Sunday, January 29, 2017
Walmart focuses on the Chinese Market
Ryan Remiorz/The Canadian PressWalmart Canada CEO Dirk Van den Berghe has been reassigned to China, leaving the company looking for a new chief executive.
TORONTO — Walmart Canada is looking for a new chief executive with news of CEO Dirk Van den Berghe’s reassignment to China.
Van den Berghe, who has quietly led the country’s biggest mass merchant through a period of ever strengthening results since taking up the helm in August of 2014, will also be in charge of the retailer’s Asia region, including Japan.
The move was announced as part of a global shuffle this week after parent company Wal-Mart Stores Inc. announced the pending departure of Andy Clarke, CEO of the retailer’s struggling U.K. unit, Asda. It comes after company executives criticized Asda’s poor performance at the Bentonville, Arkansas-based parent company Wal-Mart Stores Inc.’s annual meeting of shareholders on June 3. Sean Clarke, the current CEO of Wal-Mart in China, will replace Andy Clarke as head of Asda.
Van den Berghe, who joined Walmart Canada after a 15-year-career with global food retailer Delhaize Group, is set to begin his role in China in August.
His replacement at Walmart Canada will be announced in coming weeks. Company representatives did not immediately respond to requests for comment Tuesday.
“What I see that really changed under Dirk’s leadership was (Walmart Canada’s) focus on food, and fresh produce in particular,” said Stewart Samuel, program director at IGD Canada, a food and consumer goods research firm. Walmart Canada began carrying fresh groceries in 2006 and 75 per cent of its 400 Canadian stores include a full grocery assortment.
“He brought a lot of grocery expertise to the business and really brought that area to life. When you go into the stores now, you are not clamouring over palettes of detergent or toilet rolls to get to that fresh food area — there is a very clear entranceway to the fresh food and it is a clear destination in the store.” The retailer has become even more price competitive during Van den Berghe’s tenure, he added.
Stronger results were also a hallmark of the executive’s period with Walmart Canada.
In the first quarter ended April 30, the retailer reported a strong same-store sales increase of 6.7 per cent, its eighth consecutive quarter of gains after a period of same-store declines, and customer traffic grew 4.6 per cent. Same-store sales strip out the effect of added square footage on sales performance, and are a key performance bellwether in the retail industry. The retailer also said net sales rose 8.6 per cent and the average transaction size was up 2.1 per cent. In the meantime, Walmart Canada gained 100 basis points in market share for the 12-week period ended April 16, according to Nielsen, with growth in the food, consumables, health and wellness and infant categories.
Finding ways to generate value for customers was a theme running through parent company’s annual general meeting earlier this month.
David Cheesewright, former Wal-Mart Canada CEO and now CEO of Wal-Mart’s international unit, told reporters ahead of the company’s June 3 annual general meeting of shareholders, said he was “very disappointed” with Asda’s performance after seven straight quarters of falling sales.
Asda, like Britain’s three biggest grocers, has steadily lost ground to the influx of discount retailers into the U.K. and Europe, notably German-based discount giants Aldi and Lidl.
Earlier this month, analysts from New-York based global management consultancy Oliver Wyman discussed the heroic rise of large discount grocery chains in Europe, saying it had led to price deflation and struggles for traditional grocery retailers such as U.K.-based Tesco.
Aldi and Lidl, which collectively grew to 20,000 stores from 8,000 between 2003 and 2013, now have a 50 per cent share of the grocery market in Germany. In the U.K. their same-store sales are growing at a blistering annual rate of 30 per cent.
“They have changed the game,” James Bacos, managing partner in retail at Oliver Wyman Germany, said of the discounters at the Retail Council of Canada’s Store 2016 conference. “They have caused price deflation for the last 15 years and they will continue to do so. No market has been immune.”
The news of came of Van den Berghe’s departure came after Walmart — known industry-wide as a tough negotiator when it comes to keeping costs low — announced it would no longer accept Visa credit cards in its Canadian stores, with a countrywide rollout beginning July 18 in Thunder Bay, Ont.
Walmart said the fees applied to Visa credit card transactions in Canada were “unacceptably high,” and the retailer was unable to negotiate an acceptable fee it needed to keep its own costs in check.