Hypermarket, discount department store, and grocery store operator Walmart Inc is betting big in China despite the ongoing geopolitical turmoil and the country's economic slowdown. The Arkansas-based company announced on Thursday that it plans to open at up to 500 new stores in China over the next five years.
Walmart's substantial investment plan is solely relying on the forecast that China will become the world's largest grocery market by 2023. The company believes that opening up hundreds of stores would likely result in it significantly increasing its market share early on.
Based on its announcement, the company would essentially be doubling its number of stores in the country. The move is a major gamble for the company given that China's previously massive economic growth has started to cool down. The economic growth slowdown in the country has been attributed to its ongoing trade dispute with the United States, which has resulted in a drop in its GDP growth over the last few quarters.
While official numbers have pointed to a slowdown in economic growth, consumer spending in China still continues to be strong. For the third quarter of this year, China's overall consumer spending has grown by 6.3 percent when compared to the same period last year. Walmart is likely banking on this fact to hopefully make back its planned investment and to rake in huge profits when the economy fully recovers.
The announcement of the opening of hundreds of new stores in China follows the company's announcement earlier in the year, where it stated that it was planning to invest billions of dollars into its Chinese business. On Thursday, Walmart stated that it will mainly be using its investment to focus on groceries and online shopping, which it believes are the keys to drive its expansion in the country.
As part of its strategy, Walmart also stated that it will be investing in the integration of advanced technologies into its stores. The company stated that it will be remodeling its more than 200 stores in the country over the next few years to include advanced technologies such as facial recognition-based payments and self-service cash registers.
Walmart China's senior vice president, James Ku, mentioned in a statement this week that the company will be collaborating with policymakers and its domestic partners to accelerate its expansion plans. Walmart hopes to leverage multi-format strategies to ultimate provide Chinese customers with the most value, freshness, and convenience when shopping at any of its stores.