Walmart has said that two senior executives at its Chinese operation, chief financial officer Roland Lawrence and chief operating officer Rob Cissell - formerly of B&Q and Robert Dyas - have resigned.
The executives were said to have left “due to personal reasons to explore other opportunities”. The company has not named replacements for the two, which suggests their resignations were unexpected.
Already the US retailer is finding expansion challenging, particularly with China’s poor infrastructure, and is looking at smaller cities and online to drive growth. This sudden departure of its key executives could potentially jeopardise its expansion in a key growth market. Earlier in May, Walmart announced its plans to increase its penetration in smaller Chinese cities. According to Walmart China chief executive Ed Chan the proportion of Walmart stores located in tier one cities is expected to fall to 18% in 2014 from 20% last year.
The retailer also outlined aggressive plans to expand the Sam’s Club operations from the current four provinces to 17 in five years. The growth is to be pursued through land acquisition as opposed to leasing property due to rising real estate prices.
Not only is the retailer looking at opening new stores but is also setting up different formats and diversifying its private labels, strengthening its position in the Chinese market.
Walmart launched Smart Choice discount stores and compact hypermarkets (modelled after Walmart’s successful small-box formats in Latin America) and introduced thousands of private label lines to fill price gaps left by national brands.
Recently the retailer has acquired a minority stake in Yihaodian, a fast-growing online retailer in China. The move is consistent with Walmart’s strategy of growing online sales globally and follows on from last year’s investment in China’s largest electronics retailer, 360.buy. Walmart is not alone, other foreign retailers have also faced challenges in China recently.
US home improvement retailer Home Depot exited Beijing in January after closing its last store in the city to focus on two other regions in the People’s Republic. In February, American electronics retailer Best Buy closed its nine stores on the Chinese mainland.
For Walmart, China remains an important growth market, but with two executives resigning this might bring some strategic changes in its expansion plans.
Manu Ghai, retail analyst, Planet Retail.
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