China’s smaller cities – those with populations in only single digit millions – have become the focus of the world’s top retailer, Walmart, as it struggles to catch up to French group Carrefour in the Asian power’s market share.
Last year Walmart opened 30 new stores in China, of which 27 were outside the ‘tier-one’ cities of Shanghai, Beijing and Shenzhen, according to the AP.The company is following the trail of China’s burgeoning middle class. A report last year from consulting firm AT Kearney predicted 75 per cent of the country’s middle class market would be in tier-two and tier-three cities by 2017.
“I think the capacity for growth in China might exceed that of the US, if you look at it in the long term,” said Terrence Cullen, Walmart's Chinese development vice president.
Walmart is certainly doing something right in China; its sales rose 42 per cent in 2007 to US$3.1bn.
That kind of growth is what the US company likes to see set next to Carrefour’s 24 per cent growth in the same year.
The French group is ranked as the sixth largest retailer in China, while Walmart is behind at 13th place.
Burt P. Flickinger III, managing director of retail consulting firm Strategic Resource Group, said Carrefour was ahead of Walmart because the US retailer took too long to understand the Chinese market and open new stores.
Walmart, which reported sales growth of 32.3 per cent in the second quarter of this year, now appears to have figured out where it was going wrong.
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