German wholesaler Metro shifts to new store model in China as land prices rise
In a bid to stay competitive in a fast-changing market, the retailer is changing its approach to store ownership
Twenty years after opening its first wholesale store in Shanghai, German retail giant Metro Group has started what may be its largest-ever business transition in China.
The retailer has previously stuck rigidly to a policy of building and holding its own Metro Cash & Carry stores instead of renting from third-party landlords, a model that set it apart from competitors.
But in the face of surging land costs and changing consumer habits, the brand has decided to explore new business models in its largest Asian market.
In Wuhan, the capital of central China’s Hubei Province, Metro is trying to redevelop one of its stores into its first shopping complex.
“We are partly turning to asset-light from asset-heavy,” said Geoffrey Guo, expansion director and head of project development for China at Metro Jinjiang Cash & Carry, a joint venture set up with Shanghai-based Jinjiang Group.
According to Guo, the company has partnered with a local developer to jointly build the Wuhan project, and has transferred the property ownership to the developer.