Sam’s Club eyes greater China growth

Walmart China CEO Greg Foran reiterated the company’s goal of accelerating Sam’s Club growth in the coming years with several published reports indicating the pace of Sam’s Club openings may eventually reach 10 units annually.

Walmart currently operates 401 retail units in China, of which 356 are supercenters and only 10 are Sam’s Club. The warehouse club format has expanded slowly in China even though it was the format the company used to enter the market back in 1996 when a Sam’s and a supercenter first appeared in Shenzhen. According to published reports, Foran indicated Sam’s will increase its annual openings from two currently to about 10 over the course of the next six years.

That’s a methodical rate of growth and is consistent with the message the company shared two months ago when Foran was joined by Walmart president and CEO Mike Duke on a visit to Beijing where the pair outlined plans to open 110 new facilities during the next three years.

Sam’s Club was identified as a key part of the growth strategy with Foran noting at the time that the Sam’s business model is especially ripe for the burgeoning middle-income and upper-income consumers, and because many cities are well-suited for the format.

The other key element of Walmart’s China strategy involves opening more store is China’s smaller cities, which is somewhat of an oxymoron because cities regarded as smaller in China are larger than many metro areas in the U.S.

“In 2013, the retail industry faced challenges and strong competition, but Walmart’s confidence in the Chinese market has never been stronger,” Foran said during the October meeting in Beijing. “We adapt to market changes by making adjustments and innovations, and we will modify our operations in China by upgrading the merchandise we sell, especially in fresh food and grocery. We will improve operations and customer experience, establish best-in class food safety practices, and eliminate unnecessary costs in order to build an even stronger business.”

In addition to Sam’s and more supercenters, the company years will see Walmart elevate its store portfolio by closing up to 9% of the units in its store portfolio that are underperforming while also investing in increased remodeling activity and greater distribution capacity.