Wal-Mart seeks Chinese improvement

16 April 2012

BEIJING: Wal-Mart, the retailer, is seeking to become a "better merchant" in China, as it tries to develop stores and product assortments suitable for shoppers in the country.

Speaking at a company conference for investors, Doug McMillon, president and CEO of Wal-Mart's international operations, laid down a challenge to its Chinese unit.

"My question is: Can we really become great and grow to the share number that we would like to have? And to do that, we're going to have to drive some change," he said.

"China is a great market. And there's nothing externally that concerns me. It's really all internal at this point, in [terms of] our ability to execute and simplify that business."

Wal-Mart entered the world's most populous nation in 1996. It currently runs 379 stores in 140 Chinese cities, and has invested in Trust-Mart, a supermarket chain, as well as Yihaodian, an ecommerce site.

"We've had some new stores that have opened but haven't been as strong as we want them to be," McMillon added.

"If we could change one thing right now in China, it would be that we should be better merchants. We are not building side counter assortments to the degree of the quality that we would like to see."

Among the other "issues" McMillon flagged up was the two-week closure of 13 stores in Chongqing in February 2012 on the request of the authorities, after the discovery that ordinary pork was being sold as the organic alternative.

Wal-Mart also recently named Greg Foran as country president for China, and he is charged with leading its expansion in areas from ecommerce to lower-tier cities.

"What I'm pleased about is I think we understand better where we are and we've got a strong management team now in place in China that's going to help deliver a business here that we'll be proud of," said McMillon.

IGD, the insights provider, has predicted China will be the biggest grocery market globally by 2015, when sales figures should hit £918bn, up from £607bn in 2011, indicating the size of Wal-Mart's opportunity.

"The business isn't actually that bad," said McMillon. "Our comp store sales have been holding up. Chinese New Year was not as good as we wanted it to be, but in general, sales in China have been decent and the profitability is being managed. But it's just nowhere near what it could be."

Data sourced from Seeking Alpha; additional content by Warc staff