Wal-Mart China CEO: Slowing entity to expand electric business into an important strategy

in Shenzhen

Goffo in Wal-Mart China has a hint of stepped.

This March, Goffo Airborne Wal-Mart China as CEO. At that time, it was time for the domestic retailing industry to become increasingly competitive. Since taking office in March this year, Goffo has barely stopped at its headquarters in Shenzhen, where the New Zealander has been non-stop visiting more than 160 stores in China for 8 months.

The latest move by Wal-Mart may give a clear signal as the industry guesses where the new Chinese CEO will take Wal-Mart China. On the one hand, Wal-Mart's Global CEO, McDonnell Douglas, announced that Wal-Mart China will open 100 new stores in the next three years, compared with the previous annual expansion of the 40~50 home significantly slower; On the other hand, Wal-Mart has more than 51% of its holdings in store 1th, The Goffo-led Wal-Mart China online acceleration strategy has surfaced.

Goffo, Wal-Mart's China president and chief executive, was interviewed by Gregforan, the Daily economic News (NBD), at the just-concluded "China Chain Business Association 2012 China Retail Leaders Summit".

Slowing down the pace of development

International retailers such as Carrefour and Wal-Mart are planning to slow the pace of expansion, while Tesco will also close 4 underperforming stores, according to a new international research report. The era of foreign retailers in the Chinese market seems to have ended. As a global retail giant, what new strategies will Wal-Mart take in the face of a new retail environment?

NBD: Can you tell me the number of stores this year?

Goffo: Every year we think about how to set up a shop, this year's plan is to open 30 or so stores, and focus on the quality of new shopping malls.

NBD: According to the development plan of Wal-Mart China announced by the President of the company, the next 3 years may open 100 stores, equivalent to more than 30 a year, and before Wal-Mart in China, about 40 to 50 new stores a year, does that mean slowing the pace of development in China?

Goffo: Well, we have a slight reduction in the number of open stores per year compared to the previous two years, which also reflects some of the challenges facing China's economy. However, we are very confident that the 100 new shopping malls are of high quality, which is a very realistic and feasible plan.

NBD: What is the composition of the newly opened store?

Goffo: Our very important business is Wal-Mart Mall and Sam's Club. Some of the new stores have been set up, but some are still being planned.

NBD: Is the relative slowdown in Wal-Mart China offline related to the slowdown in the consumption environment? In addition, the Chinese market has been Wal-Mart in a relatively stable global market, Wal-Mart worried about the slowdown in the Chinese market?

GOFFO: Although China's macro economy does have some changes, we are adjusting the plan according to the development situation. Last week, Wal-Mart's global president and CEO, Mr. Duke, visited China and we are very optimistic about the development of the Chinese market. Just announced plans for more than 100 stores, reflecting our confidence in the future development of the Chinese market.

No. 1th Store logistics will not be integrated

Since this year, Wal-Mart has increased its stake in shop 1th, which is now over 51%. This seems to mean that Wal-Mart will also join the fierce competition in the domestic electricity business. In the future, how will Wal-Mart use and build this electric business platform?

NBD: What is your layout in the e-commerce market?

Goffo: E-commerce has become one of the important strategies of our market development in China. However, the e-business business is managed by another team. In the United States, our E-commerce business has also experienced such a stage of development, which is very normal. After a long period of development, our E-commerce and retail business in the United States has been very good, can order things online, in the physical store to pick up goods. We hope to have a better cooperation in the future and shop 1th, but for the moment there is no new news to share.

NBD: Due to the rapid development of E-commerce, the current domestic offline retailers have been a certain impact, Wal-Mart has not felt this impact?

Goffo: Overall, there is no sense that E-commerce has a significant impact on our retail business. May be detailed to the specific commodity category, some of the category will be more obvious. For example, many years ago when E-commerce was emerging, Wal-Mart was hit by a larger number of audio-visual products. In the past few years, some retailers have also offered fresh sales through E-commerce. But I found that only a very small number of customers are willing to buy fresh on the internet, most people still like to go to the mall. So, the main thing is to see what category of goods consumers want to buy. For me, it's a great pleasure to go shopping at the mall. I believe that the establishment of physical stores and business e-commerce have opportunities for development.

NBD: China's E-commerce competition has been very fierce, in the current competitive situation, Wal-Mart's advantages reflected in what aspects? Will you be able to integrate the logistics system of store 1th?

Goffo: When it comes to China's electricity quotient competition, it depends on how you know it. 6 months ago, the electrical business was still very new to us, but now we have entered the market through our cooperation with shop number 1th.

At present, we do not integrate the supply chain system of No. 1th store. Wal-Mart's supply chain is delivered directly to the mall with a large truck, and shop 1th is delivered directly to the customer's doorstep. The distribution system is completely different, it is difficult to integrate, so in a short period of time we will use their own distribution system to meet different needs.

We have a number of successful cases in other markets, that is, customers can buy their favorite products online, and then to our shopping malls to pick up, this model may not be achieved in China in a short time. Perhaps when the time is ripe, we will bring this experience to the Chinese market.

The challenge of localization is inevitable

Wal-Mart has been used to compare with rival Carrefour. Wal-Mart, by contrast, is thought to be less localized, leading to limited expansion in China earlier. Goffo under the helm of Wal-Mart China, can there be a breakthrough?

NBD: You are the CEO of the Airborne, and Wal-Mart China's former CEO has more local experience. Does this reflect the changes in Wal-Mart's market decisions in China, and will the localization strategy persist?

Goffo: 99.9% of Wal-Mart's employees are Chinese. I'd love to go to the mall and talk to the staff. I have probably visited 165 Wal-Mart stores since I took office 8 months ago, and in the process I learned a lot and soon learned about the Chinese consumer market. Feedback from our employees and customers gives us an opportunity to develop our future in China. NBD: Your retail experience is mainly in the new Australia market, through the six months of the tour, you find the Chinese market and their biggest difference in where?

Goffo: Because of the large population, the average domestic residential area in China is much smaller than that of other regions, such as the United States. American consumers buy a lot of things at once because they live and store more space. In China, fresh food is more important than department stores. For example, when I was in Hunan Liuyang shop, I found that some customers to walk 5 blocks, is to save 5 cents. In general, I see a lot of opportunities, in the future we can open more new shopping malls, build more distribution centers.

NBD: Open new stores need a good location, but in the one or two-line city, a lot of better than the business district has been preempted by rivals, Wal-Mart how to stay?

Goffo: China is a very huge market, I firmly believe that we can in such a competitive environment to find suitable for their own business circle. It may not be in the center of Beijing or Shanghai, but it can be on some very convenient traffic arteries. At the same time, China's three or four-line urban development opportunities are very large.

NBD: Wal-Mart's current state of business is dominated by hypermarkets, have you considered the planning and layout of small business like convenience stores?

Goffo: Convenience is where consumers are most concerned. It is very important to open a store near a resident's home or near a traffic thoroughfare. In fact, we have some community stores in Shenzhen to run a trial, but our focus is on the development of Wal-Mart shopping mall.

NBD: In the United States, Wal-Mart will be the future strategic focus of the Community supermarkets, but not in China, is it because the previous test water in China is not successful?

GOFFO: The development opportunities we see in the Chinese market are different from those in the United States. In the United States, we already have more than 4,000 Wal-Mart shopping malls in China, we now have only more than 380 stores. Our focus on Wal-Mart Mall and Sam's Club does not mean that we do not value the development and construction of midsize supermarkets, but that there are broader opportunities for development in China, the Mall and the Sam Club. Maybe in the next few years, when we have a lot of large shopping malls all over the country, we will take a look at the development space of small and medium-sized supermarkets.