Hong Kong high-end supermarket operator City’super eyes more outlets on mainland

The company is focused on expanding in the affluent Yangtze River Delta, outside Shanghai. It now operates five stores in China’s biggest commercial city

PUBLISHED : Monday, 16 July, 2018, 5:30pm
UPDATED : Monday, 16 July, 2018, 9:58pm

Hong Kong retail chain City’super, an operator of high-end supermarkets, plans to expand into China’s prosperous Yangtze River Delta outside Shanghai, banking on mainlanders’ increasing affluence and growing penchant for premium food products.

President Thomas Woo said mainland Chinese shoppers appeared to be more free-spending on some products such as imported liquor than their Hong Kong counterparts, which boosted the retailer’s confidence to open more stores.

“We felt that the potential on the mainland has yet to be tapped by City’super,” he told the South China Morning Post. “We don’t aim to expand across the mainland, but we are setting eyes on the affluent region of East China.”

The retailer has so far only opened shop in Shanghai, with five outlets including the most recent one in the Shanghai Raffles City Changning mall, a number that surpassed its four shops in Hong Kong.

“We felt that there is no wealth gap between mainland and Hong Kong shoppers,” said Woo. “Chinese consumers’ attitude about life has become more exquisite as they pay more attention to food origins to ensure healthy eating.”

The company targets the top 5 to 10 per cent of mainland income earners.

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City’super opened its first outlet in Hong Kong’s Times Square in 1996. It made its first foray into the mainland in 2010, establishing a 2,700-square metre store at IFC Mall in Pudong’s Lujiazui financial district.

Its goods, imported from abroad and less easily available in the local supermarkets and markets, are also priced relatively higher than its competitors.

Hong Kong’s ParknShop pioneered the move by overseas retailers to tap the mainland consumer market in 1994.

But in the past few years, domestic and foreign retailers have been grappling with growing competition and challenges from China’s booming e-commerce businesses as young consumers increasingly turned to buying everything from food to clothes via apps and online payment services.

We felt that there is no wealth gap between mainland and Hong Kong shoppers
Thomas Woo, City’super

In Shanghai, the mainland’s commercial capital, retail sales climbed 8.1 per cent from a year earlier to 11.83 trillion yuan (US$1.77 trillion) in 2017, according to the Shanghai Commission of Commerce.

The e-commerce Research Centre said sales conducted via the internet in Shanghai jumped 21 per cent, or more than double the growth of the overall market, to 2.43 trillion yuan last year.

Woo played down worries about rivalry from e-tailers, adding that City’super can carve out its own niche by offering goods and services that differ from products available in the Chinese market.

The company was looking adopting more digital technologies to cater to mainland consumers amid their changing spending habits, he said.

He also conceded that prime properties which would attract foot traffic of wealthy locals plays a part in City’super’s decision to open new outlets.

Property service firm JLL said landlords were seeking unique tenants to drive foot traffic as the commercial landscape changes rapidly.

“Culture tenants such as bookstores have joined sports and gym brands as favoured tools for malls to distinguish their offerings and build loyalty with specific interest groups,” said James Hawkey, JLL China’s head of retail. “Backed by investors’ capital, casual dining and drink brands are occupying prime locations in major malls.”