Post Mart, a joint venture by China Post and US-based China Horizon Investments Group, it consolidating its China operation. Lack of volume is one of their key problems among its rural customers, says retail analyst Ben Cavender in the China Daily.
The China Daily:
A scattered population, lower consumption and chaotic distribution channels filled with counterfeit products have slowed modernization of the retail businesses in rural China.
Ben Cavender, an analyst at the Shanghai-based China Market Research, said Post Mart is losing money as it cannot sell large volume products. Most of the products it sells have low margins and high logistics and labor costs, he said.
He said to attract rural consumers who have shopped largely at local markets, rather than physical stores, it is important to introduce new brands with different package sizes.
Cavender said Post Mart still has opportunities but it has to be patient and invest in right areas while keeping its stores close enough to save costs. Rural retail channels still remain underdeveloped, creating opportunities for retail brands such as Post Mart.
With first- and second-tier Chinese cities saturated, smaller centers are set to be the next battlefield for international retailers, such as Wal-mart and Carrefour SA.
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