Wal-Mart bullish over Sam’s Club

Seven out­lets planned in China over next three years to boost per­for­mance

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

Wal-Mart Stores Inc is ex­pect­ing to open seven more of its high-end Sam’s Club mem­ber­ship stores in China over next three years in a move that it hopes will help halt its de­clin­ing per­for­mance in the coun­try.

An­drew Miles, se­nior vice pres­i­dent of Wal­mart China and chief op­er­at­ing of­fi­cer of Sam’s Club in China, said he has a clear idea of his tar­get cus­tomers in China: high-in­come fam­i­lies who love to travel and many of whom have ex­pe­ri­ence of shop­ping over­seas.

The mem­ber­ship-only ware­house for­mat al­ready has more than 1.3 mil­lion mem­bers in China, both in­di­vid­ual and business shop­pers.

The first of the 11 Sam’s Club stores in China opened in Shen­zhen in 1996. There are 637 stores in the United States and 830 glob­ally.

“We have been very clear about who are our tar­get mem­bers and the di­rec­tion we want to take,” said Miles, after open­ing its lat­est club in Wuhan, cap­i­tal ofHubei prov­ince, on Tues­day— very much new ter­ri­tory com­pared with its ex­ist­ing pres­ence in first­tier ci­ties.

Miles said that its mem­ber­ship ware­houses have to be strictly dis­ci­plined about which prod­ucts they of­fer to cus­tomers. A typ­i­cal Sam’s Club stocks less than 5,000 items, down 1,200 items from last year.

Lev­er­ag­ingWal-Mart’s mas­sive global sourc­ing net­work to achieve di­rect sourc­ing is also one of the club’s strengths. “We godi­rectly to the source so we can be sure of the qual­ity and get the best price for our cus­tomers,” he said.

The ra­tio of self-owned brand­sof­fered­with­inthe­clubs is ex­pected to rise to20per­cent over the next three years from the cur­rent 6 per­cent.

“We try to bring our mem­bers new items they have not seen be­fore. They come to the club stores not to get the cheap­est price, but to get the new­est and best-value prod­ucts,” he said.

Ja­son Yu, gen­eral man­ager of con­sumer in­for­ma­tion or­ga­ni­za­tion Kan­tar World­panel China, said that by charg­ing mem­bers fees and of­fer­ing larger bas­kets of ex­clu­sive, of­ten im­ported goods, the clubs rep­re­sent a very dif­fer­ent mar­ket seg­ment com­pared to tra­di­tional price-sen­si­tive main­stream re­tail­ers.

The for­mat is also bring­ing Wal-Mart it­self ad­di­tional clients and business growth op­por­tu­ni­ties, but he said it still needs to op­ti­mize costs within its hy­per­mar­kets in China, where it has re­cently been cut­ting jobs to im­prove ef­fi­ciency and re­gain de­clin­ing mar­ket share.

Yu said in China it is very hard to com­pete us­ing the type of “every­day, low price” strat­egy that Wal-Mart has adopted in the United States.

The company has just cut 250Chi­nese jobs and closed its re­gional of­fice in Dalian. Last week, it dis­missed around 20 mid- and se­nior-level ex­ec­u­tives as partofwhatit calledan on­go­ing re­struc­ture of its head of­fice in the coun­try, adding it planned to open another nine new stores and one dis­tri­bu­tion cen­ter in­China by the end of this year, bring­ing the to­tal num­ber of new stores and dis­tri­bu­tion cen­ters opened this year to 31, which it said had cre­ated over 6,000 jobs.

Wal-Mart said it plans to open another eight such hy­per­mar­kets in Guang­dong, Jiangxi, Yun­nan, Jilin, Zhe­jiang and Sichuan prov­inces by the end of the year, bring­ing the to­tal num­ber of stores to 25.

It said it ex­pects to open a gi­ant 100,000-square-me­ter mall, at the cost of 600 mil­lion yuan ($97 mil­lion) in Zhuhai, Guang­dong prov­ince, in 2016.

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