This week, Carrefour has announced that it was pulling out of Singapore. Its two existing outlets here will close by the end of this year.
The French retail giant was the first to introduce the hypermarket concept in Singapore with the opening of its first store in 1997.
But Carrefour has found it tough to penetrate Singapore’s market of 5.2 million people largely because other rivals are better entrenched with a wider network of branches, many of them strategically located within or near high-density residential districts.
“Carrefour Singapore announces the decision to close its Suntec and Plaza Singapura stores before end of 2012, since expansion and growth perspectives do not allow reaching a leadership position in the medium and long term,” the retailer said in a statement.
Carrefour, the world’s second biggest retailer behind US group Walmart, reported in March that its 2011 profit dropped by 14.3 percent to 371 million euros ($463 million) amid weaker economic conditions.
Song Seng Wun, a regional economist with Malaysian bank CIMB, said high operating costs, including rentals, could have contributed to Carrefour’s decision.
“The bottomline is Singapore is not the biggest market (in Asia) and it’s very competitive. It’s not the cheapest place to do business in as well,” Song told AFP.
He said Carrefour’s rivals seem to have a better feel of the market, locating their stores in densely populated residential districts, where rents are also cheaper.
“These guys (rival retailers) are much better in reading the local market … Carrefour is right smack in the city area where the rents are far higher than everywhere else,” Song said.
Carrefour in 2010 sold its outlets in Thailand to a rival. It has operations in China and India, among other places in Asia. But the company said in July it has put on hold its expansion plan for wholesale stores in India due to the global downturn.