Walmart plans more hypermarkets

By Wang Zhuoqiong (China Daily) Updated: 2014-06-19 07:10

Walmart's distribution centers will allow the retailer to have the ability to be confident about the products it sources, especially from quality and standards perspectives. Citing an example, Clarke said, retailers can test fresh food in the distribution centers before sending it to the stores. Secondly, distribution centers help in reducing supply chain costs, cutting store inventories and lower product prices, he said.

Ben Cavender, an analyst at the Shanghai-based China Market Research Group, said Walmart is starting to take steps in the right direction by focusing on high-margin formats such as Sam's Clubs and enhancing its online business.

Walmart's efforts to stay profitable by closing loss-making stores and developing the rest will also help maintain its position in China's retail market, which is getting tougher due to rising costs, including those for labor, said Cavender.

The transition in leadership positions in Walmart China should be looked at as continuity, said Foran, adding that being connected with China is the most important component of his new position at Walmart.

"We have businesses in Japan and India," said Foran. "But about 75 or 80 percent of my time is with Sean and his team in China, It is the most important part of our business."

Foran's two years as the top executive of Walmart in China was significant as the retailer announced several steps to improve store quality, enhance supply chains and ensure food safety.

Walmart China also announced on Tuesday that the company will triple its food safety investment to more than 300 million yuan by 2015, from the 100 million yuan announced earlier.

Walmart reported annual sales growth of 24.5 percent last year in China and was also among the top three retailers in the country, according to a recent industry report. Walmart increased its store units by 3 percent in China last year and said it plans to open 110 new facilities in the next three years.

Closures of unprofitable outlets accounted for 9 percent of Walmart's total store portfolio and for 2 to 3 percent of the total sales volume through next year. Walmart will continue seeking steady growth and quality development in China, it said.