E-commerce hitting China's big cities first as shoppers switch to internet

Mainland developers are being forced by booming online sales to come up with new strategies to make their retail outlets attractive to buyers who are turning increasingly to the internet to do their shopping.

Management consultancy Bain & Company reported last month that China is set to overtake the United States as the world's largest e-commerce market by the end of this year.

"The popularity of online shopping has affected the businesses of supermarket chains such as Walmart and Carrefour, as well as retailers of mobile and electronic appliances and lower-end fashion," said Steve Chen, head of retail at property consultant DTZ in Greater China. "About 10 per cent of the business done in their stores has been taken over by online shopping."

Chen said the retail market in first-tier cities had suffered the most, since residents of the larger cities turned in greater numbers to online shopping due to their busy working weeks.

"Some retailers have responded by expanding into the online shopping market. Some have downsized some of their retail shop space by an average of about 15 per cent since last year, and some have closed shops with lower earnings," said Chen.

The trend is likely to expand into second- and third-tier cities in the near future, he added.