In this exclusive interview with Mr. Anthony Rose, Vice President – Corporate Affairs, Walmart Asia and Co-Chair, ECR Asia Pacific (the pre eminent association body of retailers and manufacturers), he shared with us how Walmart glocalises its brand and gave tips on how their supply chain plays an important role in establishing a sustainable brand. Enjoy the read!
How do you feel the retail customer experience has changed in the past few years?
If we take developing markets like China as an example, we have seen that the entry of foreign retailers as well as the evolution of local retail has given consumers more choice than ever before – soon to be in line with their Western counterparts.
Although China's growth rate has slowed somewhat, it's clear that a new generation of consumers is creating an enormous retail market and significant opportunity in e-commerce. With nearly 485 million internet users, China is the global leader and is predicted to overtake the US as the world’s largest e-commerce market by 2015. Currently, C2C sites like Taobao.com make up the majority of e-commerce trade but B2C is growing quickly. In Japan, the B2C e-commerce market is already worth an impressive USD$127.8 billion.
As this trend continues, Walmart is well poised to capitalize on the emerging opportunities throughout Asia. Walmart recently completed its 51% investment in Yihaodian, one of the China's leading business-to-consumer e-commerce companies. Meanwhile, our online Seiyu store has been re-launched in Japan, with an enhanced offering that now includes processed food, daily goods and clothing nationwide.
What are the top 3 challenges faced by retailers in today's customer experience engagement and how would you advise on overcoming that?
Customers' cares are constantly changing and nowadays, more and more are taking an interest in retailers’ commitments to social and environmental issues. In a recent research study undertaken by Accenture, a majority of consumers said they would choose to buy products from companies which operate more sustainably than those which don't, if the price point is the same or less than competitors'. Another survey suggested top environmental concerns among Asia Pacific consumers include air pollution and water shortages. This adds to the growing evidence that consumers are beginning to think beyond the price tag when making purchasing decisions.
Walmart recently announced new goals for how we will use our Sustainability Index to design more sustainable products, to make our global supply chain more socially and environmentally responsible, and to incentivise merchants to make sustainability a bigger part of their day-to-day jobs. Walmart, by the end of 2017 will purchase 70% of the products it sells in U.S. stores and in U.S. Sam's Clubs only from sustainable suppliers in the United States, China, and around the world who use the Index to evaluate and share the sustainability of their products. We are determined to continue improving sustainability throughout our operations, as this strengthens us as a business.
In addition to working with suppliers, Walmart has also engaged directly with its customers – for example, we have achieved a reduction in the use of plastic bags, achieving an 86%, 90% and 40% decrease in China, India and Japan respectively, compared to a 2005 baseline. As a continuing aspect of the campaign, our Best Price wholesale outlets in India have introduced reusable, nonwoven bags and reusable High Density Poly Ethylene (HDPE) bags in 2012.
How does one best take a strong global brand and "make it local"?
For Walmart, we try to drive our âEvery Day Low Cost' and âEvery Day Low Prices' promise through both global leverage and local sourcing.
We refer to Global Leverage as our ability to deliver international brands to customers at the lowest possible price. For example, we managed to increase sales of beef sold in Seiyu stores by 200% by sourcing it from the US, giving us a 50-60 yen price advantage versus our close competitors.
That said, the majority of all products we sell in Asia are sourced locally. After all, consumer preferences in this part of the world change not just between countries, but in fact from province to province and state to state. The ability to offer customers localized offerings is pivotal to success, especially in such diverse marketplaces.
Let's take China as an example: in the north of the country, rice is less popular than in Southern China because of the availability of wheat. In Japan, short-grain sushi rice is preferred over the longer grains consumed in China.
Our emphasis on local sourcing ensures that we have a constant stream of products that satisfy local tastes, while also keeping costs low. An overwhelming majority of everything we sell in our Asia stores is sourced in-country. Across Asia, between 75% and 95% of everything Walmart sells is locally sourced.
What are the top 3 countries that you see in the retail industry as emerging markets to keep a keen eye on? Why do you say that?
We are excited with our accomplishments in the markets that we are operating in today and will continue to invest in offering the best shopping experience possible.
In China, Walmart plans to open more than 100 stores over the next three years and invest in more distribution centers to forge a highly efficient supply chain. In addition, in order to present a better shopping experience, Walmart will also spend nearly 500 million yuan (approximately 78 million US dollars) to remodel 50 existing stores in 2013.
In Japan, we will continue to open new stores with much closer attention to capital efficiency. We planned to open five new stores in 2013 and we have already opened four.
We remain excited about the opportunity to grow our business in India, one of the world's most vibrant economies. We believe that allowing 51% foreign direct investment in multi-brand retail is an important first step for the Government of India to further open this sector and strengthen the Indian economy.
How important do you feel your supply chain is in helping to establish a sustainable brand?
A core aspect of our mission is Helping People Live Better and is something that applies to all facets of our business including our customers, associates and the people who make the products we sell. Supply chain efficiency and sustainability are intricately linked. In addition to this, achieving supply chain efficiency through sustainability helps us to accomplish our promise of "Every Day Low Prices" – a pillar of the business that we stand by in every single market we operate in.
Through our Ethical Sourcing program, Walmart aims to influence global supply chain practices in a positive way. We do this by evolving our own standards and then sharing our experiences and ideas with other stakeholders, thereby helping to raise the global standard. A good example of how our Ethical Sourcing programs are preventing violations can be seen in China, where through the use of external, third-party firms, regular audits are conducted to confirm that suppliers and their factories are complying with our standards. Offenders for non-core issues are re-audited more frequently while those that have committed serious offences are immediately cut out of our supply network.
In addition, food supply is a critical aspect of our Ethical sourcing program and an area we heavily focus on. An experience in India provides a useful example of how Walmart is tackling challenges in this area. A major challenge for frozen food suppliers in India is maintaining an efficient and economically viable option for the transportation of cold food. To tackle this issue within our own operations, we began using pre-chilled ice packs in shipper boxes combined with dry ice. The result not only cut energy use and saved money but also ensured a safe food supply.
Another example from Japan highlights the successes we have achieved across product categories. Through our ânon-tray packaging initiative', Walmart Japan was able to save more than 22 tons of trays and wraps in just one year by vacuum packing chicken and pork rather than utilizing trays.
How did you find Retail World Asia 2013?
The retail industry is becoming increasingly dynamic and active, predominantly through the rise of technology and e-commerce. At the same time, retailers and everyone else in the value chain have to rise to the challenge of operating more sustainably, not only to meet consumer demand, but to ensure longevity. The Conference gathers participants from all aspects of the value chain and provides a good platform to share insights and discuss solutions – all of which I hope will contribute to the development and implementation of best practices across the industry.
At Retail World Asia 2013 conference, Anthony delivered a rousing presentation and taught fellow retailers on how to achieve responsible growth and increase global market share.
Download the presentation and find out:
- Recognising that the retail business is more than a sales business
- Differentiating your brand, position, offer and process with a green movement
- Propelling social enterprises and projects that make an impact
You can find out more about Retail World Asia 2014 expo and conference over on the website.