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Wal-Mart to shut 25 unprofitable stores in 2014

2013-10-25 15:29 CNTV Web Editor: Yao Lan

The world's largest retailer, Wal-Mart, has announced it will be shutting down 25 unprofitable stores in China next year. But, the U.S. retail giant says it will be opening up many new stores in the next 2 to 3 years. The move comes as Walmart attempts to create a better fit to changing consumer desires here in China.

Although Wal-Mart still remains the biggest foreign supermarket chain in China in terms of revenue and store numbers, the company admits quarterly revenue growth has fallen from 1.2 percent last spring to 0.4 percent this spring. Analaysts say its revenue has been undermined by other emerging retailers.

"You have consumers buy in convinient stores, you have smaller concept poping up from Lian Hua. And most importantly, you have a lot of customers going online. So I think a big part of what Wal-Mart is doing today is adjusting its business portfolio towards that market," said James Button, senior manager of Smith Street Solutions.

Wal-Mart's French competitor Carrefour is also changing its retail mix in China, and last year closed six stores. Wal-Mart continues to suffer by comparison, however, making only two-thirds of Carrefour's income on a store-by-store basis. Critical consumers are not hard to find.

"I think there are more kinds of goods in other foreign supermarkets than in Wal-Mart, and they are higher-grade. Wal-Mart is more ordinary," said one customer.

"Wal-Mart has a lot of food, but fewer imported daily goods," said another customer.

One analyst says Wal-Mart's original success was based on supplying local products made in China, but has failed to keep up with consumers now looking for something different.

"Carrefour has come and they have done a very good job at positioning themselves as a more premium option. Consumers may not neccessarily know that it's foreign, they certainly don't always realize that it's French, but they view it as it is being different. Wal-Mart has been by too localized in some ways they are too easy to replicate. So it's very easy for local companies to learn from them, they really localized better. So they don't have anything that sets them apart," said James Button.

Wal-Mart says it plans to open another 30 stores in China next year and 110 more by 2016, especially in smaller cities. 55 stores will be remodeled next year and 65 in 2015. The expansion is to focus on what the company calls Supercenters and Sam's Clubs, which will better compete with flexible local retailers.


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