Photo/Zhang Xiaoqing (NBD)

Nov. 21 (NBD) -- On Thursday (November 21), Walmart China announced its plan to open 500 new brick-and-mortar stores and cloud warehouses in China in the coming 5-7 years, including Walmart Supercenter, Sam's Club and Walmart Neighborhood Market, according to senior vice president of Walmart China Property Development Gu Jianzhang.

Neighborhood stores that usually cover a floor area of 600-1000 square meters and better serve consumers will be the focus of the retail giant's future development. National Business Daily observed that Walmart shut down over 70 stores in China in the past three years. Of the closings, only one was neighborhood store, and most were traditional supermalls that often come with high housing rental and labor costs.

"Through closures and openings, there obviously shows the strategy adjustment of Walmart China that the retailer begins to leverage its neighborhood market in the country. It is exploring new possibilities to gain momentum in China," wrote industry observer Ann at iResearch.

According to the financial report for the third quarter of FY2020 ended October 31, 2019, Walmart raked in revenue of around 128 billion U.S. dollars globally, up 2.5 percent year over year.

In the Chinese market, the retailer registered a net increase of 6.3 percent in sales, its best performance in the recent five years. Notably, both Sam's Club and the e-commerce business contributed a lot to the growth, with the former delivering a double-digit rise in comparative sales and the latter reporting sales increase of 99 percent.

Looking globally, an increasing number of brick-and-mortar stores were closed in the context of rising e-commerce. UBS Securities previously predicted in a report that 75,000 stores will close around the globe by 2026, and online retail's market share will rise to 25 percent from 16 percent.

Data shows that fast e-commerce development sapped Walmart's growth momentum from fiscal year 2015 to fiscal year 2019. During the period, there saw a flat increase in the company's sales in international markets. To offset the impact, Walmart beefed up its efforts in developing its e-commerce business through acquiring digital technology and service providers and introducing apps and mobile payment, and etc. And in fiscal year 2019 ended January 31, 2019, its net sales related to e-commerce was 6.7 billion U.S. dollars, accounting for 5.55 percent of its total from the international markets. 

According to Gu Jianzhang, new cloud warehouses opening is also a tool to improve Walmart's efficiency of e-commerce in China by means of strengthening its supply chain logistics. Currently, Walmart has built more than 50 cloud warehouses in China, with more to be expected. 

Moreover, Walmart plans to renovate its existing 200 stores across the oriental nation in the next three years.

Email: lansuying@nbd.com.cn