Speaking live at an event in Beijing Walmart’s global president and CEO, Doug McMillon recently reiterated Walmart’s commitment to growing its business in China.
“China is a key strategic market for Walmart. Over the next three years we will increase investment across our diverse business operations in China. We’ll build new stores and invest in our existing estate, bolster our capacity for e-commerce, invest in food safety and fresh to ensure the highest quality products and continue to build on strong partnerships with our Chinese suppliers.
“Our aim is to become an integral part of China’s economic development, serving customers the highest quality products, creating jobs and economic stimulus and working hard to build on our position as a trusted corporate citizen in China.”
McMillon committed that from 2015 - 2017, Walmart will open 115 new stores in China, including supercenter and Sam’s Club formats, creating more than 30,000 jobs in Shanghai, Shenzhen, Changsha, Wuhan and other Tier 1 & 2 cities. The new stores will provide better services to local customers in new areas and strengthen Walmart’s penetration in mature markets. In addition Walmart will further increase its investment in emerging cities, looking to serve the groups of consumers emerging in the urbanization process of China. Walmart’s Sam’s Club format is also a key part of investment strategy. Walmart plans to open 7 new clubs in next 2-3 years.
As well as building new stores in the coming years, Walmart has invested 600 million RMB in upgrading over 90 stores in China. Upgrading stores has led to greater efficiencies, such as adopting new LED light facilities, which in turn lowers costs and improves business performance. In the future, Walmart will continue to invest in remodeling and upgrading existing stores, investing more than 370 million RMB in the remodeling of more than 50 stores in 2015.
McMillon said Walmart has an incredible opportunity to combine great stores with great e-commerce to define the future of retail. Walmart has been pleased with the customer experience it is creating through Yihaodian (YHD), the e-commerce business in which it has a 51% stake. Walmart has launched a Hypermarket Flagship Store at YHD marketplace and on YHD mobile App. In December, Yihaodian expanded Community Flash Delivery to additional China markets, aiming to provide fast delivery of consumer necessities such as fresh food including meat, egg and fruits in less than three hours. YHD.com has also rapidly grown the number of items it offers – from 180,000 in 2011 to 8 million last year.
Walmart is also focusing on innovation in its O2O e-commerce operations with plans to launch a hypermarket app in the near future, giving customers the ability to shop anytime, and anywhere they like. As well offering customers home delivery, they can also choose to pick up at nearby store at a time convenient for them. Walmart has trialed similar models elsewhere in the world with success. To 100% guarantee freshness, Walmart’s delivery team has developed a specially designed chilled bag to help maintain freshness from store to door.
McMillon also reiterated the work Walmart has undertaken to improve the safety and quality of the food that it sells. In 2014, Walmart announced a 300 million RMB investment in reinforcing food safety management—in the supply chain, at distribution centers and stores. The program includes robust food safety audits, third-party facility audits, and DNA tests on meat products. Walmart is also working to control the number of suppliers it does business with, to ensure strong partnerships and only the highest quality products. As well as simplifying the supply chain, Walmart is investing in its fresh distribution centers, several of which focus exclusively on fresh or perishable products to ensure the product coming into its supply chain is of the highest quality. As part of this focus, Walmart’s Worry Free Fresh program, which guarantees 100% refund within 14 days, will be rolled out to all stores by end of June.
Sean Clarke, President and CEO of Walmart China expressed strong confidence in the Chinese market, “It’s an honor to lead such a dynamic, growing business in one of the most vibrant retail environments in the world. Our focus on providing fresh, high quality products, with the aim of becoming China’s most trusted retailer, remains unchanged. But as we look forward, we’ll utilize our e-commerce experience to bring our customers more convenient ways to shop.
“We have enjoyed close to 20 years serving the Chinese consumer, and our intention is to do so for many years to come.”
Clarke’s statement comes off the back of strong business performance. According to Nielson’s data, as of December 31, 2014, Walmart’s hypermarket market share in China has grown for 8 consecutive quarters. With strong performance during this year’s Chinese New Year period, Walmart’s market share continued to grow in the first two months of 2015 maintaining strong momentum.
Currently, Walmart has more than 410 stores in China. Since his promotion to global president and CEO in February 2014 McMillon has visited Walmart’s operations in China three times in 15 months.
