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Main Topic: You Are Not In Arkansas Anymore

Hosts: Jane Lu James Stanworth , Clyde Warden

Walmart has been aiming to join the big expansion of China retailing, not least because it already dominates the US retail scene, and there is very little growth left there. Walmart's big move over the last decade in the States has been the expansion into supermarkets ( see Show 71 ). That experience and channel development is perfect timing for the China effort, since it makes little sense for Chinese consumers in China to go to a Walmart for everyday low prices for drygoods when they can already get every day low prices outside everywhere--since it is all made in China. In this episode, Jane, James, and Clyde join forces to explore the Walmart experience in Shanghai. If you looked at the photos and video without knowing where they were shot, you would never bee able to guess it is in a Walmart! Walmart Logo

Walking into the Shanghai Walmart feels like you are still in CHINA. This may sound like it should be obvious, but so many Western retailers aim to recreate their formats in China. In fact, many Western managers judge a store by how familiar it feels--meaning when you walk in, you feel like you are NOT in China. Walmart has traditionally experienced difficulty in localizing, even in the US, where regional markets can vary quite a bit. The economy of scale has always been the goal. In China, Walmart is showing signs of success at localization, in a market where one either localizes quickly or dies the death of a thousand cuts as competitors will eat away at you on every front. Walking through a Walmart in China, the overwhelming feeling is that this is not a foreign retailer! Some Westeners even are put off shopping there since the familiar Walmart, "from back home" is gone. Walmart has localized to the extreme.

Right at the entrance, huge signage, red and gold sale prices draw shoppers in--and they really check those signs out. One big goal of Walmart is to attract and keep shoppers in the store, or at least get them coming in often for smaller purchases (keep in mind most Shgnaghai consumers will be riding electric motorcycles or driving small cars.

Walmart aquired the Taiwan retailer Trust-Mart, in 2006, which had 108 stores and 30,000 employees across more than 20 provinces, and with annual sales of around 10 billion yuan (US$1.3 billion). The Trust-Mart purchase more than double Walmart's presence in China. Trust-Mart was more along the lines of a localized supermarket. It looks like a lot of local know-how has fed back into the Walmart retail design. Fresh food, ready to eat food deep in the store, all work to create an exciting shopping experience full of the kinds of conveniences local shoppers value.

The next show looks at Tesco in Shanghai, and shows 70 and 69 exmine both Walmart and Tesco in their native American and UK environments.

Take a look at what Walmart looked like previously at this report from PBS Online NewsHour . Watch the video, and about eight minutes in Paul Solman talks to the manager of WuMart, a competitor. What is most interesting is just how much Walmart has changed to incorporate all the local preferences. Notice how the WuMart manager talks about the consumer emphasis on renao.

It is the store for the local people . . . not a foreign store that locals don't know anything about.

The Show:

Length: 40 minutes. Download MP3 18.56MB (Right click->Save As).


Consumer CamConsumerCam:

Vid. 1) Entering the store everyone is blessed by Sam Walton.
Vid. 2) Loudspeakers blast away pulling in customers for demos.
Vid. 3) Product everywhere crowding the store.
Vid. 4) So much fresh food, it looks like a wet market.
Vid. 5) DIY noodle stand inside Walmart.
Vid. 6) Exiting the store.

Show Links:

Bottom Line:

  • Lockers are upfront. This sets expectations for customers to store their bags.
  • This is a very noisy store, reminding one of a street market.
  • Local consumers preferences and embedded them in the store: the wet market has been integrated into the store.
  • There are few isles. Product displays on multi stands, short isles and makes flexible use of space.
  • There US store focuses on ease of finding products. The Chinese store focuses on keeeping customers in store with the possibility of more purchase--even though the purchase volume is small.
  • Format is clearly based on the wet market e.g., with the ability to touch all fresh produce.
  • Ready to eat food is fresh cooked. It is not shrink wrapped TV dinners!
  • The feeling building loyalty for the long term with the nouveau riche.
  • They are not competing so much with the other international retailers. They are trying to compete with the wet market. Walmart is doing everything they can do get mainstream shoppers to join in and build loyalty.
Category: Podcasts

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