E-commerce to be pillar of retail, top executives say

16  January 2013

E-commerce will be one of the great propellers of the retail industry, according to the managers of some of the largest retail companies in the world.

“E-commerce will be one of the key drivers for retailing in the future,” said Greg Foran, president and CEO of Wal-Mart Stores Inc China.

Last month, Wal-Mart said it had signed a deal to acquire a majority stake in Yihaodian, a Chinese e-commerce website. Wal-Mart will control 51.3 percent of the website, which recorded sales of 2.7 billion yuan ($428 million) in 2011.

“E-commerce in China is faster than the business in the United States,” Foran said. “We see this (purchase of Yihaodian) as a good opportunity for us to learn.”

Analysts said the acquisition supports the retailer’s plans to grab a larger share of the country’s online-shopping market.

Besides e-commerce, top executives at large foreign retail companies are also placing an emphasis on continuous investment.

“Store expansion investment in China is critical, as well as investment in fresh foods sectors,” said Thierry Garnier, president and CEO of Carrefour SA China.

Foran said Wal-Mart plans to open 100 new stores in the next three years in China. Most will be either hypermarkets – meaning they will be a blend of a supermarkets and department stores – or Sam’s Clubs, the company’s warehouse club chain.

Speaking of the benefits of hypermarkets, industry experts said consumers need one-stop shops where they can find everything they need in one large room, allowing them to “save money and time”.

“With previous developments concentrating on first-tier cities, the retailer is now heading to second- and third-tier cities, where consumption has not reached its full potential and the increase in residents’ incomes has been on the rise in the past few years,” said Zhao Ping, deputy director of the Economic Research Department of the Chinese Academy of International Trade and Economic Cooperation.

“Developing new ways of doing business, such as e-commerce, and exploring new markets, such as markets in lower-tier cities, will be the main driver of the retail industry,” said Guo Geping, president of the China Chain Store and Franchise Association, on Thursday at the 14th China Retail Industry Convention.

Garnier said retailers will also invest in technology innovation and training to improve efficiency and meet new stores’ demand for workers with certain skills.

Earlier this year, Carrefour China said it plans in the next six months to recruit more than 20 general store managers.