China's top 100 retail chains recorded slower sales growth last year and the increase in store numbers was the lowest in a decade, China Chain Store & Franchise Association said Thursday.

The total sales volume of top retailers rose 18.4 percent from a year before to 1.20 trillion yuan (US$175.6 billion) in 2008, accounting for 11.1 percent of the country's total retail sales. The number of retail stores reached 120,775, up 10.6 percent on a year by year base, the lowest growth in ten years, according to CCFA.

"Global economic downturn is still putting a huge pressure on retailers this year, who are faced with the challenges of tightened belts, possible deflation, and a lack of consumer confidence," the association said. "Fiercer competition between retailers has forced them to offer discounts to lure customers, which further narrows profit margins."

The top chains have posted slower sales growth for five straight years. Growth rates were 33 percent, 32 percent, 25 percent and 21 percent from 2004 to 2007. But CCFA has expects there will be 7,000 new stores this year with direct investment of 25 billion yuan, rising from last year's 20 billion yuan.

Gome Electrical Appliances Holdings Ltd remained the top chain store with sales of 104.59 billion yuan. Suning Appliance Co surpassed last year's No. 2 Shanghai Bailian Group with 102.34 billion yuan in sales. Carrefour was the largest overseas retailer with sales of 33.82 billion yuan.

Retail chains saw faster growth in second-and-third tier cities than their counterparts in large ones. Among the 23,844 new stores opened last year, 20,000 were in rural areas along with government efforts to tap the rural markets and boost domestic consumption, the report said.

"Sales in some companies fell sharply in the first two months of this year, raising concerns within the industry," CCFA said.

China's January-February retail sales climbed 15.2 percent from a year earlier to 2 trillion yuan. The growth was down from 17.4 percent in December as consumers began to hold back on spending amid the financial crisis.

(Shanghai Daily March 26, 2009)