Foreign retailers shop for new growth model (2)

Sources with the association said the net profit of the top 50 chain retailers in Guangdong plunged in 2012 due to rising costs.

For example, a local retail giant, Guangzhou Grandbuy, reported a net profit decline for the first time since it was publicly listed in 2007. Its operating revenue grew just 2.3 percent year-on-year in 2012.

Sun attributed the weak numbers to rising online shopping and increased operating costs for retailers.

"Foreign retailers need to change their strategy in China amid fierce competition, rising costs and consumers' changing demand," Sun said.

Following the closure of some hypemarkets in recent months, Wal-Mart Stores Inc plans to open more Sam's Club stores (membership-only warehouse clubs) to sustain growth in the Chinese market.

The company has 620 Sam's Club stores in the United States, which have proved successful growth engines. The Sam's Club stores in the US generate $49 billion in sales annually.

The world's largest retailer by revenue plans to open seven Sam's Club stores in China in the next two or three years targeting affluent local families, sources with the company said.

The Guangzhou Sam's Club store, in the city's booming Panyu district, also began selling fresh and frozen products online.

The online service delivery area covers most of Panyu district and will soon expand to other districts such as Haizhu and Tianhe.

"We have always attached great importance to e-commerce service in our stores. We will have more products covered in the online purchasing service in the near future," said Yan Haiyun, deputy director of the Sam's Club marketing and e-commerce department.

Also, in an effort to boost Chinese buyers' confidence, Wal-Mart said it will invest 100 million yuan ($16.3 million) in food safety management in its stores across China over the next three years.

In its latest initiative, the company launched a mobile testing program in Guangzhou, covering its 70-plus stores in Guangdong province.

"We hope to provide safe goods and good services to our Chinese customers to boost consumption," said Greg Foran, president and CEO of Wal-Mart China.

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