Walmart keeps on expansion path in China

The world's largest grocery chain says Hong Kong's market is too competitive and it is instead focused on expanding stores and streamlining supply chains on the mainland and in India.

"We enter a market because we believe that we're able to add value to the customer and make a difference through scale," Walmart Asia chief executive Scott Price said in Hong Kong yesterday, adding that "given the maturity and the duopoly that exists in Hong Kong", opening stores in the city did not interest the US-based firm.

Including its Walmart and Sam's Club brands, the firm operates 409 outlets on the mainland and plans to open a further 110 in the next three years, while closing up to 30 underperforming ones.

The focus will be on western China and second- and third-tier cities where the company sees opportunities to leverage its global sourcing and distribution network to compete against less resourceful regional players. Walmart is the third-largest supermarket chain on the mainland with a market share of 5.8 per cent and US$9.2 billion in revenue last year, according to China Market Research Group (CMRG). The firm has more than 11,000 outlets worldwide, including 20 in India where, because of prohibitions on foreign-owned supermarkets, it focuses on selling wholesale goods to retailers.

Price said its scale meant it could deliver like-for-like product savings of 10 to 40 per cent in Walmart's mainland stores.

Central to this is a joined-up logistics network. He said that unlike its competitors, Walmart supplied most of its stores through a chain of 14 distribution centres, each responsible for keeping shelves stocked and screening products for deficiencies such as food-related health hazards.