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Q1. In relation to the Walmart in China case study outline and critically discuss the various strategies adopted by Walmart to succeed in the Chinese retail market?
Walmart Inc. first opened in China in 1996 and since then, has grown only into 405 stores. Upon its opening, one of the US’ largest chain stores applied marketing strategies to penetrate into the largest market. Among the superstore’s strategies include: Setting-up of modernized retail format: Walmart introduced highly-modernized and urbanized stores where almost all shopping needs are available. It set up huge and air-conditioned stores to promote convenient shopping compared to wet markets and locally-owned stores. It also extended its store hours to cater to the shopping needs of professionals and workers who work overtime. Walmart also took pride in serving reliable and hygienic food and in selling authentic products compared to the fake ones sold at local market.
Serving of local favorites: Walmart tried to retain its local feel by serving locally-produced food and sold items from local distributors. The superstore offered an ambience of modern retailing with the feel of wet market where Chinese consumers usually rely on their shopping needs
Retail-tainment: The superstore company also organized entertainment activities, tapping local school groups to perform at the event spaces. It also organized every day activities for the elderly and welcomed residents from the locality to stroll and enjoy the air-conditioning.
Tian tian ping jia (Everyday low prices): Walmart was known for its discounts and low-prices in the US; thus, it also applied the same strategy in China to lure locals, especially their target market, the middle class, to buy goods and luxury brands at a discounted price.
Acquisition of Trust mart: Walmart invested in acquiring the Taiwanese-owned, Trust Mart, in 2007 because of its strategic location and to lessen its competitors.
Environment-friendly stores: Walmart took advantage of the growing clamor for environmentally-friendly establishments so it set up a store in Beijing that utilizes energy-saving devices, recyclable and reusable materials, and conform to environmentally-safe standards and norms.
Q2. In your opinion what do you think are the key reasons for Walmart’s slow growth within the Chinese retail market? Support your answer by citing examples where appropriate.
Although Walmart had the competitive advantage from its competitors such as Sun Art because of its banner of cleanliness and modernized retail format, the superstore did not grow because of its lack of understanding on consumer behavior. The analysis of John (2015) emphasized that Walmart failed to consider the preference of its demanding customers in China, specifically, their preference for “custom-made” products and an ambience of the local preferences (p.9). Their strategies did not capture the Chinese consumers’ interests, i.e. discounts on condiments instead of discounts on soda products, fresh and quality food products, and inconsistencies on their promotions (they label frozen food as fresh). Walmart’s retail format was still very much influenced by Western shoppers which differ from the interests of their Chinese market.
Apart from consumer behavior, it is also important to note that the slowing economy, bureaucracy in the government and store locations affect the business and may have implications to the store’s slow expansion (Burkitt, 2015). China’s stringent policies on foreign ownership, coupled with huge number of low-income locals and even its non-strategic locations can hamper its growth. Since Walmart’s main target customers are middle class, its store locations must be in business centers and not in far-flung areas or in areas where the majority of the populace do not shop on a daily basis. Eventually, the superstore chose to close some of its stores because of failure to consider these factors.
Q3. Discuss Walmart’s future in the Chinese market, within the context of the evolving retail scenario? Support your answer with comparative marketing campaigns and real life commercial examples.
Despite the slow growth of Walmart in China, the company still intends to expand its reach and open additional stores. Walmart would still survive in China because of its relatively huge market; however, the company must consider the essential importance of its market from a long term point of view. It needs to plan and execute impressive strategies to better penetrate into the Chinese market and despite its many attempts, it still has to prove itself to gain the trust of its Chinese consumers (Anderlini and Waldmeir, 2015; Forbes.com, 2015). For instance, Starbucks also struggled to gain the trust of its consumers in China, but it managed to thrive in the country where people used to drink tea. It carefully studied its market and introduced a demand for coffee by revolutionizing how the Chinese population view and drink coffee. It maximized locations where they can have high visibility and exposure to their target market and provided their customers an extraordinary experience through their interior design and coffee products (Wang, 2012). Walmart has this advantage which they have yet to maximize. A careful analysis on the market coupled with strategic location and visibility can help Walmart reestablish its name and promote its competitive advantage of cleanliness and modernized retail experience to its customers.
Q4. What advice / suggestions would you make to the head of Walmart in China in order for them to succeed in China, given their recent experiences outlined in the case? Support your answer by proving comparative examples.
Stralser (2004) emphasized that in order for a product to success, it must consider the 4Ps of marketing: product, price, placement, and promotion. Walmart already had their products and prices in place, but in terms of placement and promotion, they have to carefully examine. The lesson from Starbuck has put premium in capitalizing into its target market. They carefully reviewed the profile of their market in order to penetrate into the business.
Walmart can also adopt the strategies of Starbucks in order to reach out to the larger market. Wang (2012) suggests the following steps that may be applicable to the superstore:
Position strategically: Do not compete with the local market; hence, create promotional campaigns about cleanliness and the importance of air-conditioned locations to keep the products fresh. Engage in promotions and inculcate the advantages of the modern retail experience. In terms of pricing, capitalize into the needs of the market instead of their wants. Offer discounts on their commonly consumed items.
Establish global branding: Reintroduce Walmart as a global brand with a touch of local ambience. Tap local personalities to serve as ambassadors that promote the competitive advantage of US products and even the quality of local products being sold at the store, especially the exclusive ones.
Commit to a long term perspective. Invest in training employees. Invest in educating consumers. Invest in providing consistent, excellent, and quality products and services.
Overall, being open to innovations, studying carefully the market, planning and executing right strategies, adapting to local preferences and commitment to deliver the best services can make the store reach the pinnacle of success that they continuously striving at for the past 20 years (Strasler, 2004; Wang, 2012).
References
Anderlini, J. and Waldmeir, P. (2015). Walmart accelerates China expansion. Financial Times. Retrieved from: http://www.ft.com/cms/s/0/85103bcc-ee24-11e4-987e-00144feab7de.html#axzz43guzSHX8
Burkitt, L. (2015). Walmart to open 115 stores in China by 2017. Wallstreet Journal. Retrieved from: http://www.wsj.com/articles/wal-mart-to-open-115-stores-in-china-by-2017-1430270579
Stralser, S. (2004). MBA in a day® : what you would learn at top-tier business schools (if you only had the time!). New Jersey: John Wiley and Sons.
Wang, H. (2012). Five Things Starbucks Did to Get China Right. Forbes Magazine. Retrieved from: http://www.forbes.com/sites/helenwang/2012/08/10/five-things-starbucks-did-to-get-china-right/2/#203e6f9656fe
