Retailers adapting to meet local customers' changing needs
Retailers are actively adjusting their presence in Shanghai as they modify physical and virtual offerings to adapt to changing demand.
Walmart's membership-only store, Sam's Club, opens its fourth outlet in the city in Baoshan District on Saturday as it explores a smaller-store format for the city center's residents and neighboring communities.
The Baoshan store will host less heavy goods such as bottled water, staple foods like rice or noodles and cooking oil compared with existing stores.
The newest store, which is about one-fifth smaller than traditional Sam's Club stores, allows shoppers to place online orders for those items while keeping most fresh food, personal care and apparels at the store for offline shopping.
The store aims to further integrate online and offline offerings and test customer responses and operation models in order to find an optimal format.
"It further complements our multi-channel shopping experience as we continue to innovate in terms of e-commerce, restocking merchandise, operations and supply-chain management to enhance efficiency," said Andrew Miles, president of Sam's Club China.
Sam's will use customer feedback regarding the smaller format for future operations at existing stores.
Multinational retailers are adjusting to better suit changing habits while staying committed to investing in the city.
Industry watchers suggest retailers will continue to explore new development models as traditional hypermarket chains remodel their operations to suit real-time shopping demand.
Understanding local consumers' preferences and building up mature supply chains is crucial for long-term development in China for the cash-and-carry outlet model, according to the latest retail channel study by consumer market researcher Nielsen IQ.
New formats such as slim-and-fancy stores and smaller exclusive formats that provide consumer convenience and cater to community demand will be preferable transformation models for the physical supermarket businesses, said Nancy Song, managing director of Nielsen IQ China.
Home-furnishings retailer IKEA has allocated 5.3 billion yuan (US$815 million) of investment in China in the new fiscal year beginning in September and will continue to explore new shopping formats.
The new investment will go toward digitalization programs, enhancing operation efficiency and new openings of stores and shopping centers.
IKEA closed its neighborhood store in Yangpu District earlier this year after only two years, the first of its kind in the country to test the waters for a small-scale physical presence.
Vice President of IKEA China Lydia Song said it will continue to assess and adjust formats and channels to reach customers, which will not affect long-term development.
The city remains a key market for the retailer, evidenced by the recent addition of a pickup spot in Songjiang District for online orders.
The construction of the Shanghai IKEA LIVAT center in Changning District is ongoing, although the estimated completion date has been delayed due to pandemic restrictions.
"Instead of a one-size-fits-all strategy for different regions in the country, we continue to test different operation formats to maximize efficiency and reach as many shoppers as possible," IKEA China President Anna Pawlak-Kuliga said.
IKEA said its online sales in China grew about 20 percent from a year ago, enterprise customers' transactions nearly doubled and it sees further growth potential in these areas.