WalMart, the worlds biggest retailer, is boosting its China business as it is looking for opportunities to raise profitability in a slowing retail sector. WalMart will open up to 110 facilities in China between 2014 and 2016, in addition to the 30 it has already opened this year, it said at a press event in Beijing today.
The US-based company is dealing with tough global economic conditions and tries to position itself according to the new trends in Chinas retail sector – online shopping. E-commerce is expected to record 32% composite annual growth between 2012 and 2015, according to Bain & Co.
“Customers are using technology more, and especially here in China,” said WalMart Chief Executive Officer Mike Duke. “We love customers to understand price, and the safety of the product theyre purchasing. E-commerce is a great enabler allowing Walmart to grow globally.”
WalMart has been closing less profitable stores and revamping business units in China. Company closed 11 stores so far and its planning to shut down another 15-30 in next 18 months which according to officials would rationalize firms process. The U.S. retailer has been battling setbacks in emerging markets including the end of a six-year partnership in India with local billionaire Sunil Mittal.
“China presents one of the biggest opportunities for us around the world to grow our stores and clubs, so its really important,” Doug McMillon, president of WalMart’s international business, said today in an interview with Bloomberg Television.
WalMart is targetingn smaller cities outside Beijing and Shanghai for the expansion. The company is also investing in distribution and will add a new center in the Northeastern city of Shenyang next month. It is also remodeling 45 China stores this year, with more planned over the next two years.
WalMart’s net sales in China, rose roughly 6% in the second quarter from a year earlier, while customer traffic declined 6.8%, according to analysts.
The current consensus reported on CNN Money, among 31 polled investment analysts is to hold stock in WalMart Stores Inc. Stock slumped 0.5% yesterday while being up more than 11% this year.