An extensive sales promotion hit retail giant Wal-Mart’s shelves in China today, in a move some experts say will put pressure on small and medium-sized supermarkets.
Further discounts are on the cards for later in the year, reported Beijing Business Today. The new promotion follows sales during the spring festival holidays.
The discounts will extend to 117 Wal-Mart stores in 64 Chinese cities, with most product lines discounted 20 per cent but some cutting back 54 per cent.
“We are going to keep on pushing our sales promotions this year,” a Wal-Mart officer told Beijing Business Today.
Both Carrefour and China’s own Wumart have said they will continue discounts past the end of the spring festival holidays, indicating the three are vying for customer numbers.
In a replication of Wal-Mart’s well known effect on suppliers in North America, an unidentified retailer told Beijing Business Today suppliers were willing to lower purchasing prices because of large order volumes.
The source also said retailers are using ‘loss leaders’ – zero profit margin goods used to draw in customers, who then purchase additional, higher margin products.
The aggressive business practices of Wal-Mart and its big-chain competitors are expected to put pressure in smaller-scale retailers.
“Small and medium stores face a serious situation. Discounting means lost profits, keeping existing prices means lost customers. A power shift in the industry seems unavoidable,” said the unidentified retailer.
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