Grandmart to open in Shenzhen

GRANDMART Warehouse Club, Hong Kong's first discount shopping club, is planning to set up in China next year.

Vice-president Gregory Ng said: ''The company is already building a solid foundation in Hong Kong from which to launch into the mainland. We are opening a new store tomorrow in Kwun Tong, and we plan to open another three in Hong Kong before the end of the year.'' The group's plans in China will focus on the Shenzhen Special Economic Zone to start with, and then move further into the Pearl River Delta region.

''This area is the most sensible starting point. It has a comparatively affluent population, which is receptive to new things happening in Hong Kong,'' Mr Ng said.

But the company's ambitions are not limited to Guangdong Province.

Among the areas in China already under consideration for future expansion of operations is Shanghai, where the growth in disposable income is also rising.

Grandmart seems to have hit the mark in the territory, and hopes China will be just as receptive.

''I am very satisfied with the performance so far. Our projection for the first year's membership was 15,000 but just since our opening in January, we have almost achieved that target,'' Mr Ng said.

With outlets in Yau Tong, Sha Tin and Sheung Wan, the company is enjoying a growth in sales of between 20 and 30 per cent per month.

Mr Ng said there was a growing acceptance of the idea of a discount shopping club in the territory. But he conceded the market was in some ways different from the United States where the idea first took off.

GrandMart's entry into the Hong Kong market came at a time when local residents were becoming aware of the idea.

''People from Hong Kong were visiting friends and relatives in areas such as San Francisco and Toronto, and visiting warehouse clubs.

''This has helped the acceptance of the business, despite the fact that there remains a percentage of local residents who show a degree of resistance. That section of the community are persuaded by our prices.'' GrandMart's idea is to provide top quality US merchandise at the lowest possible prices, and the strength of the group appears to be helping customers beat inflation.

GrandMart maintains it can keep its prices stable for at least six months by economy of scale. ''Our business depends on passing savings and other benefits on to the customer. The vision of our business is to help keep inflation low because we really cankeep our prices down,'' Mr Ng said.

The company is looking at more locations in Hong Kong following the opening of the new store tomorrow.

GrandMart sees its business developing as people seek out its stores.

''We are looking at strategic locations such as Tsuen Wan, Tuen Mun and on Hong Kong island, and are having discussions with developers. But unlike supermarkets, we do not have to be on every corner.'' GrandMart anticipates competition both in the territory and across the border, but is confident that in Hong Kong it has already established a strong membership which will enable it to remain competitive.

''Our fundamental operating philosophy will not change. We provide quality products at the lowest possible price. Some aspects of the business will not change when we move into China.

''Low overheads and large stores providing large quantities of goods are the bottom line of how we operate. Other aspects, such as car park size, may change over the border.''