Plans to Expand the Existing Department Stores and Acquire New Project Further Enlarge Retail Network
New World Department Store China Limited ("NWDS"), one of the largest owners and operators of department stores in the PRC, announced its development plan in FY2012 to FY2014, including the announcement of acquiring the property and operating rights of "Channel One" in Putuo District, Shanghai on 21 September 2011, expansion of Shenyang Jianqiao Road Branch Store, operation of Shenyang Nanjing Street Branch Store Phase II, as well as entering five cities including Mianyang, Yancheng, Xian, Hengyang and Yantai to further expand its retail network.
Located in the northwestern of Sichuan Province, Mianyang is 90 kilometres away from Chengdu with 5.4 million of population in total. Mianyang enjoys convenient transportation with well-developed airport, railways and highways. Travel time from Chengdu to Mianyang will be greatly shortened to 30 minutes after the completion of Chengmianle high-speed railway by the end of 2011. Possessing excellent geographic location, the five-storey Mianyang project with a GFA of about 35,000 sq m is located in the Eastern Linyuan, where is not only the centre of Mianyang, but also the new business hub developed by Mianyang government with high traffic flow and efficient transportation facilities.
Yancheng, Jiangsu Province, the second largest provincial city located along the shore of Yangtze River, is a huge market with a population of more than 800 million. Since July 2005, the railway has been operated in succession that significantly shortened the distance between southern and northern of Jiangsu Province, resulting in a rapid economic development in Yancheng. Its per capita disposable income of the urban residents in 2010 reached RMB 20,003, up 13.2% over the previous year (Note1). In 2009, its local residents' consumption expenditure is approximately 73% of the per capita disposable income which is almost the same as Shanghai (Note2) , reflecting a huge consumption potential in Yancheng. As early as ten years before, NWDS has entered the Jiangsu market, which led to a thorough understanding of local people's mode of consumption and preferences. NWDS therefore decides to strategically expand to the potential Yancheng City, and plans to open a self-owned store positioned as "Living Gallery" with gross floor area ("GFA") of about 54,000 sq m in FY2012, striving to enlarge the retail network in Jiangsu Province.
Located at the central plain of the Shaanxi Province, Xi'an is the capital of the Province with a population of 8.43 million. As an important foothold for the nation's Western Development strategy, Xi'an plays a significant strategic role in connecting all directions as well as boosting the local economic development. Over the years, NWDS has established extensive retail network in the surrounding provinces and cities of Shaanxi Province, including Lanzhou, Chengdu, Chongqing, Wuhan, Zhengzhou, Changsha which formed agglomerative economies effect in Central Western China Region. In FY2013, NWDS will open a self-owned store in Xi'an with a GFA of 58,500 sq m. The new store will be located in Zhonggulou business district, the largest and oldest business area in Xi'an, where it is situated at the most valuable central location of the Zhonggulou business district and a crucial market for business operators.
Hengyang is located in central southern of Hunan Province, its per capita disposable income of urban residents was RMB 15,635 in 2010, grew 8.6% when compared to the previous year. In 2010, the city's total retail sales of consumer goods was about RMB 47.212 billion, up 19.2% over the past year (Note3), showing an immense potential for retail market growth. In FY 2014, NWDS plans to open a new self-owned store with a GFA of 42,200 sq m in Hengyang. The new store will be situated in Lianhu Plaza, a well planned central business area with comprehensive facilities and convenient transportation network. Adding the vigorously effort of the government to promote urban restructuring, the area will become a new central business district ("CBD") for Hengyang City. As early as 2006, NWDS had a bullish view on the potential of development for Hunan Province, therefore entered Changsha City setting up a store. With the operation of the Wuhan-Guangzhou line and the opening of Hengyang East Station, the transportation time for Hengyang and Changsha is only 40 minutes.
In FY 2014, NWDS will also enter Yantai City, Shandong Province by opening a store with a GFA of about 55,000 sq m inside a shopping mall with a GFA of about 101,000 sq m. For the rest of the GFA of about 46,000 sq m of the shopping mall, NWDS will be responsible for its shopping mall management. Yantai City is the third largest city in Shandong Province. Its per capita disposable income of urban residents was RMB 23,288, an increase of 10.2% from the previous year (Note4), reflecting the higher living standard and consuming power of local people. The new store will be located in Xianglong Wanxiang Plaza, which is the meeting point of three city roads and the transportation hub for connecting the city's new and old zones. Situated at the center of urban planning, the surroundings of Xianglong Wanxiang Plaza have nearly 30 years of history for commercial functions, including central administration district, CBD, high-end residential area, University City, which will become a core business district for the municipal city in future.
Besides entering new cities, NWDS is committed to increase footholds in current cities and department stores as to realize a fast business expansion. With the goal to enhance NWDS' market share in Shenyang, NWDS will expand the existing Shenyang Jianqiao Road Branch store for approx. 34,000 sq.m from the GFA of 34,000 sq.m to a total GFA of 68,000 sq.m by completion of the project in FY2012. In addition, NWDS has acquired the property right of the Shenyang New World Commercial Centre located next to Nanjing Street Branch Store. In FY2013, Phase II of Shenyang Nanjing Street Branch Store is expected to commerce operation. Moreover, as NWDS is bullish about the development of Shanghai, it effectively unitized its "multiple presences within a single city" strategy, acquiring the property and operating rights of "Channel One", the retail property located at 155 Changshou Road, Putuo District at a consideration of RMB 1,460,000,000.
Commenting on the expansion plans, Mr. Philip Cheung, Managing Director and Executive Director of NWDS said, "NWDS has always been implementing two expansion strategies of 'multiple presences within a single city' and 'radiation city'. In early years, NWDS has taken the lead to step into Jiangsu and Hunan to establish retail footholds. In order to capture the opportunities driven by the fast growing Chinese economy and accelerated urbanization progress in the Central-Western-North district, besides the effective 'multiple presences within a single city' strategy, we are also committed to expand to more provinces and cities nearby. When rich market information gathered from different areas combines with the synergy in various districts, more operation advantages will be formed. As a result, we are very confident of the future development of the five cities including Mianyang, Yancheng, Xian, Hengyang and Yantai. In future, NWDS will carry on the 'radiation city' strategy and further enhance NWDS' retail presence, striving to be China's leading department store operator. "
Business Development Pipeline
* Each of the financial years started on 1 July and ended 30 June.
Note1: Source: Statistics department of Yancheng
Note2: Source: Statistics on National Economy and Social Development
Note3: Source: Statistics department of Hunan
Note4: Source: Statistics department of Yantai