Wal-Mart axes se­nior jobs, stores

China Daily (Canada) - - BUSINESS - ByWANG ZHUO­QIONG wangzhuo­qiong@ chi­nadaily.com.cn

Wal-Mart Stores Inc, the world’s largest re­tailer, has dis­missed around 20 mid- and se­nior-level ex­ec­u­tives and closed stores in China as part of a re­struc­tur­ing aimed at coun­ter­ing grow­ing pres­sure from lo­cal ri­vals and on­line re­tail sales. The company said the mea­sures will op­ti­mize the or­ga­ni­za­tion.

“As we have pre­vi­ously stated, we are trans­form­ing our business to meet the needs of a rapidly chang­ing mar­ket and cus­tomers. Re­or­ga­ni­za­tion has been a nec­es­sary business re­al­ity,” it said in a state­ment, adding that the jobs cuts have been agreed by mu­tual con­sent, with the company pay­ing com­pen­sa­tion in line with the laws and reg­u­la­tions.

The re­tailer also said it had shut some out­lets and was re­mod­el­ing dozens more as the over­haul con­tin­ues.

It in­sisted, how­ever, it was mak­ing “good progress” to­ward open­ing around 110 new stores across China be­tween now and 2016, within a plan that also in­cludes new dis­tri­bu­tion cen­ters, and cre­at­ing what it called “a highly ef­fi­cient sup­ply chain and en­hanced com­pli­ance process”.

Wal-Mart, based in Ben­tonville, Arkansas, is fac­ing stiff com­pe­ti­tion in China, and ear­lier this year also had to with­draw don­key meat prod­ucts from sale in its stores after they were found to con­tain fox DNA.

Among the ex­ec­u­tives be­ing side­lined are vice-pres­i­dents from its hy­per­mar­ket busi­nessWal-Mart China and its whole­sale arm, Sam’s Club China, ac­cord­ing to two Wal­Mart China em­ploy­ees, who asked not to be named. Oth­ers have been re­moved from di­vi­sions in­clud­ing mer­chan­dis­ing and in­no­va­tion, they said.

Many of the dis­missed have at least 15 years’ work­ing ex­pe­ri­ence, ac­cord­ing to lo­cal me­dia re­ports.

“This is a sign thatWal-Mart is fac­ing more com­pe­ti­tion as well as cost pres­sures,” said Ben Caven­der, prin­ci­pal of the Shang­hai-based Chi­naMar­ket Re­search Group.

“This looks like an at­tempt to stream­line their op­er­a­tions, to cut costs and be­come more ef­fi­cient.”

The cur­rent over­all eco­nomic cli­mate as well as the fall­out from bad pub­lic­ity from its own and other food safety scan­dals are also hurt­ing the brand, said Caven­der, while at the same time com­peti­tors are be­com­ing more ef­fi­cient and com­pet­ing more ag­gres­sively.

Ja­son Yu, gen­eral man­ager of con­sumer in­for­ma­tion or­ga­ni­za­tion Kan­tar World­panel China, said the US re­tailer has seen a re­lent­less growth in com­pe­ti­tion from lo­cal re­tail­ers as well as from e-com­merce.

He said e-com­merce now ac­counts for a 3 per­cent share of to­tal fast mov­ing con­sumer goods sales and con­tin­ues to record in­cred­i­ble growth.

“This is achieved at the ex­pense of mod­ern trade re­tail­ers, es­pe­cially in the fir­stand sec­ond-tier ci­ties,” he said.

Other Wal-Mart re­struc­tur­ing ef­forts in­cluded its in­te­gra­tion of nearly 30 pur­chas­ing of­fices into eight re­gional pur­chas­ing of­fices in Novem­ber 2012.

The company re­ported a 0.8 per­cent fall in China sales dur­ing the quar­ter to Oct 31, which it at­trib­uted to gov­ern­ment aus­ter­ity mea­sures and de­fla­tion.

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