Rapidly growing marketplace shapes personnel, marketing strategies

DSN Retailing Today, Dec 13, 2004 by Mike Troy

"We have one of the best people-development programs of any country in China," said John Menzer, Wal-Mart International president and ceo. "As we determined what our accelerated growth would look like in China we spent all our time up front talking about a five-year people plan so we would have people in place."

Being prepared for growth is aligned with the structure of Wal-Mart's field operations team. Three regional operations managers covering a base of 43 stores report to Gray, but next year the regional structure will expand to five positions. Reporting to those individuals are district managers who are initially assigned three stores. District managers in the United States are typically responsible for six to 10 stores.

"Most of the people that are hired have no retail experience so they have to be trained," Gray said.

For example, Jacky Guo, the general manager of Wal-Mart's newest supercenter in Wuhan, began with Wal-Mart in 1999 as a management trainee. His supervisor, Harry Zhang, is a former assistant manager who left Wal-Mart to earn an MBA in the United States before returning as a district manager responsible for four stores. He reports to Lawrence Lee, a Wal-Mart China veteran who was the general manager of Wal-Mart's first store of learning in China.

The fact that most of the employees it hires don't have retail experience is not all bad for a company like Wal-Mart where success depends on employees who embrace the beliefs that comprise its corporate culture. Those beliefs--respect for the individual, taking care of the customer and striving for excellence--are more likely to be embraced by employees untainted by prior retail experience.

A parallel situation exists with consumers, many of whom are unaccustomed to shopping in modern retail outlets. As a result, they are still shaping their attitudes toward different retailers and their pricing philosophies. Wal-Mart wants them to buy into the everyday-low-price concept, while others such as Carrefour are appealing to a different mindset with a high-low strategy.

That battle is currently being fought in China's largest cities where most of the foreign-owned retail outlets are currently located. However, the next phase of the battle is moving to China's smaller cities--those with only two million or three million residents--where no modern retail exists. Wal-Mart views getting to these markets first as a key to gaining consumer acceptance of its pricing philosophy. This explains why Hatfield has traveled extensively within China during the past six months visiting more than 50 smaller markets to assess their suitability for a Wal-Mart store and scouting real estate.

Whether it's from Hatfield, John Menzer or Wal-Mart president and ceo Lee Scott, a great deal of time and energy is being devoted to China. These executives through their words as well as their actions indicate very clearly that Wal-Mart is very optimistic about the long-term potential of China. They don't get into specifics about that potential other than to disclose 15 of the 155 to 165 stores that will open internationally next year will be located in China.