Walmart rides Sam's Club growth wave

Walmart China is accelerating the expansion of its Sam's Club business in China after another quarter of double-digit sales growth, with preparations for the opening of its sixth warehouse club in Beijing underway even as the retailer faces mounting operational challenges, including rising consumer complaints over product quality and heightened regulatory scrutiny.

The new Sam's Club in Beijing's Fangshan district will officially open on Monday, extending the membership retailer's footprint into the southwest of the capital as it targets growing demand from suburban households for premium groceries and bulk purchases.

The opening comes just days after Walmart reported strong fiscal second-quarter results, with China remaining one of its fastest-growing markets.

Walmart China's net sales rose 20.7 percent year-on-year to $7 billion in the second quarter ended July 31, while comparable sales increased 9.7 percent. E-commerce continued to fuel growth, with online sales climbing 26 percent and accounting for 55 percent of total revenue.

Sam's Club remained the company's biggest growth driver, opening 11 new clubs over the past 12 months, including four during the latest quarter. Walmart stores have also recorded growth in the quarter.

The Fangshan outlet follows the opening of Sam's first store in Shijiazhuang, Hebei province, on Aug 21.

The expansion reflects Walmart China's strategy of increasing store density in established markets while extending its reach into surrounding metropolitan areas. Since opening its first Beijing Sam's Club in 2003, the retailer has steadily expanded its network in response to shifting population patterns and rising demand for premium consumption.

Located in one of Beijing's fastest-growing residential districts, the Fangshan store is expected to serve a growing base of families seeking high-quality groceries, bulk household essentials and holiday gifting products closer to home.

Over the past three decades, Walmart has built an omnichannel retail network in China spanning hypermarkets, Sam's Club warehouse stores, cloud warehouses and digital platforms.

The company has recently signed agreements with local governments to develop additional Walmart and Sam's Club locations in Beijing; Wuhan in Hubei province; Nantong in Jiangsu province; Yantai in Shandong province; and Shenyang in Liaoning province, signaling that China remains a priority investment market.

The rapid expansion, however, has also exposed operational pressures. As Sam's Club's membership base continues to grow, the retailer has faced increasing consumer complaints over product quality and customer service. In June, China's market regulator summoned the company over food safety issues, highlighting the challenges of maintaining operational standards while scaling up rapidly.

Industry data suggest the membership model continues to outperform traditional grocery formats. According to Worldpanel by Numerator, sales across China's modern grocery retail channels — including hypermarkets, supermarkets and convenience stores — fell 2.5 percent in the first half from a year earlier. Walmart Group, however, expanded its market share by 1.2 percentage points, driven by Sam's Club's continued momentum, a denser neighborhood-store network and stronger sales of private-label products.

wangzhuoqiong@chinadaily.com.cn