World No one retailer Wal-Mart lost Rob Cissell, its chief operating officer in China and Roland Lawrence its chief financial officer in the country. The management turmoil again accentuated as Shawn Gray its vice president of operations resigned for so called personal reasons.
Wal-Mart operates 333 outlets and generates $7.5 billion revenue in China, but in last three year market share has reduced to 5.5% from 8 %, because it has not reacted proactively to key trends.
Wal-Mart requires a new strategy because it faces increasing headwinds as new sales channels like e-commerce; increasing real estate and labors costs; and transforming consumer habits in the Chinese retail landscape.
Wal-Mart have committed the blunder of betting too heavily on the big box retailer format as they are doing in the U.S.,rather than smaller,conveniently located retail outlets which is more preferred in China this is the same mistake that Home Depot and Best Buy had committed and led them ultimately retreated from the market.
China may have high compound annual revenue growth rates, but traffic and the lack of free parking means consumers often prefer to shop in neighborhood stores.
The government restriction on free plastic shopping bags has also affected the consumers shopping behavior, and the habit of buying less each time, further decreased the foot fall of stores away to home.
Consumers habit to buy costly products such as imported blue berries and meats in high-end organic and fruit stores opened by individuals,while going to Wal-Mart to shop up on low-margin products such as toothpaste, detergent. People like to buy fruit from high-end stores because it’s fresher than Wal-Mart they don’t want to pay for parking at Wal-Mart.
Wal-Mart had struggled with consumer perception and their branding.They espouse the 'everyday low price' concept, yet are positioned relatively high in the market when compared to street vendors who sold their product truly on low price.
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