Wal-Mart Stores Inc, the world’s largest retailer, plans to add as many as 110 stores over three years in China, while shutting some outlets and remodeling dozens more as it seeks to overhaul its business there.
The Bentonville, Arkansas-based company plans to open the new stores from next year to 2016 in the world’s second-largest economy, it said in a statement yesterday.
The retailer expects to shutter up to 30 underperforming outlets over the next 18 months, Greg Foran, its China chief, said at a media briefing in Beijing yesterday.
Photo: Reuters
Wal-Mart has been closing less profitable stores and revamping business units in China amid increasing competition from regional rivals Sun Art Retail Group (高鑫零售) and China Resources Enterprise (華潤創業).
The US retailer has been battling setbacks in emerging markets, including the end of a six-year partnership in India with local billionaire Sunil Mittal.
“China presents one of the biggest opportunities for us around the world to grow our stores and clubs, so its really important,” Doug McMillon, president of Wal-Mart’s international business, said in an interview with Bloomberg Television yesterday.
Wal-Mart plans to ramp up expansion in smaller cities outside Beijing and Shanghai. The company is also investing in distribution and will add a new center in the northeastern city of Shenyang next month. It is also remodeling 45 China stores this year, with more planned over the next two years.
“We have supercenters and we have Sam’s Club. We’ll be investing in both formats, as well as in distribution areas to help us improve in areas such as fresh food,” McMillon said.
The company is hiring in China and expects to create about 19,000 jobs.
In India, Wal-Mart this month agreed to buy the stake held by Mittal’s Bharti Enterprises in their joint venture, which runs wholesale stores. Foreign companies need a local partner to run retail chains in India and Wal-Mart will have to find a new partner to open outlets.
The company is still interested in India’s retail market and is in discussion with the government, Asia head Scott Price said at the press conference.
Wal-Mart’s net sales in China, excluding an online grocer business, rose 6.3 percent in the second quarter from a year earlier, while customer traffic declined 6.8 percent, according to a Bloomberg transcript of the company’s earnings conference call.
Sun Art is China’s largest hypermarket operator, with a 14 percent share of the 574 billion yuan (US$94 billion) industry last year, according to Euromonitor International.
Wal-Mart and China Resources are tied for second place with an 11 percent share each last year.
China’s hypermarket industry is going through a wave of consolidation. Tesco PLC, the largest UK retailer, said earlier this month it would pay US$558 million to merge its more than 130 stores in China into a joint venture with Hong Kong-listed China Resources.
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