Walmart stores to make changes in China

Leading U.S. supermarket chain Walmart will close around 25 stores in China in 2014 and open many ot…

Leading U.S. supermarket chain Walmart will close around 25 stores in China in 2014 and open many others in the years to come as it attempts to adapt to the changing desires of Chinese consumers. Analysts said Walmart is making the changes partly because the products sold in its Chinese stores are sometimes too local.

Although Walmart remains the biggest foreign supermarket chain in China in terms of revenue and store numbers, analysts said its share of the market is being challenged by other emerging retailers. "You have consumers buying at convenience stores, you have smaller concepts popping up from Lian Hua and most importantly you have a lot of customers going online. So I think a big part of what Walmart is doing today is adjusting their business portfolio towards that market," said James Button, senior manager at Smith Street Solutions, a Shanghai-based strategy, consulting and corporate advisory firm.

Walmart is also suffering in comparison to French competitor Carrefour, making only two-thirds of the income Carrefour makes on a store-by-store basis.

Walmart's original success in China was based on supplying local products made domestically, but it has failed to keep up with changing consumer demands, said Button. "Carrefour has come and they have done a very good job at positioning themselves as a more premium option. Consumers may not necessarily know that it's foreign, they certainly don't always realize that it's French, but they view it as being something different," said Button. "By being too localized, in some ways, they [Walmart] are too easy to replicate. So it's very easy for local companies to learn from them and really localize better. So they don't have anything that sets them apart."

Walmart said it plans to open another 110 stores in China by 2016, many of which will be in smaller cities. It will also remodel 55 stores in 2014 and 65 in 2015. The expansion will focus on what the company calls Supercenters and Sam's Clubs, which they hope will better compete with flexible local retailers.