During a meeting with the mayor of Shenzhen, where Walmart China has its headquarters, Sean Clarke, president and CEO of Walmart China introduced the retailer's plan to expand in Shenzhen.
Pilot Online to Offline model in Shenzhen
In November 2012, Walmart China acquired a majority stake in the online grocer Yihaodian, which was interpreted as a signal of the retailer's move into ecommerce. The acquisition of the stake has proved to be a good investment. In the presentation in Shenzhen Clarke introduced the retailer's next step forward, saying: '...At the end of this year or early next year, we will choose Shenzhen as the first pilot to launch online to offline model.'
More details of the O2O pilot is yet to be revealed, however, it shows Walmart's initiative to further capture growth from ecommerce and it helps to know that the government officials are on board.
Potential to double the store numbers
Walmart runs 24 Supercenters and two Sam's Club stores in Shenzhen and will likely to double the number of stores in the next three to five years, said Clarke. He also emphasised the importance of food safety to Walmart, which has a rigorous internal inspection system, standardised procurement procedures and has developed a series of measures taken to strengthen the inspection of products along the whole the supply chain. He also mentioned Walmart will introduce more private label products in China.
Strategies in line with Walmart's global approach
The steps announced by Clarke are in line with Walmart's international development strategy to focus on driving growth from ecommerce as shoppers shift more of their spending online. In China particularly, bricks-and-mortar retailers are under great pressure from rising rental, labour and utility costs as well as fast growing ecommerce and mobile commerce. International retailers also face regulatory hurdles and challenges from the expanding local competitors.
In the first half of 2014, Walmart closed nine under-performing stores in China and has slowed the pace of expansion to enable it to focus on building a more sustainable platform for growth. This strategy will see Walmart focusing on investing more in food safety and quality, store upgrades, its supply chain and technology.
To learn more about Walmart visit the Walmart hub page.
To see an example of a Walmart store in Jingtian, Shenzhen click here.
|Shirley Zhu leads IGD’s China research programme, and is based in Shanghai. Shirley has extensive research experience in the Chinese FMCG industry – feel free to contact her directly by email - at Shirley.Zhu@IGD.com - for more insight on China.|