Walmart to gain salient foothold in China with 110 new stores

Walmart is closing less profitable stores and reorganises business units in China amid increasing competition from regional rivals, such as Sun Art Retail Group and China Resources Enterprise, bloomberg reports. In August, 2014, the retailer cut its annual profit forecast after US shoppers’ reluctance to buy more than the bare necessities affected Q2 sales negatively.

Walmart faces several hurdles in China including intense competition from local chains and a lack of scale that makes it harder to offer lower prices than wet markets, said Shaun Rein, Shanghai-based managing director at China Market Research Group, cited by the source. Sun Art is China’s largest hypermarket operator, with a 14% share of the CNY 574 billion (USD 94 billion) industry in 2014, according to Euromonitor International. Walmart and China Resources were tied for second place with an 11% share each in 2012.

Walmart plans to ramp up expansion in smaller cities outside Beijing and Shanghai. The company is also investing in distribution and will add a new center in the Northeastern city of Shenyang in May, 2015. It is also remodeling 45 China storesin 2015, with more planned by 2017.

In India, Walmart has agreed to buy the stake held by Mittal’s Bharti Enterprises in April, 2015 in their joint venture, which runs wholesale stores. The company is still interested in India’s retail market and is in discussion with the government, the source cites.