After a strategic retreat from Shanghai's supermarket scene in 1999, ParknShop plans to re-enter the city with the hypermarket model which has proved successful in southern China.
Ian Wade, managing director of Hutchison Whampoa's retail division AS Watson, told the South China Morning Post ParknShop planned to apply for permission for wholly owned stores in northern and eastern China for expansion there next year.
A spokeswoman later confirmed that Shanghai would be one of the first targets.
The retailer was the first foreign operator to enter China, opening its first ParknShop store 20 years ago. But it was forced to scale back from 75 stores in the mid-1990s to the current 26 outlets after failing to follow market trends.
'We started off with the wrong format,' said Mr Wade, referring to the company's decision to open traditional supermarkets of several thousand square feet. That strategy changed in 2001 when ParknShop began opening megastores and superstores with floor areas of more than 100,000 sq ft in southern China.
'We learnt our lesson the hard way,' he said. 'But our megastore and superstore formats have become very popular in southern China and we are the only foreign supermarket chain that is already in the black.'
Last week, ParknShop was ranked among the top 10 best performing retail organisations in the region in the Retail Asia Pacific Top 500 Awards 2004. Mr Wade said consumers wanted a 'theatre' where they could take their family.