Walmart’s track record in China has been mixed - rapid expansion of Supercenters has been followed by retrenchment and reappraisal.

Walmart plans to increase its Sam’s Club openings in China to 10 a year

In the meantime, it has gained a valuable foothold in the local ecommerce market through a 51% stake in online grocery business Yihaodian. But unsung hero Sam’s Club is increasingly taking centre stage, the US giant unveils a significant expansion push for its warehouse club business.

Walmart plans to expand Sam’s Club in China by two more stores in 2014. That is just the start. It then intends an accelerated rate of growth each year thereafter until it reaches 10 new stores a year in six to seven years’ time.

President and chief executive of Walmart China Greg Foran has said he also wants to reduce prices online, ramp up the selection of imports and private-label goods and look out for potential acquisitions.

Foran said that focusing on Sam’s Club will help offset a traffic decline that has plagued Walmart’s Supercenter stores in China in recent years. To entice shoppers to put more in their baskets, Sam’s Club will expand its imported products five-fold this year. Private-label goods, which at present account for just 1% of Walmart Supercenter and Sam’s Club sales in China, are also poised to gain much sharper focus. Foran wants to increase the figure to 20% over the next seven to 10 years.

Foran also said he is keen to make it easier for shoppers to blend their online and offline shopping - comparing prices online and offline and picking up their online purchases in stores.

He said he can imagine a day when there are pick-up lockers at Walmart’s Chinese stores and shopping carts are equipped with smartphones or other similar devices.

Increased investment in Sam’s Clubs coincides with wider demographic change in China - the already large, westernised and wealthy middle class continues to grow and with it consumer demand for quality over price. Accelerated expansion of Sam’s Club should also not be seen in isolation from Walmart’s other Chinese operations, notably Yihaodian.

If the retailer can achieve its goal of finding a way to successfully blur the boundaries between online and offline shopping, especially as younger consumers grow up, it could be the game-changer that Walmart’s Chinese operation craves.

  • Stephen Springham, senior retail analyst, Planet Retail

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