China Food

Wal Mart China’s e-commerce increased by 89% in the first quarter! The Global CEO praised the Chinese team’s work of epidemic protection and supply

Despite the temporary closure of stores caused by the COVID-19 and many challenges brought by logistics restrictions, Wal Mart China still handed over a growing quarterly report card.

 

Xiaoshidai noted that yesterday, the global retail giant released the financial results of the first quarter of fiscal year 2023 (Note: February 1, 2022 – April 30, 2022). The financial report shows that during the period, the company’s global total revenue was US $141.6 billion, an increase of 2.4% year-on-year, and the business stripping brought a decrease of US $5 billion; The operating profit was US $5.3 billion, a year-on-year decrease of 23%, and the business divestiture resulted in a decrease of US $300 million.

Specific to the Chinese market, Wal Mart continued to achieve sales growth, and e-commerce is one of the biggest “Heroes”. Xiaoshidai learned that at the subsequent performance meeting for analysts, Doug mcmillon, Wal Mart’s Global CEO, also paid special tribute to the Chinese team’s efforts to ensure supply during the epidemic blockade.

Let’s pay attention.

 

High growth of e-commerce

 

Let’s first focus on the performance of the Chinese market.

 

According to the performance conference presentation materials read by snack generation, in the first quarter, Wal Mart China’s net sales increased by 7.2% year-on-year; Comparable sales increased by 4.4% year-on-year, of which the transaction volume of comparable sales increased by 0.2% year-on-year, and the unit price of comparable customers increased by 4.2% year-on-year. Among them, the e-commerce business once again achieved a very amazing growth, with a year-on-year increase of 89% in net sales and a two-year superimposed growth rate of 149%.

Wal Mart China fiscal year 2023 first quarter results

 

“The strong performance of consumables contributed to the growth of sales (of China business in the first quarter).” Wal Mart said in the financial report. Statistics show that Wal Mart roughly divides its products into six categories, including refrigerated and frozen fresh food, food and beverage groceries, consumables (such as daily chemical products), household products and clothing, science and technology office and entertainment products, and health nutrition products.

 

The retail giant also said that the sales growth in the Chinese market in the first quarter was lower than expected due to the sealing and logistics restrictions under the COVID-19.

 

Wal Mart China fiscal year 2023 first quarter results

“In China, the growth was lower than expected, but the comparable sales still increased by more than 4% driven by the growth of nearly 90% of e-commerce.” Brett Biggs, Wal Mart’s global chief financial officer, added at the performance meeting.

 

In fact, the business has maintained a high growth rate for several consecutive quarters. Xiaoshidai introduced that Wal Mart’s net sales of e-commerce in China increased by 93% in the fourth quarter of fiscal year 2022 and 96% in the third quarter of fiscal year 2022. In recent years, the e-commerce business of Sam’s club has maintained triple-digit growth for several consecutive years.

 

In addition, the snack generation looked through the information and found that Wal Mart has opened 36 Sam’s club stores in China. At present, the number of paying members in Sam’s stores has exceeded 4 million in the middle-class member market. According to Wal Mart China’s previous plan, by the end of 2022, Sam will have 40-45 stores open and under construction in China.

 

The expansion of offline stores has also driven the growth of e-commerce. At present, “Sam yuncang” and “dada express delivery” provide members with “jisuda” service, covering cities with Sam stores, and more than 1000 kinds of daily commodities consumed at high frequency can be delivered in one hour. In addition, the scope of Sam’s self operated e-commerce services has also been expanded to most parts of the country. In cities where there are no Sam’s offline stores for the time being, some of Sam’s selected products can also be purchased through Sam’s app.

 

Guarantee of supply under epidemic situation

 

Wal Mart China has made great efforts to ensure the supply in the areas affected by the epidemic in the face of various challenges brought by the epidemic. When talking about Wal Mart’s international market (including China), Dong Minglun said at the meeting that “Wal Mart China team responded very well”.

 

Xiaoshidai learned that during the epidemic in Shanghai, in order to ensure store operation and online order fulfillment, many Sam’s club employees, especially staff in important positions such as e-commerce and kitchen, chose to stay in or near the hotel to stick to their posts. Employees of e-commerce department work continuously for more than 48 hours to coordinate manpower and vehicles to deliver online orders.

 

The protection of supply under the epidemic also benefits from Wal Mart’s flexible supply chain and deployment ability in China. It is reported that as early as the 2022 Spring Festival, Sam will reserve 4-5 spare vegetable suppliers in advance as the “mobile force” of the existing supply. At the beginning of the outbreak in Shenzhen and Shanghai, Sam immediately started the reserve resources in the face of the surge in demand. The vegetable and meat reserves of Sam’s stores in Shenzhen and Shanghai reached three times that of normal days.

 

“All in all, around the world, we still live in an environment where the epidemic exists and are affected by macroeconomic and other factors. Our employees have always performed well and are very grateful to them. We will continue to change and strengthen our company to face a strong future.” Dong Minglun said at the meeting.

 

Looking forward to fiscal year 2023, the retail giant is still facing huge profit pressure. According to the financial report, the company raised its net sales forecast for fiscal year 2023 from an expected increase of 3% to an increase of 4% at a fixed exchange rate; But at the same time, the profit guidelines were lowered. The annual operating profit was adjusted from the expected growth of 3% to a decrease of 1% at the fixed exchange rate, and the earnings per share (EPS) was expected to decline by 1%, compared with the previous expectation of median single digit growth.

Wal Mart fy2023 performance guidelines

 

Upgrade action

 

After the challenging first quarter, Wal Mart China recently made a big move in order to better seize the growth opportunities in the post epidemic period.

 

Xiaoshidai noted that last Wednesday, Wal Mart announced that its own brand “Huiyi” had been upgraded recently to further strengthen commodities from multiple dimensions such as selection, price and packaging to meet the daily consumption needs of urban middle-class families. Statistics show that Wal Mart has three own brands in the Chinese market, namely “Huiyi”, “wojixian” and “George”, covering packaged food, fresh food and household clothing. Among them, Huiyi mainly covers packaged food, daily necessities and frozen fresh food.

 

In Wal Mart’s view, with the changes of macro environment and consumption habits, “smart consumption” has become the current trend. Its own brand, which is positioned as “giving consideration to high quality and high cost performance”, is expected to usher in greater growth opportunities.

 

“Consumers will be more rational and fastidious, and have clearer requirements for the quality and price of goods.” Wal Mart China said that based on its insight into consumer trends and consumer preferences, it will conduct in-depth research and repeated consideration on the development of each “Huiyi” commodity, and accurately develop new products in multiple dimensions.

 

Take snacks as an example. Xiaoshidai noticed that Huiyi has recently launched a number of new products with great online popularity, such as cherry white peach and bubble cashew nut. “In recent years, consumers prefer bubble taste, so we have adopted the bubble coating technology of Japan, combined with the current trend of Cherry Blossom White Peach taste, and achieved a breakthrough in the taste of nut retail products.” Wal Mart China said the new product was “sought after by young consumers as soon as it was launched”.

In addition, many classic products of Huiyi have also been further optimized in this upgrade. “For example, the traditional soda biscuits have heavy oil and salt. In today’s environment that pays attention to health, Huiyi soda biscuits carry out the oil reduction and upgrading of the formula. The cake layer is added with white cooked sesame, which has a richer taste experience, uses sea salt seasoning, retains more trace elements, and is supplemented by imported full fat milk powder constant temperature fermentation. The taste is crisp but not loose.” Wal Mart said.

 

This is also the latest landing measure of Wal Mart China to promote transformation and upgrading.

 

Xiaoshidai introduced that since 2020, Wal Mart China has launched its overall core strategy, focusing on three directions: differentiated commodity power, improving end-to-end efficiency and omni-channel experience. At the same time, efforts should be made to improve the support of two core competencies: digital upgrading; Talent / organization / culture.

Zhu Xiaojing, President and CEO of the company, said last November that Wal Mart had entered China for more than 20 years. “In the first decade, that is, from the mid-1990s to the beginning of this century, the key words are: the subversion of modern business supermarkets to traditional businesses. In the second decade, the key words are the rise of e-commerce, the subversion of online to offline. In the third decade, starting from the post epidemic era, we are in it.”

Zhu Xiaojing, President and CEO of Wal Mart China

 

“In this context, we believe that in the next decade, the key words will change from payment, that is, coverage, to loyalty, that is, the ability to obtain and retain customers.” Zhu Xiaojing said that the reconstruction of the business model requires a “who what how” thinking framework, that is, a clear understanding of the customer groups served, an insight into the consumer needs of the customer groups, and a clear understanding of what capabilities need to be built to better serve the core needs of consumers.

Pay attention to “snack generation” (wechat: foodinc) “and reply to” Wal Mart “to see wonderful news.

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