Hong Kong trading firm Li & Fung has aggressive plans for its Circle K convenience stores in Guangzhou, hoping to open one shop every two weeks, and already firing the first shot in an expected price war with competitors.
When it recently opened its first two Circle K convenience stores in the city, it priced some of its products up to 10 per cent lower than those of its rivals, eliciting an adverse reaction from existing players.
'People in Guangzhou are not used yet to paying any premium for their purchases in convenience stores,' said Richard Yeung Lap-bun, the chief executive of Convenience Retail Asia, Li & Fung's retail arm and operator of 160 Circle K convenience stores in Hong Kong.
'They are price-sensitive so we decided to offer 8 to 10 per cent discount on selected products to attract customers,' he said.
Mr Yeung appeared unfazed by the prospect of increased competition from Guangzhou's incumbents.
'We expect competition to intensify this year, but our market positioning is different from that of the domestic players because we cater to high-spending customers, such as office workers, professionals and students. We expect to break even when we have 50 to 70 stores by next year.'