Ito Yokado to shut Beijing shop

The company closed one store in Wangfujing in January in 2013 and took over another from the joint venture - in the Sanlitun area - and turned it into Ito Yokado Food Market.

To attract customers and improve performance, the retailer invested in such things as store decoration and the addition of more high-end and imported products. In some Beijing stores, services have been upgraded and shelf-height lowered to increase customer satisfaction.

Liu Yun, a Wangjing housewife, said most of her shopping finds come from the Internet. She buys fresh and organic food from Tootoo, clothes and other necessities from platforms as Taobao or JD.

"Going to bricks-and-mortar stores nowadays for my family is becoming a social occasion where we meet our friends and family," she said.

The penetration of e-commerce is now 29 percent, up from 19 percent two years ago and thrives in key cities where penetration is 46 percent, according to Kantar Worldpanel's report in March. It expects lower-tier cities to catch up over the next few years as e-commerce retailers expand their networks and reach.

Future successful retailers in China will likely be those that can offer a range of different store formats to cater to a variety of shopper needs, said Jason Yu, general manager of Kantar Worldpanel.

Shoppers can now more easily compare prices and pay through their mobile phone. The challenge for retailers is how to grow or simply retain customers as demand increases for wide inventory ranges, low prices and good service, according to the report.

JD.com moves to merge Tencent's e-commerce business	JD.com moving to Alibaba's home base