Kingfisher Plc's B&Q chain, the UK's biggest home-improvement retailer, plans to almost double outlets in China to 39 next year as the government prepares to drop restrictions on expansion by overseas retailers.
"The opportunities are there next year because of the availability to go wholly owned," Ian Strickland, managing director of B&Q China, said at a forum in Shanghai. "We will not turn it down."
China plans to open the retail market fully next Thursday. B&Q, started in 1969 as a single store in Southampton, England, and other rivals such as Ikea are betting young homeowners will spend more on decoration.
Disposable incomes in urban areas, home to a third of the nation's 1.3 billion people, rose 7 percent in the first nine months of this year to 7,072 yuan per capita, official figures show. Gross domestic product per person will probably rise to US$5,078 in 2030 from US$1,139 this year, UBS AG said. B&Q, which has 20 stores in China employing 5,154 people, plans to add a store in Wuxi, Jiangsu Province on December 18, Strickland said. B&Q plans to open 18 stores next year in nine other cities and will hire 2,500 more people, he said.
Ikea is adding a second store in Beijing and has a third in Shanghai. The company plans to add 10 stores in the next six years. OBI, a German do-it-yourself chain, has 10 stores, including Shanghai, Nanjing, Wuxi, Tianjin, Shenyang, Qingdao and Hangzhou. Chinese rival Home Mart has 22 stores in 10 cities such as Shanghai, Guangdong, Beijing, Hubei, Chengdu and Qingdao.
B&Q's China sales reached 131 million pounds (US$250 million) in the year through January in a market worth 20 billion pounds annually. The business reported its first annual profit of 400,000 pounds in the same period.
B&Q's new stores will open in smaller so-called second-tier cities such as Chongqing, Dalian, Wuhan and Shenyang. The company, which opened its first China store in Shanghai five years ago, is on track with plans to have 75 stores in China by 2008, Strickland said.
B&Q China has broadened its business to include property developers and second-hand property buyers to gain market share, Strickland said. China is moving toward semi-furnished apartments from the "cement box" or bare-shell units, he said.
"We are hedging our risks," he said. "We must ensure we appeal to a bigger audience of customers, so even if there is a slowdown in the real estate market, which is going to happen at some point, we can still appeal to another segment," he said.
B&Q this year signed agreements with six big developers to supply materials such as tiles and floorings.