Boutique stores are trying to attract more Chinese customers to improve sales. Provided to China Daily

One major reason why there has been a surge in niche supermarkets in China has been the central government's push to grow its service industry as a major source of GDP.

Beijing is targeting a 47-percent contribution by the industry to the national economy, up from 43 percent in 2010. In the US, the service industry makes up two-thirds of its economy. The government also wants to increase consumption as exports have recently slackened.

Supermarkets are a clear choice for increased consumption. One way in which they are attracting more customers is by mirroring the kind of customer service found in the US.

At City Shop, in order to emphasize its high-end products, professional services and a thoughtful staff are crucial elements to the chain store's appeal. Staff often help customers carry their bag of groceries to their cars. In the store, staff give specific explanations for a product if customers have questions.

The first City Shop in Beijing, located on the ground floor of the Grand Summit in Liangmaqiao Diplomatic Mansion, was opened before the Beijing Olympics in 2008. About 400 people visit the store a day and on weekends the flow rises to 600. Revenue has been growing by 25 percent every year.

Germans and Americans are reportedly the most frequent customers and imported goods from Western countries are very popular. The sales of imported cheese total about 6 million yuan ($950,000, 710,000 euros) per year, with brands such as Sargento from the US, President Cheese from France, Ambrosi from Italy and German Ehrmann, says Wei Yangyan, manager of the Beijing City Shop.

"In the beginning, expats accounted for 80 percent of the store's customers, but with more Beijingers and trendy crowds coming to the store, the ratio is 7 to 3 right now," Wei says.

In the Shanghai City Shop, Chinese shoppers account for 60 percent of the customer base, says Cheng Chen, manager of business planning with Shanghai City Supermarket Co Ltd.

City Shop began with a 160-square-meter store on Hongmei Road in the Xuhui district of Shanghai in 1995. The company has expanded to 10 retail stores in Shanghai's central business district and the city's affluent residential areas. The second store in Beijng will open this year in the Parkview Green Fang Cao Di complex in Chaoyang district, covering an area of 1,400 square meters.

"Up to now, sales of City Shop have maintained an annual growth of 15 percent. The most popular products in City Shop outlets are dairy and meat products with sales of 60 million yuan every year," Cheng says.

Cheng says City Shop isn't without its struggles. With rising rent and labor costs, the grocery store company is trying to attract more Chinese shoppers to improve sales.

One way in which the company is doing that is publishing a bimonthly bilingual magazine that reads more like a gourmet food magazine. It also organizes food festivals, tasting events and tours of its farms.

"Expats often spend 1,000 yuan or 2,000 yuan for food, but Chinese people may prefer to spend the money on other luxury goods. Sometimes, even when they want to buy some imported goods, they don't know where to buy and how to use or eat them," Cheng says.

But Cheng is still optimistic about the market because she says more people are becoming richer.

Ole, on the other hand, sets itself apart from stores like City Shop with its emphasis on aesthetics. Walking into the 1,700-square-meter store located on the ground floor of China World Trade Center Tower 3 in Beijing's central business district, Western music plays over the speakers, items are neatly arranged on wooden racks and not a single salesperson is in a customer's face trying to promote their products.

"Turnover of the store has tripled since it opened in March 2011. We have more than 70 percent imports," says store manager Lu Jianfu.

The best-selling wine label is Penfolds from Australia, which accounts for nearly half of the sales from the wine cellar, with prices ranging from 180 yuan to 12,000 yuan, depending on the vintage.

Meat at City Shop, however, is pricey. Horqin brand diced beef, which comes from Mongolia, costs 85 yuan per kilogram.

Lu says Ole has invested heavily in facilities and improving services. It also isn't overburdened with trying to sell everything so it can better control its supply channels and make better judgments on which goods to offer. The store manager says that because of high import tariffs, prices of imported goods in their supermarkets are much higher than in the country of origin.

Liu Gang, merchandising manager for Ole Northern China, says his work is bargaining with suppliers and updating the store's supply with the most popular items every three months. They single out products from hundreds of Chinese suppliers. Once an item doesn't sell, they drop the product.

China's food and beverage imports rose 32.4 percent to $35.5 billion (26.73 billion euros) last year from the previous year. Sugar, candy, baked goods, convenience foods and dairy products were the top five items in terms of value, according to Chinairr.org, a leading Chinese industry research organization.

Beijing Jinhebaili Trading Co Ltd focuses on supplying imported chocolates, cookies and olive oil for about 200 supermarkets in Beijing. Chen Li, marketing manager of the company, says the company is more than willing to work with boutique shops in offering premium, hard-to-find products.

"Our target customers prefer boutique supermarkets, although the same product sold on the grand shelves are 5 to 10 percent higher than in general supermarkets.

yaojing@chinadaily.com.cn