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Suzanne Harrison

Wellcome supermarkets is in negotiations to take over prime retail property that will be available when France-based Carrefour Group closes its doors in Hong Kong next month.

Carrefour announced on Tuesday it would close its four Hong Kong hypermarkets on September 18, blaming restrictive urban development laws and intense competition for too few retail sites.

'We are looking at taking on some of the Carrefour space,' Dairy Farm International Holdings group treasurer Simon Mawson said yesterday.

Dairy Farm operates Wellcome supermarkets, Mannings chemists and 7-Eleven stores.

'The landlords approached us before Carrefour announced it. I guess they have been planning this for a while,' he said.

Mr Mawson said he expects fellow supermarket chain ParknShop - owned by Li Ka-shing's Hutchison Whampoa  - to also talk to the landlords.

ParknShop marketing director Andrew Brent on Tuesday said the company had not contacted either Carrefour or the sites' landlords, but the company would consider the sites for potential investment. He declined to comment further yesterday.

According to Mr Mawson, plans to rent the properties were a reactive move after the company learned of Carrefour's imminent departure.

'We are always on the lookout for new and good sites so when you hear [something] on the grapevine, we assess it and pursue it. I would not say it was part of a pre-meditated plan. I would imagine ParknShop [is also looking to move in],' Mr Mawson said.

'If you were in the landlords' shoes and you had Carrefour in there, then you would probably want a food retailer. I am sure they are talking to ParknShop.'

An industry source had said he believed Carrefour - which has 5,246 integrated stores in Europe, Latin America and Asia - was forced into closing by powerful retailers that blocked the group from expanding to hotly contested new sites. But there are also reports Carrefour has lost up to HK$400 million since it opened in Hong Kong in 1996.

Analysts say even if there was a squeeze on Carrefour in its bid to expand, the group does not have the right mix for Hong Kong.

'Carrefour always had the model of a huge aircraft carrier,' Pacific Challenge Securities head of research Alan Hutcheson said of its stores.

'And clearly, that sort of model has not worked in Hong Kong. Carrefour only had four shops and people do not tend to go supermarketing out of their way in Hong Kong.'

Another market watcher said the closures should be taken at face value.

'The trading situation in Hong Kong is quite difficult and that is to do with the deflationary environment and the price war that has been initiated by ParknShop,' HSBC analyst Geoffrey Cheng said.

Still, a finance Web site analyst said the view that the powerful retailers blocked Carrefour renting new sites was not totally unfounded.

Mr Li controls property-dominated conglomerate Cheung Kong Holdings.

Dairy Farm's largest shareholder is Jardine Strategic, part of the Jardine Matheson group - a conglomerate with huge property interests in Hong Kong.

'If you look at it that way, then it makes sense,' Mr Cheng said of the situation.

ParknShop and Wellcome are often viewed as a duopoly in the supermarket space, forcing newcomers out - such as a short-lived stint from WalMart - by their sheer size.



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