BRITISH retailer Tesco will close a shop in Shanghai's Jing'an District at the end of this month when its lease ends amid speculation that rising rent may be a factor.

The retailer will terminate operations at the Tesco outlet sited at the crossroad of Yongyuan Road and Zhenning Road, which opened in July 2003, when its lease expires, the company said in a text message to members.

But rising rent in the area may have forced the closure of the Tesco store, according to people familiar with the matter. Tesco officials didn't respond to an e-mail seeking comment yesterday.

Earlier media reports said another Tesco outlet in the city's Changning District will also close in August, but the retailer didn't confirm the reports.

Tesco has 113 outlets in China, with 23 stores in Shanghai. Last year, it added 13 new stores and closed five in the country, a drop from the 16 new openings in 2011.

Foreign retailers have had to adjust their strategies with slower expansion after rising labor cost and rent squeezed their profits.

US retail giant Wal-Mart said in April that it will close its Minhang outlet in Shanghai together with another two in Jiangsu and Guangdong provinces in a bid to strengthen its sales network.

Wal-Mart's growth slowed in 2012 when it added 30 new stores in China, down from 50 new outlets in 2010 and 41 in 2011.