to patronise small outlets and wet markets, as well as hypermarkets and supermarkets (Uncles & Kwok, 2009). Because of urban densities in Chinese cities and reliance on public transport, travelling long distances to shop is not practical and this favours local or neighbourhood-based retailing and argues against out-of-town developments. Small-scale retailing and improvisation persist—you rarely have to travel far to ­nd a bicycle repair shop, a family-operated fastfood outlet or a neighbourhood hairdresser in a Chinese city

1. Why might shoppers continue to patronise ‘Mom & Pop’ stores when large retail chains are becoming increasingly physically available?

2. If large overseas retailers continue their growth in China, what impact might this have on Mom & Pop stores?