In one MediaMarkt store, a customer was looking at a television worth several thousand yuan. A few moments later, he pulled out his phone, checked the price on JD.com, and bought the same model online. A few years later, MediaMarkt had largely exited China.
Tesco, MediaMarkt and Carrefour were among the largest European brands operating in China. All had substantial resources, international experience and strong brand recognition. Yet none managed to establish a lasting position in the market.
Tesco: Building Stores While China Changed the Way It Shopped
In the early 2000s, Tesco invested heavily in large hypermarkets across China’s biggest cities. The model had worked well in the UK: large stores, broad product selection and weekly shopping trips.
At the same time, property prices in Shanghai, Beijing and Guangzhou were rising rapidly. Operating large retail spaces was becoming increasingly expensive.
The challenge also appeared in customer behaviour. Many Chinese consumers visited stores more frequently than their European counterparts. They bought less on each trip but shopped more often. Fresh products played a much larger role. In some locations, customers expected live seafood, freshly prepared food and local products that did not fit neatly into the traditional British hypermarket model.
Tesco found itself operating an expensive retail infrastructure built around shopping habits that often did not exist. A few years later, the company merged its Chinese operations with China Resources Enterprise, effectively ending its independent presence in the market.
MediaMarkt: The Store Became a Showroom for JD.com
MediaMarkt opened large electronics stores in prime locations. The assumption was straightforward: customers would visit the store, speak with sales staff, examine the products and make a purchase on site.
At the same time, JD.com was investing billions of yuan into logistics networks and distribution centres.
In many MediaMarkt stores, customers would examine products and then pull out their phones to compare prices on JD.com. Price differences were often immediately visible. Next-day delivery was becoming the norm.
MediaMarkt carried the cost of premium retail locations, large showrooms and sales staff. JD.com focused on logistics, technology and mobile commerce. By 2013, MediaMarkt had closed most of its operations in China.
Carrefour: When Customers Stopped Going to the Store
For years, Carrefour was one of the most successful foreign retailers in China. During the first decade of the century, the large hypermarket model worked well.
Then customer behaviour began to shift. While Carrefour continued attracting customers through in-store promotions and weekend campaigns, Alibaba was building an ecosystem around Taobao, Tmall and Alipay.
Customers could watch a livestream, purchase a product during the broadcast, pay through Alipay and arrange delivery without ever leaving the app.
By 2018, Alibaba had access to enormous volumes of shopping, payment and logistics data. This allowed it to personalise offers, predict customer behaviour and connect online and offline channels in ways traditional retailers struggled to match.
Carrefour continued investing primarily in stores, promotions and conventional retail operations. As more customers began their shopping journey on a smartphone rather than with a trip to a store, the advantage increasingly shifted to local platforms. In 2019, control of Carrefour China was acquired by Suning.
While Tesco was building more hypermarkets, property costs were rising faster than sales. While MediaMarkt was investing in stores, customers were comparing prices on JD.com while standing between the shelves. While Carrefour was planning its next promotion, a growing share of shopping activity was already moving to mobile platforms.
Looking at these three stories, it is tempting to conclude that European companies lost because of pricing, logistics or technology. Each played a role. Yet in every case, the market was changing faster than the assumptions on which the business had been built.
There is another pattern worth noticing. Tesco did not lose to Carrefour. Carrefour did not lose to Tesco. MediaMarkt did not lose to another European electronics retailer. In each case, the company ultimately lost ground to a local player.
What makes these stories interesting is that the local competitors were not necessarily bigger, better funded or operating stronger brands. They simply noticed changes in customer behaviour earlier.
None of these changes happened overnight. They were visible in the market long before the results appeared in financial reports.
For many European companies, the challenge today is not finding customers in China. It is understanding the environment in which Chinese companies search for information, evaluate partners and make their first decisions.
The same pattern may now be emerging again. A few years ago, the first step was usually a search engine query. Increasingly, the first question is now asked to an AI system. Instead of reviewing dozens of websites, users expect a direct answer, a shortlist of suppliers or a recommendation.
A company may still have a website, rankings and brand recognition. Increasingly, that is no longer where the first decision is made.
Just as Tesco, MediaMarkt and Carrefour did not lose their position overnight, the shift towards AI-driven discovery will not happen overnight either. The process is already underway. The question is not whether behaviour will change, but how early companies notice it.
More and more often, the first decision is no longer made after visiting a website. It is made earlier, when someone asks an AI system about a company, a service provider or a potential business partner.