Friday, October 18, 2013
Wal-Mart Takes a Pause in China
It will be closing about 25 stores in China, even as it continues to open others. China would still add more stores than it subtracts. Wal-Mart is set to open about 30 stores this year as part of a three-year, 100-outlet expansion effort, which will continue until 2015. Currently, Wal-Mart has 398 China-based stores.
Wal-Mart executives said some of the stores to be closed were gained through a 2007 acquisition of Trust-Mart, a Taiwanese chain that operated more than 100 big-box stores in mainland China but that Wal-Mart struggled to incorporate into its own operations. Wal -Mart looks to change their strategy overall, it plans to close 50 poorly performing stores in Brazil and China. And while it will continue to expand internationally, it has ratcheted down the plan: It will add 14 million square feet of new store space in overseas markets.
China is the world's biggest market for groceries by sales, according to the Institute of Grocery Distribution, a U. K. -based industry group.
Mr. Button said the closures could help Wal-Mart create a more consistent brand image, adding, "they need to focus on existing locations to align the stores with where the customer is today."
Wal-Mart needs both size and improved profitability in China. Profit margins in the hypermarket business there can be as low as 1% or 2%, according to analysts and industry executives.