January 25, 2018. Shanghai – Walmart’s approach to the New Retail business model in China was the focus of a keynote speech by Mr. Wern-Yuen Tan, President of Walmart Stores China, at an Executive Forum that attracted more than 100 people who braved a rare but heavy snowfall to make their way to the Shanghai Campus today. CEIBS Professor of Entrepreneurship, Ramakrishna Velamuri moderated the event.

Mr. Tan began his talk by asking the audience if they had ever shopped in a traditional Walmart store – nearly everyone raised their hand. But when he asked who had tried the retailer’s online channels few had. The ways in which Walmart is trying to bridge this gap between consumers’ online and offline shopping habits and meet the challenge from e-commerce giants like Alibaba and JD.com in China was the focus of his presentation. The combination of online and offline retailing strategies, as well as payment, big data and logistics, is known as New Retail. In the US, where Walmart is headquartered, most retailers have a well-established offline presence and struggle to be competitive online, while in China it is the opposite.

Having entered the Chinese market more than 20 years ago, Walmart has witnessed significant changes in the retail environment, driven largely by a gradual but profound shift in consumption habits. Thanks to rising incomes, Chinese consumers have moved from pragmatism to hedonism, from a frugal and functional mindset to one that prioritises quality and convenience.

“Chinese consumers today are savvy, digitised shoppers thanks to the almost 24/7 digital accessibility here in terms of retail channels and payment, which comes from the popularisation of smart devices in China,” said Mr. Tan.

As a successful traditional retailer, he said that Walmart should tackle the digital challenge by addressing customer pain points through a transformation of both its online and offline channels. “E-commerce remains a major sales driver in the retail sector, but that doesn’t mean Walmart has an ‘e-commerce vs offline’ choice to make,” he said. “We don’t force customers to choose a channel; channel should never come first. Walmart combines its different assets to target different customers.”

The retail veteran also shared some of his thoughts on the importance and advantages of creating an ecosystem, and provided some examples of how Walmart has established synergies with suppliers and other partners in China to lower costs and deliver value to its customers and the community.