Walmart has embarked on a new strategy in China in a bid to reach lower-income and rural shoppers.
The world’s largest retailer has opened the first of a series of new stores, based on its low-cost bare bones model of its Bodega Aurrera stores in Mexico.
Doug McMillon, chief executive of Walmart’s international division, told the Financial Times that compared to the retailer’s larger Supercentres, the compact hyper is “a smaller store, typically a cheaper physical plant; a cement floor, perhaps brick walls, sometimes we don’t have air conditioning”.
He added: “It is going to help us reach more people… not only in urban markets but also reaching people in rural areas.”
Walmart will have about 300 regular hypermarket stores in China after it completes its takeover of some 100 Trustmart stores, aimed mainly at emerging middle class customers.
The new compact hypermarket is just over 37,000 sq ft and opened under the Trustmart banner last month in Zhang Shu in Jiangxi province, a town of 500,000 people.
McMillon said the return on investment in the compact hyper formats was equal to larger supercenter hypers, which are more than twice the size.
“But the cost of operating it is less, so the [prices] are less.”
He also said the format could be suited to sub-Saharan Africa, if it wins approval for its $2.4bn bid to take over Massmart.
Walmart is also testing two SmartChoice convenience stores in Shenzhen, aimed at more prosperous urban shoppers.