Fung Group sells Circle K retail network
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Fung Group has sold its Guangzhou Circle K-store network to Chinese retailer Suning for an undisclosed sum.
Facing intense competition in the mainland convenience-store market, the network of 61 outlets has failed to make a profit since the brand’s launch there in 2002. The Guangzhou Circle K business recorded a net loss of HK$21.4 million in 2014 before then parent Convenience Retail Asia sold the business to its 41-per-cent shareholder Fung Group the following year for $48 million (US$6.12 million). Since then, Fung Group has closed at least 12 stores there.
Suning Xiaodian, Suning.com’s convenience-store business, will take over the Guangzhou Circle K stores, broadening its footprint in the city.
Convenience Retail Asia continues to own and operate more than 300 Circle K stores in Hong Kong, Macau, and Zhuhai.
The president of Suning’s consumer-goods business, Bian Nong, said Circle K’s experience in merchandising, supply chain and store management will supplement Suning’s existing operations in Guangzhou.
Suning has been rapidly expanding its brick-and-mortar store business in recent months, acquiring supermarkets from Carrefour and the Chinese business of Spanish grocer Distribuidora Internacional de Alimentacion.
Questions & Answers
Q.Why did Fung Group decide to sell its Guangzhou Circle K-store network?
Why did Fung Group decide to sell its Guangzhou Circle K-store network?
The Guangzhou network has struggled with intense competition in the mainland convenience-store market. It failed to make a profit since its launch in 2002 and recorded a significant net loss in 2014, leading to the sale.
Q.What is the current status of Circle K stores outside of mainland China?
What is the current status of Circle K stores outside of mainland China?
Convenience Retail Asia, the former parent company, continues to own and operate more than 300 Circle K stores. These are located in Hong Kong, Macau, and Zhuhai, separate from the recently sold Guangzhou network.
Q.How will the acquisition of Circle K stores benefit Suning’s existing operations?
How will the acquisition of Circle K stores benefit Suning’s existing operations?
Suning expects Circle K’s experience in merchandising, supply chain, and store management to supplement its current operations in Guangzhou. This acquisition will also broaden Suning’s convenience-store footprint in the city.
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