B&Q sets its sights on ambitious store rollout - Shanghai B and Q Building Material Supermarket Co - International Pages - Brief Article

Home Channel News, August 6, 2001

Castorama division looks to open 58 stores by 2005

With its bright orange signage and orange-aproned employees, B&Q resembles another familiar retailer that once eyed this market. But the Shanghai B&Q Building Material Supermarket Co. -- B&Q, for short -- is owned by a different foreign chain of DIY warehouses. Castorama, a France-based retailer that is now part of Kingfisher PLC, opened a B&Q store in June 1999, marking Chin's first joint venture in home improvement retailing.

Hansen Tian has been president of B&Q since its inception, and by 2005, he intends to reign over 58 stores. He wants B&Q to be the first nationwide DIY retailer in China, with regional offices in Beijing (North), Shenzhen (South), Shanghai (East) and Wuhan (Central). "The market is not yet there in the West," Hansen said, referring to the lower levels of population and standards of living. But it is only a matter of time, he added.

But first Tian has to conquer the Shanghai market, where B&Q is opening its fourth store this month. After that will come two more stores in two different provinces: Kunming (close to Thai and) and Shenzhen (next to Hon Kong). All these units ate scheduled to open by the end of 2001.

The target customer at B&Q is an office worker or small business owner between the ages of 25 and 45. Their average monthly income is 3,000 RMB (US$362). The average purchase at B&Q is 400 RMB (US$48).

Although the white-collar salaries in Shanghai may seem low, the numbers are deceiving, Tian said. Many households are made up of four adults supporting one child, Most mothers work, aswnd grandparents often provide child care. One of the adults might be employed at a government job that comes with a housing allotment; they can tent this apartment our, providing additional monthly income.

Guoyu Zhou, interviewed at B&Q last March, was in the process of purchasing his first home, a 90-square-meter apartment in Shanghai. Zhou had to equip the kitchen and bath with fixtures, tile and appliances, install windows and plumbing, lay down some floor coverings and paint the walls.

Zhou sat down at one of the desks in B&Q's Home Decoration Design & Construction Service center, located in the front of the store. Using computer-aided design software, an independent consultant advised Zhou and his wife (who had final say on the colors) on floor plans and materials. One advertised special that week was a complete set of teal kitchen cabinets with glass-front doors (including a wooden wine rack) for 2,080 RMB (US$251.30). An entire kitchen, including appliances, was displayed on the floor for 8,000 (US$966.53) RMB.

Zhou came to B&Q for the service, he said, referring to installation. The quote for the entire house was 57,000 RMB (US$6,887.55).

On the other side of' the store, neat the trade entrance, a group of soldiers was loading a pallet of floor substrate into the back of a truck. "It's probably for the house of a military officer," observed Tian. Customs change slowly in China, even when it comes to business. Like other local retailers, Tian has to fight with his suppliers for factory-applied barcodes, timely deliveries, and returns. Foreign companies have a particularly difficult time operating in this milieu, he noted.

B&Q

Headquarters: Shanghai

Number of units: 4

2000 sales: 234.8 mil. RMB (US$28.3 mil.)