Walmart will place a renewed focus on its fresh produce sector to combat falling consumer numbers in its Chinese stores, according to the Financial Times (FT).
The move is aimed at catering more to Chinese shoppers’ preference for making small daily purchases of fresh items, rather than the large weekly transactions commonly made by consumers in the US-based retailer’s home market. By adapting its approach, Walmart China chief executive Greg Foran said the retailer hoped to build trust in its products amongst consumers.
“The most important area for us in China initially is to get our fresh departments running the way we need them to operate for our customers,” Foran told FT. “I see too many of our customers having to inspect our product.”
To help service its revamped grocery departments, FT said Walmart plans to build between eight and 16 fresh and frozen food distribution centres around China. It will allow the company to cut back on its list of close to 100 Chinese distributors and give it more control over sourcing.
“Years ago it would have been impossible to think about how to reduce the number of suppliers and further centralise the purchasing because China was growing out so quickly,” Doug McMillon, head of Walmart’s international business, was quoted by FT. “I think we did what made sense at the time.”
McMillon also quashed suggestions Walmart was planning to down scale its expansion plans in the world’s most populated market. Earlier this week the conglomerate announced its intentions to close 25 stores across China within the next year.McMillon said the majority of these stores were in locations Walmart “wish we hadn’t taken” during its last round of expansion.
Walmart has announced plans to open 110 new stores in China between 2014 and 2016, with Oceanne Zhang, an analyst for Kantar Retail, predicting a focus on second and third-tier cities.
“The international traders haven’t done well penetrating smaller cities, so this is a necessity for Walmart,” Zhang said.
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