US retailer Home Depot closes last seven big stores in China
Last 7 big stores to close as US retailing giant keeps two shops and seeks online ventures
Home Depot, the world's largest home-improvement retailer, said yesterday it will close its remaining seven "big box" stores in China and focus on online sales and speciality stores.
"We've learned a great deal over the last six years in China," said Frank Blake, chairman and chief executive of the company in a statement released yesterday.
The American seller of building materials and home improvement products said it will keep its two so-called "speciality outlets" - a paint and flooring store, and a home decoration shop - in Tianjin. It is also in talks with several Chinese e-commerce websites to explore selling its products online, it said.
The group embarked on an ambitious expansion plan in the mainland in 2006, and to adapt to the market, it started to offer one-stop home renovation services to local customers, although it has always followed a "do-it-yourself" business model in the US and elsewhere.
However, the innovation appears to have failed and it closed several stores due to low sales revenue over the past few years.
A marketing manager of Red Star, one of the largest local home improvement chain stores in the nation, said Home Depot had struggled because of its ambiguous market positioning and less attractive product mix.
"In a city like Tianjin, Home Depot does not have a strong enough brand to entice high-end customers, while their pricing is too high for mid- to low-end buyers. Compared to us, Home Depot cannot be called a one-stop retailer because it mainly sells building materials," the manager said.
Around 850 workers will be fired as a result of the move, and the group will take an after-tax charge of US$169 million in the third quarter.
It said it will also keep its research and development team as well as the 170 workers in the sourcing offices in Shanghai and Shenzhen.
