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Lionel Desclée has been appointed as the new CEO at Seiyu, one of the largest supermarket chains in Japan.
The high end membership-only retail club chain is to open 40 more stores in mainland China by end of 2019.
Since the first Sam’s Club opened in Shenzhen in 1996, the company now has 19 stores covering different geographic regions of China: Beijing, Shanghai, Shenzhen, Guangzhou, Fuzhou, Dalian, Hangzhou, Suzhou, Wuhan, Changzhou, Zhuhai, Tianjin, Xiamen, Nanjing and Changsha.
The company plans to open new stores to complement current stores. Currently there is only one Sam’s Club in Shanghai, which was opened eight years ago in Pudong. A second one will shortly be launched in Shanghai’s Qinpu area. Meanwhile, the retailer is also negotiating for five more locations in Shanghai.
“Continuous investment is the best way to prove our confidence in the Chinese market", president of Sam's Club China, Andrew Miles, commented.
Source: IGD Research
Sam’s Club has a strong performance in China. Its revenue is up by +8%YoY in 2018.
It has 2 million members in mainland China. It opened online store with direct delivery service in 2010. Same-day-delivery service for chilled and frozen food was launched in 2012 in main cities. In 2014, Sam’s Club App was launched after forming a strategic partnership with Tencent, opening the gateway of reaching WeChat’s one billion monthly active users. Recently, it started testing one-hour delivery service in Shenzhen.
Because of these progressive initiatives on service and user experience, Sam’s Club saw a 300% online growth since 2016. It is estimated that online sales will account for 13 – 15% of total revenue by end of this year when the 40 more stores are opened.
Membership of Sam’s Club China costs US$36 per annum, raised from US$23 in 2016. Premium memberships available at US$100 per year. An average Sam’s Club provides at least 1,500 parking spaces for its members, with a shopping area of 20,000 square meters.
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Encouraged by the 2018 success, the retailer plans to further its online/offline integration with focus areas clearly identified.
The integration will prioritise:
Below are a few highlightes of what Walmart China achieved in these areas.
Getting fresh food right is important for the company as it accounted for 25% of Walmart China’s total sales in 2018.
In march 2019, the retailer will launch its first perishable food distribution centre in Dongguan, serving its stores in South China.
The retailer plans to invest more than US$103.7mn in the centre, the largest investment by Walmart since its entrance to the market 22 years ago. In the next 20 years, Walmart China plans to build or renovate at least a dozen of such centres in China to provide better quality fresh food to customers.
Source: IGD Asia
Walmart China’s private label goods have grown 30 percent annually in 2018. The range includes Great Value for grocery, Marketside for fresh food and new clothing brand George.
Tan Wern-Yuen, president and CEO of Walmart China, said the company’s ecommerce had a revenue growth of 150% YoY in 2018, a third consecutive three-digit rise. Logistics and payment method are the two strategic areas:
Logistics: the CEO said company will expand its JD Daojia delivery services, planning to connect 300 Walmart stores to JD Daojia services.
Payment method: Walmart implemented WeChat Mini program "Scan and Go" in all its stores and had more than 20 million users by the end of last year. In terms of number of users, it is ranked No 1 mobile app among those developed by retailers nationwide.
Sales of Walmart’s high-end membership store, Sam’s Club, increased by 8% in 2018. The company attributed the growth to online delivery services and electronic membership card that was introduced recently.
The company added four new Sam’s outlets last year and launched one-hour delivery services in Shenzhen, Shanghai and Beijing. More than 70% of the members use Sam’s Club app and electronic cards.
Regulatory guidelines may have significant impact for ecommerce.
In a move aimed at promoting fair trade in India, the government has announced a series of regulations for the ecommerce industry. From 1 February 2019, online marketplaces will not be allowed to list exclusive products on its platform. Previously, manufacturers and suppliers would work with Amazon or Flipkart exclusively to launch new products or promotions. This was especially common for smartphones and other consumer electronic items.
The new ruling states that online retailers must provide equal trading terms for all of its vendors and suppliers. Manufacturers and suppliers are now allowed to have a maximum of 25% of total online sales revenue from a single marketplace.
Another new regulation that will be introduced prevents foreign companies from selling its own products directly to shoppers. An example of a product to be impacted by this regulation would be Amazon’s Echo speaker. Under the new rules, this product will not be allowed for sale in the Amazon India site
Deep discounts offered by online retailers have badly affected many smaller businesses, making it difficult for them to compete effectively. By removing these entry barriers, the government hopes to encourage the growth of local mid and small enterprises.
Find out more information about the Indian market here.
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Flipkart, a leading Indian online market place, has committed to pushing newer categories such as furniture and groceries over the next three years.
Flipkart currently provides online grocery services in four cities in India, adopting the monthly basket approach. Its CEO Kalyan Krishnamurthy commented that Grocery is by far one of the most difficult businesses Flipkart has launched. In the long-term, Flipkart may invest in or partner with offline retailers in groceries and furniture to become a leader in these categories.
Walmart bought Flipkart in May 2018 and has increased its stake to more than 80% since then. The Flipkart group currently has Myntra and Jabong, two online fashion retailers. It is reported that Flipkart may either partner with a video content firm or build out its own content offering, as part of Flipkart’s loyalty programme, which was launched a few months ago.
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