The world’s biggest retailer Wal-Mart Stores believes the best way to achieve profitability in China is to open more stores and lure more customers.
Walmart China will expand its store network by almost a third between now and 2017 according to CEO Doug McMillon.
“Our aim is to become an integral part of China’s economy. China is a top priority,” McMillon told a press conference in Beijing.
Faced with slowing growth in its mature home market, Walmart sees a massive opportunity in China’s rising middle class and booming tier 2 and 3 cities as a means to restoring growth and boosting profits. Cities like Shenzhen and Wuhan.
But its experiences in China to date have been mixed. Sales declined 0.7 per cent in the quarter to January 31 and same store sales fell 2.3 per cent.
At the end of January, Walmart had 411 stores in China – and after some underperforming stores are closed should end 2017 with a network exceeding 500.
The company is also increasing its investment in its online business Yihaodian.com. Launched in 2011 with 18,000 SKUs the online store now boasts more than 8 million products. With more and more Chinese buying online – on both computers and mobile devices – the potential seems unlimited.
Walmart’s Asian chief, Scott Price, said while the company had seen a softening in sales, it was not all bad news.
“We’ve gained share in the hypermarket channel.”
