Walmart to cut 250 jobs in China
Retailer was on track to open over 30 stores and distribution centres
Beijing: Walmart is to cut some 250 jobs in its Chinese operational division and shutter a regional management office in the northeast as it ploughs ahead with its expansion and restructuring plan.
The world’s biggest retailer was on track to open more than 30 stores and distribution centres while hiring an additional 6,000 people in China by the end of the year, it said on Tuesday in its first detailed update of the revamp.
Walmart is engaged in what it calls a “major transformation” in China in the face of stiff competition from domestic rivals and a rapid acceleration in online shopping, with plans to open 110 new outlets in the world’s second-largest economy by 2016. It now has about 400 stores, including hypermarkets and Sam’s Clubs, and employs 125,000 staff in China.
Responsibility for the stores currently managed from Dalian in the northeast of the country will be transferred to the Beijing office.
Last week Walmart confirmed the loss of about 30 middle-management jobs as part of the restructuring — out of a total of “several hundred” such positions across the country including about 400 store managers.
“Since 2012 we have been implementing strategic initiatives to regain price leadership, grow with a focus on business fundamentals, simplify business [and] invest in the supply chain and technology,” Sean Clarke, Walmart’s China head, said in a statement.
“After two years ... customers’ feedback on products and service is improving,” he added, citing studies that showed higher market share for the company’s hypermarkets.
By the end of this year, Walmart will have opened 25 new hypermarkets and Sam’s Clubs. The clubs, which offer fewer products but have a greater focus on quality and value, are members-only operations that analysts say are more popular with consumers than the retailer’s standard hypermarkets.
“They are still doing too many of the hypermarkets and not enough of the Sam’s Clubs,” said Shaun Rein, a Shanghai-based retail consultant who is critical of the retailer’s China strategy. “Customers don’t want to be taking a long trip to a hypermarket.”
Walmart said it will have invested about Rmb550m in 2014 to remodel 50 of its existing stores, while expanding online shopping services to nine of its 11 Sam’s Club outlets by the end of the year. Separately, the retailer has broken ground on a Rmb600m shopping mall in southern China — its first such investment in the country. The mall in Zhuhai will include a Sam’s Club and is scheduled for completion by 2016.
Walmart has closed about 30 underperforming stores as part of the reorganisation, including one in southern Hunan province that sparked a long severance dispute with the outlet’s employees. A labour arbitration panel eventually ruled in the retailer’s favour.
Walmart also confirmed the opening of six new distribution centers this year — bringing its total nationwide to 20 — to service its retail network. The rapid build-out of the centres is part of an effort to improve quality control, increase the efficiency of Walmart’s supply chain and keep costs low in China’s hyper-competitive retail sector.
— Financial Times
