New World to revamp department store network

PUBLISHED : Monday, 14 September, 2009, 12:00am
UPDATED : Monday, 14 September, 2009, 12:00am

New World Department Store China expects annual gross sales from its mainland stores to top 12 billion yuan (HK$13.62 billion) in the next five years through the expansion of its 33-outlet network and a nationwide rebranding exercise.

The five-year plan for the department store was mapped out last week by executive director Adrian Cheng Chi-kong, the grandson of the founder of New World Development (NWD), Cheng Yu-tung.

The target would turn New World into China's third-largest operator by sales and is about 20 per cent higher than last year's gross revenue of 10 billion yuan.

The mainland retailer controlled by NWD was listed on the stock exchange in 2007.

Armed with an annual cash flow of about HK$3 billion, the firm would expand its network partly through acquisitions in second-tier mainland cities, said Cheng.

To compete with the growing popularity of mega shopping centre operators, he plans to open a department store in Beijing next year targeting women customers. The store will be staffed exclusively by young males under 30 and, depending on its success, a second could be opened in Shenyang, Liaoning province.

The store will have a pet shop, cosmetics and South Korean-made accessories, he said.

Its 30,000-square-metre store on Zhongjie, in Shenyang, at a total investment cost of 300 million yuan might be the next women's store.

Currently, the firm operates a network of 33 stores, including 26 New World-branded department stores and seven Ba Li Chun Tian stores in 17 cities such as Shenyang, Chengdu, Shanghai and Beijing. The portfolio has 1.04 million sqmetres of gross floor area.

Last Wednesday, Cheng launched a rebranding programme at its four-year-old Shenyang store on Zhonghua Road, a shopping district in the city. The 44,000 sqmetre store will feature newly renovated outlets as it tries to compete with the increasingly popular modern mega shopping centres.

Every morning, 16 saleswomen in uniforms perform a dance to greet customers before the store opens.

'Many of our stores were opened in the early and mid-1990s. They are outdated. We plan to completely revamp the stores in two years,' he said.

Today, the mainland market is dominated by mega shopping centres ranging from 400,000 to one million square feet that offer a lifestyle shopping environment.

'But our old stores are limited in size, each between 14,000 and 11,000 sqmetres, and it is time for a revamp,' he said.

The company has rolled out a HK$100 million rebranding programme since last year.

He expects sales growth of 10 to 20 per cent when the revamp is completed in two years.

The three existing stores in Shenyang have recorded improved sales and shopper traffic. Sales at its nine-year-old store in Taiyuan Road, Shenyang, jumped as much as 40 per cent to 300,000 yuan a month after it was transformed into Liaoning province's first store selling off-season products at discounts of as much as 90 per cent.

Another 13,890sq metre store selling luxury branded leather bags and garments on Nanjing Road, Shenyang, recorded 30,000 yuan in sales per square metre, the highest in the city.

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