Wal-Mart to open 30 new stores in China
The world’s largest retailer by sales will open 30 new stores in China and invest nearly 500 million yuan (US$80.1 million) to remodel existing ones in the country.
Wal-Mart Stores Inc told China Daily on Monday it will remodel 50 stores this year, following completion of remodeling at 31 stores last year.
The new openings in China this year are part of a plan announced in October for the company to have more than 100 new stores in the next three years.
This year, the US retailer has opened two new stores in Sanhe, Hebei province, and in Bazhong city, Sichuan province.
Two hypermarkets will be opened in Shenzhen and Dongguang in Guangdong province and two new Sam’s Club stores in Hangzhou, Zhejiang province and Suzhou, Jiangsu province.
More distribution centre networks are also on the investment agenda for Wal-Mart, including a new distribution center in Wuhan, Hubei province and chilled warehouses in Shenzhen and Guangzhou to enhance food safety and quality, and help reduce costs, the company said.
The company will continue to upgrade its operations and invest in its stores, Sam’s Clubs and distribution centres, said Wal-Mart China’s President and CEO Greg Foran.
He added: “Our aim is to strengthen our business foundation to enable our long-term development in China.”
After 17 years in the country, the company feels the time is right to optimize its nearly 400 stores.
Wal-Mart is acting after closing stores in Shenzhen, Shanghai and Zhengzhou since the end of last year, which it referred to as an “adjustment in business strategy”.
Recognising the development potential in the retail industry created by rapid urbanisation and emergence of the middle class, Li Ling, senior director of corporate affairs at Wal-Mart China Investment Co Ltd, said the company’s business has entered a new phase, focusing on the quality of individual stores.
Meanwhile, France-based Carrefour SA closed six stores in China from 2010 to 2012 and British chain store Tesco PLC shut four last year.
Surging rents are to blame for a contraction among foreign chain stores in the country, according to an industry insider.
Zeng Lingtong, an expert with The Beijing Enterprise Management Consulting Firm, said retailers have reached a “peak season” to renew rental contracts with landlords for stores that opened before the year 2000.
Foreign retailers, encouraged by soaring market expectations, expanded rapidly in China in past years, overlooking challenges in some locations to gain profit growth.
To reduce the high costs of maintaining such stores, they have to put an end to these operations, Zeng added.